UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SecureStaff Systems, Inc.
(Name of small business issuer in our charter)
Wyoming 75835 65-10405953
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Indentification Number)
22 Commerce Park Drive, Unit C-1, Suite 244
Barrie, Ontario, Canada L4N 8W8
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number 1-705-722-3033
(Address of principal place of business or intended principal place of business)
Karis B. Rowley, General Manager
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Corporate Service Center of Wyoming, Inc.
200 West 17th Street, Suite 80
Cheyenne, WY 82001
Telephone 307-634-7920
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(Name, address and telephone number of agent for service)
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Copies to:
Bruce Fein, Esq.
Bruce F. Fein, PC
6363 Woodway Drive
Suite 965
Houston, TX 77057
Phone 713-273-6600
Fax 713 273 6605
Approximate date of commencement of proposed sale to the public: >From time to
time after this Registration Statement becomes effective.
If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per aggregate offering registration
unit (1) price fee
Common Stock offered by our 1,248,849 $2.50 $3,122.122.50 287.24
Selling Stockholders (2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. (2) Selling shareholders will be selling these shares at
negotiated prices. We will not receive proceeds from the sale of shares from the
selling shareholders.
We hereby amend this registration statement on such date or dates as may be
necessary to delay our effective date until we will file a further amendment
which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933
or until this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
PROSPECTUS
SECURESTAFF SYSTEMS, INC.
SUBJECT TO COMPLETION, DATED
Selling shareholders are offering up to 1,248,849 shares of common stock. The
selling shareholders will offer their shares at $2.50 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices. We will not receive proceeds from the sale of
shares from the selling shareholders.
Prior to this offering, there has been no market for our securities. Our common
stock is not now listed on any national securities exchange, the NASDAQ stock
market or the Over the Counter Bulletin Board.
This offering is highly speculative and these securities involve a high degree
of risk and should be considered only by persons who can afford the loss of
their entire investment. There is substantial doubt about our ability to
continue as a going concern. We have no definitive plan in place that is capable
of removing the threat to the continuation of our business. See "Risk Factors"
beginning on page 12.
Neither the securities and exchange commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
Offering Information
--------------------
Price to Public (1) Underwriting Estimated Offering Proceeds to
Discounts and Expenses (3) Company (4)
Commissions (2)
Per Share $2.50 N/A N/A N/A
Total $0.0 $0.0 $0.0 $0.0
(1) The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. The offering price for the
selling shareholders' shares has been determined solely by management.
(2) Selling Shareholders hold all of the shares that we are registering. Because
we are not selling any of our shares, there are no underwriting commissions
involved in this offering.
(3) Does not include offering costs, including filing, legal, and accounting
estimated at $50,000. We have agreed to pay all the costs of this offering.
Selling security holders will pay no offering expenses.
The date of this preliminary prospectus is ***, 2002.
TABLE OF CONTENTS
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SUMMARY INFORMATION AND RISK FACTORS...........................................9
RISK FACTORS............................................................... 13
Our poor financial condition raises substantial doubt
about our ability to continue as a going concern...................... 13
Because our ability to continue as a going concern is in doubt and we
have no definitive plan in place that is capable of removing the threat
to the continuation of our business, we may not be able to continue
operations in the future..............................................13
We have a limited operating history; because our planned growth is
contingent upon receiving additional funding, you will be unable to
evaluate whether our business will be successful...................... 13
If we need financing to support our expansion plans but are unable to
obtain it, we will have to curtail our expansion plans and the value
of your investment may be reduced..................................... 14
Because our on-line psychological profiling has not been accepted
by the public as an acceptable form of employer or employee
selection, we face significant barriers to acceptance of our
services.............................................................. 15
Because employers and job seekers may obtain other human resource
services for free, our revenues may be reduced........................ 15
Internet affiliate companies may not be successful in selling our
services, causing our revenues to be reduced.......................... 15
We face risks due to competing technologies or development of new
technologies, which may reduce consumer attraction to our
technologies.......................................................... 15
To date, much of our business has come from three customers; if we
fail to develop a wide customer base, our revenues will be reduced.... 16
If our customers lose connection to our website, we will lose
customers and fail to develop repeat business which will reduce
our revenues.......................................................... 16
Our vulnerability to security breaches, glitches and other
computer failures could harm our customer relationships, our ability
to broaden our customer base and our ability to promote our brand
name.................................................................. 16
Because our psychological profiling products and services business
depends upon our intellectual property rights, which we have not
taken any formal legal action to protect against third parties
utilizing our intellectual property without our consent, our
revenues may be reduced............................................... 17
Our management decisions are made by our Vice President of
Information Technology Management and Marketing, James Cousineau; if we
lose his services, our revenues may be reduced........................ 18
Our Vice President of Information Technology Management and Marketing,
James Cousineau does not have significant financial reporting
experience which may reduce our revenues.............................. 18
Because our common stock is considered a penny stock, any investment
in our common stock is considered a high-risk investment and is subject
to restrictions on marketability; you may be unable to sell your
shares................................................................ 19
Certain Wyoming corporation law provisions could prevent a potential
takeover of us that could adversely affect the market price of our
common stock or deprive you of a premium over the market price........ 21
USE OF PROCEEDS...............................................................21
DETERMINATION OF OFFERING PRICE............................................... 22
DILUTION...................................................................... 22
SELLING SECURITY HOLDERS...................................................... 22
PLAN OF DISTRIBUTION.......................................................... 26
LEGAL PROCEEDINGS............................................................. 28
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS................. 28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................ 30
DESCRIPTION OF SECURITIES.....................................................31
INTEREST OF NAMED EXPERTS AND COUNSEL......................................... 33
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES................................................................ 33
DESCRIPTION OF BUSINESS....................................................... 33
FUTURE PLANS............................................................... 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.............................................................. 47
DESCRIPTION OF PROPERTY....................................................... 51
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................ 52
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...................... 54
Penny Stock Considerations................................................. 54
EXECUTIVE COMPENSATION........................................................ 56
FINANCIAL STATEMENTS..........................................................57
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.................................................................58
Inside Front and Outside Back Cover Pages of Prospectus.......................59
INDEMNIFICATION OF OFFICERS AND DIRECTORS.....................................60
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION...................................65
RECENT SALES OF UNREGISTERED SECURITIES.......................................65
EXHIBITS......................................................................70
UNDERTAKINGS..................................................................71
SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
The prospectus summary contains a summary of all material terms of the
prospectus. You should carefully read all information in the prospectus,
including the financial statements and their explanatory notes, under the
Financial Statements section beginning on page F-1 prior to making an investment
decision. In addition, you should consult you tax, legal, or business advisor
before making an investment.
Our Organization
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We were incorporated in Wyoming on December 14, 1999, under the name Psitek.org,
Inc. In April 2000, we changed our name to Careertek.org, Inc. On October 16,
2001 we changed our name to SecureStaff Systems, Inc. We are authorized to issue
100,000,000 shares of common stock of which 13,260,453 shares are outstanding.
We are authorized to issue 1,000,000 shares each of Class A, B, C, D and E no
value par preferred stock.
Our Business
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Our offices are located at 2 Birchshire Drive, Barrie, Ontario, Canada L4N 6W6.
Our telephone number is 705-722-3033.
We acquired our software on December 14, 1999. From our inception to April
30, 2002, we incurred operating losses of ($788,493) and had a net working
capital deficiency of $250,948. In addition, as of April 30, 2002, we had only
$161 of current cash available. Our cash resources of $161 are not sufficient to
satisfy our cash requirements over the next 12 months. We will need to secure a
minimum of $145,000 to satisfy such requirements, but we need an additional
minimum of $320,000 to finance our planned expansion in the next 12 months,
which funds will be used for product development, marketing, and customer
support. However in order to become profitable we may still need to secure
additional debt or equity funding. We hope to be able to raise additional funds
from an offering of our stock in the future. However, this offering may not
occur, or if it occurs, may not raise the required funding.
We operate our main website at www.securestaffsystems.com , which provides
security related and other personnel services to employers and job applicants.
The securestaffsystems.com website became operational in October 2001. We also
operate a website at www.careertek.org , which became operational in August 2000
and. The careertek.org website performs no function other than to refer a person
to the securestaffsystems.com website. No information on the websites
constitutes part of this prospectus.
Our mission is to simplify and enhance the personnel selection process through,
accurate, and interactive psychological profiling; providing performance
predictability, violence predictability and recruit retention, at the lowest
cost to human resource management.
Our products consist of reports for potential employers, employees and others.
We do not offer our software for sale. Rather, our software is used to generate
these reports.
Our current specific products are the following:
o JobFit - accounting for 75% of our revenues. This is our primary
product and we commenced offering this service on a limited basis in
September 2000. A client can order a regular JobFit profile that shows
the person's ability and success probability in a specific job. U.S
clients can add on an extensive, additional profile that can also show
the basic character and attitudes of the person.
o RetailFit - accounting for 22% of our revenues. This product was
developed to fulfill the needs of the retail marketplace employers.
We commenced offering this product in September 2001.
o CareerFit - accounting for 3% of our revenues. We commenced offering
this product on a limited basis in September 2000.
Our potential future product is the following:
o StudentFit - this product is still in development and we anticipate
that we will commence offering this product in January 2003. This profile
points out the areas where a young person is likely to excel and what
they will enjoy - very helpful in helping a student select disciplines
to pursue and courses for future study. Slotted in the general questions
of StudentFit is a second set of questions that produce a second report
that will examine the student's character and moral attitudes along with
measuring his or her propensity for violence.
Our personnel services are primarily directed to combining workplace security
with psychological profiling and extensive background checks. We have built into
our products a violence predictor, which evaluates a candidate's propensity to
violence, basic character and possible anti-social behavior. We believe this
part of our business will assume more and more importance to employers these
days due to recent tragic events, although it is uncertain whether these events
in fact will have any impact upon our business.
In May 2002 our Acting CEO resigned as an officer and director due to our
current financial condition. He currently provides no services to us. Our
remaining employee only devotes 25% of his time to our business. Unless we
generate additional revenues or secure additional funding, we may not be able to
replace our CEO and our remaining employee will continue to devote limited time
to our business. We have no definitive plan in place that is capable of
removing the threat to the continuation of our business.
Nonetheless, we continue to own our software, which we believe to be a valuable
asset and tool in generating reports for prospective employers, employees and
others. We will continue to explore possibilities for utilizing this asset to
bring value to our business.
The Offering
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As of the date of this prospectus, we had 13,260,453 shares of common stock and
no shares of preferred stock issued and outstanding.
Selling shareholders are offering up to 1,248,849 shares of common stock. The
selling shareholders will offer their shares at $2.50 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices. We will pay all expenses of registering the
securities, estimated at approximately $50,000. We will not receive any proceeds
of the sale of these securities.
Financial Summary
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Because this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should carefully read
all the information in this prospectus, including the financial statements and
their explanatory notes before making an investment decision.
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Summary Financial Data
Consolidated Balance Sheets
April 30, July 31,
ASSETS 2002 2001 2000
(Unaudited) (Restated)
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TOTAL CURRENT ASSETS $ 161 $ 9,720 $ 15,485
PROPERTY AND EQUIPMENT, NET 13,774 17,492 -
OTHER ASSETS 593,463 653,958 721,472
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TOTAL ASSETS $ 607,398 $ 681,170 $ 736,957
================ ==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 84,150 $ 51,533 $ 46,239
Accrued liabilities 29,524 19,032 75,500
Demand note payable 34,650 35,965 -
Loans from related parties 102,785 22887 -
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TOTAL CURRENT LIABILITIES 251,109 129,417 121,739
TOTAL SHAREHOLDERS' EQUITY 356,289 551,753 615,218
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 607,398 $ 681,170 $ 736,957
================ ==============================
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Summary Financial Data
Statement of Operations For the period
For the Period
From Inception
For the Nine Months Ended For the Three Months Ended For the Year (December 14, 1999)
April 30, 2002 April Ended Through
2002 2001 2002 2001 July 31, 2001 July 31, 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Restated)
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REVENUES $ 2,142 $ 4,587 $ - $ 338 $ 4,702 $ -
OPERATING EXPENSES 210,914 325,989 26,711 116,834 432,719 160,336
NET LOSS FROM OPERATIONS (208,772) (321,402) (26,711) (116,496) (428,017) (160,336)
OTHER INCOME (EXPENSE) 8,746 (118) - 34 (114) -
NET LOSS $ (200,026) $ (321,520) $ (26,711) $ (116,462) $ (428,131) $ (160,336)
WEIGHTED AVERAGE SHARES
OUTSTANDING
(basic and diluted) 12,605,476 12,605,476 12,605,476 12,605,476 12,563,715 7,143,205
NET LOSS PER SHARE $ (0.016) $ (0.026) $ (0.002) $ (0.009) $ (0.034) $ (0.022)
- ------------------------------------------------------------------------------------------------------------------------------------
RISK FACTORS
In addition to the other information provided in this prospectus, you should
carefully consider the following risk factors in evaluating our business before
purchasing any of our common stock.
Our poor financial condition raises substantial doubt about our ability to
continue as a going concern. You will be unable to determine whether we will
ever become profitable.
We acquired our software on December 14, 1999. From our inception to April 30,
2002, we incurred operating losses of ($788,493) and had a net working capital
deficiency of $250,948. In addition, as of April 30, 2002, we had only $161 of
current cash available. Our cash resources of $161 are not sufficient to satisfy
our cash requirements over the next 12 months. We will need to secure a minimum
of $145,000 to satisfy such requirements, but we need an additional minimum of
$320,000 to finance our planned expansion in the next 12 months, which funds
will be used for product development, marketing, and customer support. However
in order to become profitable we may still need to secure additional debt or
equity funding. We hope to be able to raise additional funds from an offering of
our stock in the future. However, this offering may not occur, or if it occurs,
may not raise the required funding.
Because our ability to continue as a going concern is in doubt and we have no
definitive plan in place that is capable of removing the threat to the
continuation of our business, we may not be able to continue operations in the
future.
Our ability to continue as a going concern is dependent on our ability to raise
funds to implement our planned development; however we may not be able to raise
sufficient funds to do so. Our independent auditors have indicated that there is
substantial doubt about our ability to continue as a going concern over the next
twelve months. We have no definitive plan in place that is capable of removing
the threat to the continuation of our business. Our poor financial condition
could inhibit our ability to achieve our business plan, because we are currently
operating at a substantial loss with no operating history and revenues, an
investor cannot determine if we can remain in business or will ever become
profitable.
We have a limited operating history; because our planned growth is contingent
upon receiving additional funding, you will be unable to evaluate whether our
business will be successful.
Our business development is contingent upon raising debt or equity funding. We
have no sources of funding identified. You must consider the risks,
difficulties, delays and expenses frequently encountered by development stage
companies in our business, which have little or no operating history, including
whether we will be able to overcome the following challenges:
o Inability to raise necessary revenue to operate for the next 12 months
or thereafter
o Advertising and marketing costs that may exceed our current estimates
o Unanticipated development expenses
o Our ability to generate sufficient revenues to offset the substantial
costs of operating our business
Because significant up-front expenses, including advertising, sales, and other
expenses are required to develop our business, we anticipate that we may incur
losses until revenues are sufficient to cover our operating costs. Future losses
are likely before our operations become profitable. As a result of our lack of
operating history, you will have no basis upon which to accurately forecast our:
o Total assets, liabilities, and equity
o Total revenues
o Gross and operating margins
o Labor costs
Accordingly, the proposed business plans described in this prospectus may not
either materialize or prove successful and we may never be profitable. Also, you
have no basis upon which to judge our ability to develop our business and you
will be unable to forecast our future growth.
Because if we need financing to support our expansion plans but may be unable to obtain
it, we may have to curtail our expansion plans and the value of your investment
may be reduced.
Our future business will involve substantial costs, primarily those costs
associated with the following:
o For all of our products, translate our questionnaire and reports into
Spanish and French.
o Conduct a North American print media advertising campaign.
o Conduct a North American promotions campaign.
o Conduct various business related sales calls and travel throughout
North America.
o Hire a corporate sales manager and two in-house account managers.
o Hire three customer support staff.
We do not anticipate that our revenues will be sufficient to finance these
activities. Accordingly, we will need traditional bank financing or financing
from debt or equity offerings. However, if we are unable to obtain financing
when needed, we may be forced to curtail our operations and our future growth
plans, which could reduce our revenues and potential profitability and the value
of your investment.
Because our on-line psychological profiling has not been accepted by the
public as an acceptable form of employer or employee selection, we face
significant barriers to acceptance of our services.
Our business involves the use of on-line job selection and career-counseling
services to employers and job applicants by computer generated psychological
profiling methods. The use of the Internet is a relatively new form by which to
provide these type services. Traditionally, these services are provided through
personal contact with seasoned professional career counselors, job placement
specialists, and psychologists. Additionally, the public has perceived these
professionals as being more reliable than our depersonalized on-line services.
Accordingly, we face significant barriers to overcome the consumer preferences
of traditionally used professionals for the type of services that we offer.
Because employers and job seekers may obtain other human resource services
for free, our revenues may be reduced.
We charge employers and job applicants various fees for our psychological based
profiling and screening services. There are many alternative forms of job
placement and job seeking services available, however, to the public for free.
For instance, employers may seek employees by using classified advertisements,
free Internet employment listing services, and applicant fee based services. Job
applicants may seek employment by responding to classified advertisements, using
free Internet employment listing services, and employer fee based services.
Accordingly, if we are unable to distinguish the advantages of our fee based
services from human resource services that are offered for free, our revenues
will be reduced.
Internet affiliate companies may not be successful in selling our services,
causing our revenues to be reduced.
We have arrangements with approximately 3 Internet affiliate web sites that
promote or advertise our services on our behalf. An affiliate site company
receives 20 to 25% of a total sale when a customer links to our site through
their affiliate site, with the percentage determined by individual negotiations
with each site. Our affiliate sites may not prove to be a reliable source of
revenues. Many of the affiliate sites have overlapping visitation and advertise
or market the same services. Additionally, visitors may find that linking to our
site through other sites to be a cumbersome process. Other visitors will access
the same services we offer directly, without access through an affiliate site.
Accordingly, our revenue sharing arrangements with affiliate sites may be an
unreliable source of revenues. Revenue from these affiliate web sites has been
minimal. We have no formal agreements with our affiliates and accordingly these
relationships can be terminated by either party at any time.
We face risks due to competing technologies or development of new
technologies, which may reduce consumer attraction to our technologies.
We face competition from other companies in the Internet human resource business
that may have alternative technologies. We will primarily use a logarithm-based
software solution that administers a job-orientated personality test that
determines work-related activities at which the candidate would likely excel.
Consumers may prefer other alternative technologies that have perceived or
actual advantages to our technology. For instance, Career Leader has developed a
career self-assessment software technology that provides assessments of patterns
of business relevant to individual interests and recommends business careers to
users of their software. Preference of this and other technologies over our
technologies will reduce our revenues.
To date, much of our business has come from three customers; if we fail to
develop a wide customer base, our revenues will be reduced.
Our three main clients, Wilson Logistics, MVP Personnel, and Zellers, have
accounted for 84% of our aggregate revenue to date, which breaks down as
follows:
Wilson Logistics 40%
MVP Personnel 22%
Zellers 22%
We do not have any long-term contracts, commitments or arrangements with them.
Should these customers cease to use our services in the future, our revenues
will significantly decline.
If our customers lose connection to our website, we will lose customers and
fail to develop repeat business which will reduce our revenues.
The average time required for our users to complete a profile is 30 minutes.
Although we will test our services for errors and attempt to identify any bugs
or errors, our services may contain the following problems leading to
interruptions in our service:
o Undetected errors or bugs
o Inability of our server to handle peak loads
o Systems failures by our Internet service provider
o Inactivity by users for periods while remaining on-line
Repeated disruptions due to such errors or even one disruption may dissuade
users from ever using our services again. Accordingly, if we fail to develop
effective systems to detect such errors or guard against such errors and there
are substantial interruptions, we will be unsuccessful at developing repeat
business, and our revenues will be reduced.
Our vulnerability to security breaches, glitches and other computer failures
could harm our customer relationships, our ability to broaden our customer base
and our ability to promote our brand name.
We will offer our services through our Internet sites. The secure transmission
of confidential information over public networks is a critical element of our
operations. A party who is able to circumvent security measures could
misappropriate proprietary information or cause interruptions in our operations.
If we are unable to prevent unauthorized access to our users' information and
transactions, our customer relationships will be harmed. Although we intend to
implement industry-standard security measures, these measures may not prevent
future security breaches. Heavy stress placed on our systems could cause systems
failures or operation of our systems at unacceptably low speeds.
Because our psychological profiling products and services business depends
upon our intellectual property rights, which we have not taken any formal legal
action to protect against third parties utilizing our intellectual property
without our consent, our revenues may be reduced.
We have currently not taken any formal legal steps to protect important
intellectual property related to our psychological profiling products and
services. We anticipate we will do so in the next 12 months by filing for
trademark and copyright protection for our software and profiling system.
Because we face intense competition from larger and better-established
companies that have more resources than we do, we may be unable to develop our
business plan or increase our revenues.
The market for our products and services is intensely competitive and highly
fragmented. Many of these competitors may have longer operating histories,
greater financial, technical and marketing resources, and enjoy existing name
recognition and customer bases. New competitors may emerge and rapidly acquire
significant market share. In addition, new technologies likely will increase the
competitive pressures we face. Competitors may be able to respond more quickly
to technological change, competitive pressures, or changes in consumer demand.
As a result of their advantages, our competitors may be able to limit or curtail
our ability to compete successfully.
We currently have no CEO or CFO.
In May 2002 our Acting CEO resigned as an officer and director due to our
current financial condition. He currently provides no services to us. Our
remaining employee only devotes 25% of his time to our business. Unless we
generate additional revenues or secure additional funding, we may not be able to
replace our CEO and our remaining employee will continue to devote limited time
to our business. We have no definitive plan in place that is capable of
removing the threat to the continuation of our business.
Nonetheless, we continue to own our software, which we believe to be a valuable
asset and tool in generating reports for prospective employers, employees and
others. We will continue to explore possibilities for utilizing this asset to
bring value to our business.
Our management decisions are made by our Vice President of Information
Technology Management and Marketing, James Cousineau; if we lose his services,
our revenues may be reduced.
The success of our business is dependent upon the expertise of our Vice
President of Information Technology Management and Marketing, James Cousineau.
Because Mr. Cousineau is currently essential to our operations, you must rely on
his management decisions. Our Vice President of Information Technology
Management and Marketing, James Cousineau will continue to control our business
affairs after the offering. We have not obtained any key man life insurance
relating to our Vice President of Information Technology Management and
Marketing, James Cousineau. If we lose his services, we may not be able to
hire and retain another Vice President of Information Technology Management and
Marketing with comparable experience. As a result, the loss services of our Vice
President of Information Technology Management and Marketing, James Cousineau
could reduce our revenues.
Our Vice President of Information Technology Management and Marketing, James
Cousineau does not have significant financial reporting experience which may
reduce our revenues.
Because Mr. Cousineau does not have significant financial reporting experience,
we may experience difficulties in implementing our business plan, which may
reduce our revenues. We intend to hire an employee with such experience when we
become profitable.
We have lost services of Dr. Peter Donnelly and will only have
part-time services of Mr. James Cousineau, which may delay implementation of our
business plan and our generation of revenues.
Because of our cash flow difficulties, Dr. Peter Donnelly, our former acting CEO
has resigned as officer and director. He has ceased rendering any services to
us. Mr. Cousineau, our Vice President of Information Technology Management
and Marketing will only be devoting no more than 25% of his time to our business
until we secure adequate funding or until our cash flow improves. The loss of
Dr. Peter Donnelly and the part-time availability of Mr. Cousineau may delay
implementation of our business plan and our generation of revenues.
The offering price of $2.50 per share has been arbitrarily set by our board
of directors and accordingly does not indicate the actual value of our
business.
The offering price of $2.50 per share is not based upon earnings or operating
history, does not reflect the our actual value, and bears no relation to our
earnings, assets, book value, net worth or any other recognized criteria of
value. No independent investment banking firm has been retained to assist in
determining the offering price for the shares. Accordingly, the offering price
should not be regarded as an indication of any future market price of our stock.
Because there is not now and may never be a public market for our common
stock, investors may have difficulty in reselling their shares.
Our common stock is currently not quoted on any market. No market may ever
develop for our common stock, or if developed, may not be sustained in the
future. Accordingly, our shares should be considered totally illiquid, which
inhibits investors ability to resell their shares.
Because our common stock is considered a penny stock, any investment in our
common stock is considered a high-risk investment and is subject to restrictions
on marketability; you may be unable to sell your shares.
If our common stock becomes tradable in the secondary market, we may be subject
to the penny stock rules adopted by the Securities and Exchange Commission that
require brokers to provide extensive disclosure to its customers prior to
executing trades in penny stocks. These disclosure requirements may cause a
reduction in the trading activity of our common stock, which in all likelihood
would make it difficult for our shareholders to sell their securities. For
additional details concerning the disclosure requirements under the penny stock
rules, see the section entitled Penny Stock Considerations at page 40 below.
Sales of our common stock under Rule 144 of Rule 144A could reduce the price
of our stock.
There are 11,130,203 shares of our common stock held by non-affiliates and
2,130,250 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933 defines as restricted securities. No shares have been
sold pursuant to Rule 144 of the Securities Act of 1933, however as of May 2002,
approximately 7,943,351 shares held by non-affiliates are eligible to be resold
pursuant to Rule 144, and additional 820,700 shares held by non affiliates are
eligible for resale under 144 in July 2002.
Once this registration statement is effective, the shares of our common stock
being offered by our selling shareholders will be freely tradable without
restrictions under the Securities Act of 1933, except for any shares held by our
"affiliates," which will be restricted by the resale limitations of Rule 144
under the Securities Act of 1933. With the exception of 384,753 shares issued
after June 2001 , all of our shares will be eligible for resale no later than 90
days after this registration statement is declared effective, assuming the
method of sale limitations in Rule 144 can be satisfied to the extent required.
Further, Rule 144A as currently in effect, in general, permits unlimited resales
of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144 and Rule 144A, all of the restricted
securities could be available for sale in a public market, if developed,
beginning 90 days after the date of this prospectus. The availability for sale
of substantial amounts of common stock under Rule 144 could reduce prevailing
market prices for our securities.
In the future, our stock may trade on the over-the-counter bulletin board;
because the bulletin board does not operate under the same rules and standards
as the NASDAQ stock market, our stockholders may have greater difficulty in
selling their shares when they want and for the price they want.
The over-the-counter bulletin board is separate and distinct from the NASDAQ
stock market. NASDAQ has no business relationship with issuers of securities
quoted on the over-the-counter bulletin board. The SEC's order handling rules,
which apply to NASDAQ -listed securities don't apply to securities quoted on the
bulletin board.
Although the NASDAQ stock market has rigorous listing standards to ensure the
high quality of its issuers, and can delist issuers for not meeting those
standards, the over-the-counter bulletin board has no listing standards. Rather,
it is the market maker who chooses to quote a security on the system, files the
application and is obligated to comply with keeping information about the issuer
in its files. The NASD cannot deny an application by a market maker to quote the
stock of a company. The only requirement for inclusion in the bulletin board is
that the issuer be current in its reporting requirements with the SEC.
Because stocks traded on the bulletin board are usually thinly traded, highly
volatile, have fewer market makers and are not followed by analysts, our
stockholders may have greater difficulty in selling their shares when they want
and for the price they want.
Investors may have greater difficulty in getting orders filled because it is
anticipated that if our stock trades on a public market, it initially will trade
on the over-the-counter bulleting board rather than on NASDAQ . Investors' orders
may be filled at a price much different than expected when an order is placed.
Trading activity in general is not conducted as efficiently and effectively as
with NASDAQ -listed securities.
Investors must contact a broker dealer to trade bulletin board securities.
Investors do not have direct access to the bulletin board service. For bulletin
board securities, there only has to be one market maker.
Bulletin board transactions are conducted almost entirely manually. Because
there are no automated systems for negotiating trades on the bulletin board,
they are conducted via telephone. In times of heavy market volume, the
limitations of this process may result in a significant increase in the time it
takes to execute investor orders. Therefore, when investors place market orders
- - an order to buy or sell a specific number of shares at the current market
price - it is possible for the price of a stock to go up or down significantly
during the lapse of time between placing a market order and getting execution.
Because bulletin board stocks are usually not followed by analysts, there may be
lower trading volume than for NASDAQ -listed securities.
We are authorized to issue preferred stock which, if issued, may reduce the
market price of the common stock.
Our directors are authorized by our articles of incorporation to issue shares of
preferred stock without the consent of our shareholders. Our preferred stock,
when issued, may rank senior to common stock with respect to payment of
dividends and amounts received by shareholders upon liquidation, dissolution or
winding up. Our directors will set such preferences. The issuance of such
preferred shares and the preferences given the preferred shares, do not need the
approval of our shareholders. The existence of rights, which are senior to
common stock, may reduce the price of our common shares. We do not have any
plans to issue any shares of preferred stock at this time.
Certain Wyoming corporation law provisions could prevent a potential takeover
of us that could adversely affect the market price of our common stock or
deprive you of a premium over the market price.
We are incorporated in the State of Wyoming. Certain provisions of Wyoming
corporation law could adversely affect the market price of our common stock.
Because Wyoming corporation law requires board approval of a transaction
involving a change in our control; it would be more difficult for someone to
acquire control of us. Wyoming corporate law also discourages proxy contests
making it more difficult for you and other shareholders to elect directors other
than the candidates nominated by our board of directors. Neither our articles
nor our by-laws contain any similar provisions.
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus are "forward-looking statements."
These forward-looking statements involve certain known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. These
factors include, among others, the factors set forth above under "Risk Factors."
The words "believe," "expect," "anticipate," "intend," "plan," and similar
expressions identify forward-looking statements. We caution you not to place
undue reliance on these forward-looking statements. We undertake no obligation
to update and revise any forward-looking statements or to publicly announce the
result of any revisions to any of the forward-looking statements in this
document to reflect any future or developments. However, the Private Securities
Litigation Reform Act of 1995 is not available to us as a non-reporting issuer.
USE OF PROCEEDS
Not applicable. We will not receive any proceeds from the sale of shares offered
by the selling shareholders.
DETERMINATION OF OFFERING PRICE
Our management has determined the offering price for the selling shareholders'
shares. The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our securities.
DILUTION
Not applicable. We are not offering any shares in this registration statement.
All shares are being registered on behalf of our selling shareholders.
SELLING SECURITY HOLDERS
The selling security holders named below are selling the securities. The table
assumes that all of the securities will be sold in this offering. However, any
or all of the securities listed below may be retained by any of the selling
security holders, and therefore, no accurate forecast can be made as to the
number of securities that will be held by the selling security holders upon
termination of this offering. These selling security holders acquired their
shares by purchase or in exchange for software or services in transactions
exempt from registration primarily under Regulation S as well as for several
stockholders under section 4(2) of the Securities Act of 1933. We believe that
the selling security holders listed in the table have sole voting and investment
powers with respect to the securities indicated. We will not receive any
proceeds from the sale of the securities by the selling security holders.
Name (last name Nature of Total Shares Percentage Percentage Relationship to
first) Business Shares Registered Before After us
Owned Offering Offering (1)
- -------------------- ------------------ ----------- -------------- --------------- -------------- -----------------
Kushnir Fred 2,200 2,200 .15 0
Harnett Anthony 40,000 40,000 .3 0
Appell Andrew 37,500 37,500 .28 0
Fleming Rowland 25,000 25,000 .19 0
Gillot Martyn 15,000 15,000 .11 0
Rodriguez Miguel 25,000 25,000 .19 0
Auclair Dany 1,500 1,500 .05 0
Avard David 40,000 40,000 .30 0
Rudnisky Walter 15,000 15,000 .11 0
Yetman Herbert 21,750 21,750 .16 0
Tuthill John 21,750 21,750 .16 0
McConachie Yvonne 7,500 7,500 .06 0
Schmalhofer 22,500 22,500 .17 0
Charles Robert
Kostrich Adam 15,000 15,000 .11 0
Kostrich Danielle 15,000 15,000 .11 0
Kostrich Rose 56,000 56,000 .42 0
Kostrich Anna 18,750 18,750 .14 0
Kostrich Michael 50,500 50,500 .4 0 Director
Troyak Maria 30,000 30,000 .23 0
Troyak Nancy 7,500 7,500 .06 0
Tirman Nina 7,500 7,500 .06 0
Firth Kevin 15,000 15,000 .11 0
Leslie Ray 15,000 15,000 .11 0
Hillman Bruce 15,000 15,000 .11 0
Donaldson Construction 15,000 15,000 .11 0
Construction Co.
Chislett David 15,000 15,000 .11 0
Moncada Michael 30,000 30,000 .23 0
Bryan Jack 7,500 7,500 .06 0
Miron Susan 4,000 4,000 .03 0
Stephenson David 15,000 15,000 .11 0
Woods Jill 3,750 3,750 .02 0
Marques Suzana 1,500 1,500 .01 0
Yetman Herbert 21,750 21,750 .16 0
Zadra Teresa 25,000 25,000 .19 0
Rodgers Jane 15,000 15,000 .11 0
Littlejohn Robert 7,500 7,500 .06 0
Stevens George 30,000 30,000 .23 0
Holtom Kimberly 15,000 15,000 .11 0
Garner Catherine 7,500 7,500 .06 0
Levesque Gary 36,000 36,000 .25 0
McLellan Brian 30,000 30,000 .23 0
Holtom Lois 15,000 15,000 .11 0
Marques Suzana 3,000 3,000 .02 0
Rodgers Jane 15,000 15,000 .11 0
Gugler Wolf 7,500 7,500 .06 0
Yetman Herbert 6,000 6,000 .05 0
Saggu Gursharan 3,750 3,750 .03 0
Saggu Surinder 3,750 3,750 .03 0
Clark Nanette 7,500 7,500 .06 0
Holowka Diane 7,500 7,500 .06 0
Badger Rev Donald 15,000 15,000 .11 0
Saggu Harwinder 15,000 15,000 .11 0
Tibaut Carol 7,500 7,500 .06 0
Walters Brent 15,000 15,000 .11 0
Weatherby Deane 7,500 7,500 .06 0
Weatherby Wayne 7,500 7,500 .06 0
Schincariol Adrian 7,500 7,500 .06 0
Campbell Scott 7,500 7,500 .06 0
Dixon Mark 6,000 6,000 .05 0
Smillie Jim 15,000 15,000 .11 0
Bell Dennis 15,000 15,000 .11 0
Beausoleil Guy 12,000 12,000 .09 0
Kippenchuk Trevor 9,600 9,600 .07 0
Hopper Paul 7,500 7,500 .06 0
Brockwell Merv 15,000 15,000 .11 0
Donnelly Ruth 18,749 18,749 .13 0
Chatham Daniel 750 750 .01 0
denBok Tony 3,000 3,000 .02 0
Kippenchuk Trevor 4,800 4,800 .04 0
McDonald Al 7,500 7,500 .06 0
McDonald Kathryn 15,000 15,000 .11 0
Near Doreen 7,500 7,500 .06 0
Atrium Dynamic Health products 30,000 30,000 .23 0
Health Inc
Cudmore Cathy 7,500 7,500 .06 0
Owen Trevor 7,500 7,500 .06 0
Politsch Kent 7,500 7,500 .06 0
Carlyle Donna 7,500 7,500 .06 0
McCrone Marty 7,500 7,500 .06 0
Asare Beadros 25,000 25,000 .19 0
Fein Bruce 50,000 50,000 .38 0 attorney
Hopper Paul 15,000 15,000 .11 0
Chatham Daniel 3,000 3,000 .03 0
(1) Assuming the sale of all shares offered.
We intend to seek qualification for sale of the shares in those states where the
shares will be offered. That qualification is necessary to resell the shares in
the public market and only if the shares are qualified for sale or are exempt
from qualification in the states in which the selling shareholders or proposed
purchasers reside. There is no assurance that the states in which we seek
qualification will approve resales of the shares.
PLAN OF DISTRIBUTION
Selling shareholders are offering up to 1,248,849 shares of common stock. The
selling shareholders will offer their shares at $2.50 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices. We will pay all expenses of registering the
securities.
We intend to seek qualification for secondary trading by obtaining a listing in
Standard and Poor's Corporation Records. This will qualify our securities for
trading in the following states:
Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of
Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland,
Massachusetts, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Jersey,
New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island,
South Carolina, Texas, Utah, Washington, West Virginia, and Wyoming.
We currently do not intend to and may not be able to qualify securities for
resale in other states which require shares to be qualified before they can be
resold by our shareholders.
The securities offered by this prospectus will be sold by the selling
shareholders. We are not aware of any underwriting arrangements that have been
entered into by the selling shareholders. The distribution of the securities by
the selling shareholders may be effected in one or more transactions that may
take place in the over-the-counter market, including broker's transactions,
privately negotiated transactions or through sales to one or more dealers acting
as principals in the resale of these securities.
Any of the selling shareholders, acting alone or in concert with one another,
may be considered statutory underwriters under the Securities Act of 1933, if
they are directly or indirectly conducting an illegal distribution of the
securities on behalf of our corporation. For instance, an illegal distribution
may occur if any of the selling shareholders were to provide us with cash
proceeds from their sales of the securities. If any of the selling shareholders
are determined to be underwriters, they may be liable for securities violations
in connection with any material misrepresentations or omissions made in this
prospectus. In addition, the selling shareholders and any brokers and dealers
through whom sales of the securities are made, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and the
commissions or discounts and other compensation paid to such persons may be
regarded as underwriters' compensation.
The selling shareholders may pledge all or a portion of the securities owned as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, margin accounts or loan
transactions. Upon default by such selling shareholders, the pledgee in such
loan transaction would have the same rights of sale as the selling shareholders
under this prospectus. The selling shareholders may also enter into exchange
traded listed option transactions, which require the delivery of the securities
listed under this prospectus. The selling shareholders may also transfer
securities owned in other ways not involving market makers or established
trading markets, including directly by gift, distribution, or other transfer
without consideration, and upon any such transfer the transferee would have the
same rights of sale as such selling shareholders under this prospectus.
In addition to the above, each of the selling shareholders and any other person
participating in a distribution will be affected by the applicable provisions of
the Securities Exchange Act of 1934, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the securities by
the selling shareholders or any such other person.
Upon this registration statement being declared effective, the selling
shareholders may offer and sell their shares from time to time until all of the
shares registered are sold; however, this offering may not extend beyond two
years from the initial effective date of this registration statement.
There can be no assurances that the selling shareholders will sell any or all of
the securities. In order to comply with state securities laws, if applicable,
the securities will be sold in jurisdictions only through registered or licensed
brokers or dealers. In various states, the securities may not be sold unless
these securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations of the Securities Exchange Act of 1934,
as amended, any person engaged in a distribution of the securities may not
simultaneously engage in market-making activities in these securities for a
period of one or five business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of our securities. Pursuant to
the various agreements we have with the selling shareholders, we will pay all
the fees and expenses incident to the registration of the securities, other than
the selling shareholders' pro rata share of underwriting discounts and
commissions, if any, which is to be paid by the selling shareholders.
Should any substantial change occur regarding the status or other matters
concerning us or the selling shareholders, we will file a Rule 424(b) prospectus
disclosing such matters. Specifically, until a market develops, we will file the
following if any sales are consummated at a price different than $2.50 per
share:
o A prospectus supplement, if within 20%; or
o A post-effective amendment, if more than 20%.
LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings in which we are
involved. However, in March 2000, we entered into a service agreement with
Daedalian, a consulting company, pursuant to which the consulting company was to
develop a website and a certain computer software applications for us. In
September 2000, we entered into a debt agreement with the consulting company
under which the outstanding balance owed was reduced by approximately $31,000.
The agreement provided for a promissory note of $37,400 securing the remaining
outstanding amount and for the issuance of 300,000 common shares to the
consulting company. We did not pay $37,400 due under the promissory note and the
common shares referred above were not issued to the consulting company, because
it is our position that the consulting company did not comply with the terms and
provisions of the agreement. As of the date of this prospectus, we have not
received any demand or threat of litigation.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The board of directors elects our executive officers annually. A majority vote
of the directors who are in office is required to fill vacancies. Each director
shall be elected for the term of one year, and until his successor is elected
and qualified, or until his earlier resignation or removal. Our directors and
executive officers are as follows:
Name Age Position
- ---- --- --------
Mr. Bruce Fein 61 Secretary/Director
Mr. Mike Kostrich 41 Director
James Cousineau 53 Vice President of Information Technology
Management and Marketing, currently acting
as Principal Executive and Principal
Financial/Accounting officer in view of the
fact we have no other employees.
Bruce F. Fein has been one of our Directors since February 2001. Mr. Fein has
been in the private practice of law since 1985. Mr. Fein received his Florida
Certified Public Accountant license in February 1963; however his license has
since been retired. Mr. Fein received his Juris Doctor Degree from the George
Washington University School of Law in Washington, DC in June 1964. Mr. Fein
received a Master of Business Administration from the University of Miami in
Coral Gables, Florida in June 1961. Mr. Fein received a Bachelor of Business
Administration from the University of Miami, Coral Gables, Florida in June 1960.
Mr. Fein was admitted to practice law in Texas in 1993, New York in 1964, the
District of Columbia in 1971.
Michael J. Kostrich has been one of our Directors since February 2001. Mr.
Kostrich has been in the public practice of accounting since 1983 and has had
his own practice since September 1998. Mr. Kostrich received a Bachelor of
Communications Degree from McMaster University in Hamilton, Ontario Canada in
1983. He received his Chartered Accountant designation in 1987.
James Cousineau has been our Vice President of Information Technology Management
and Marketing since July 2000. Mr. Cousineau manages all technical related
matters, web site design and maintenance, Internet marketing, and commissioned
sales representative management on our behalf. From November 1999 until June
2000 Mr. Cousineau was upgrading his information technology Certifications. From
September 1998 to November 1999, Mr. Cousineau was the Marketing Manager and Web
Master for Deevan Technology Management, a firm specializing in Year 2000
information technology Preparedness and information technology Asset Management
for Fortune 500 corporations. From July 1994 to September 1998 he was President,
founder and owner, of Mr.InterNet, a web design and Internet marketing firm.
From June 1984 to June 1994 Mr. Cousineau was President, founder and owner, of
Cousineau & Company Advertising Concepts Limited, a promotional advertising
firm for corporate clients. Cousineau & Company was the recipient of six
Canadian National Image Awards for Excellence in Advertising. On Sept. 11, 1998,
Mr. Cousineau filed for personal bankruptcy in Canada, Estate No.: 31-352298,
District: Ontario, Division: 9. It was discharged in April 1999. Mr. Cousineau
was also a member of the National Speakers Panel for the SAAC/PPAC, and educator
of corporate sales techniques in that industry. Mr. Cousineau is also a founder
and director of the International Organization for Entrepreneurs. Mr. Cousineau
is a Microsoft Certified Professional, Certified Computer Technician, Certified
Web Designer, and Certified Advertising Specialist.
In May 2002, Dr. Peter Donnelly resigned as our Acting CEO and director due to
our financial difficulties limiting our ability to pay him under his employment
agreement. He currently provides no services to us. He has advised us he is
available for consultation on a contract basis.
Directors serve for a one-year term. Our bylaws currently provide for a board of
directors comprised of a minimum of three directors. We are currently searching
for a third director. Until the vacancy is filled, in case of a tie vote, Mr.
Kostrich will break the tie.
Board Committees
- ----------------
We currently have no compensation committee or other board committee performing
equivalent functions. Currently, all members of our board of directors
participate in discussions concerning executive officer compensation.
Family Relationships
- --------------------
There are no family relationships among our officers or directors.
Legal Proceedings
- -----------------
No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of the date of this
registration statement, of our common stock by each person known by us to be the
beneficial owner of more than 5% of our outstanding common stock, our directors,
and our executive officers and directors as a group. To the best of our
knowledge, the persons named have sole voting and investment power with respect
to such shares, except as otherwise noted. There are not any pending or
anticipated arrangements that may cause a change in control.
Name and Address Number of Shares of Percentage before Number of Shares Percentage after
---------------- ------------------- ------------------- ------------------ ----------------
Common Stock before offering of Common Stock offering (4)
------------------- -------- ------------------ ------------
offering after offering (4)
-------- ------------------
- -------------------------------------- -------------------- ------------------- ------------------- --------------
Dr. Peter Donnelly (1) 82 Islandview 1,050,000 7.95 1,050,000 7.95
Crescent, Wasaga Beach, Ontario
Canada L0L 2P0
- -------------------------------------- -------------------- ------------------- ------------------- ----------------
Mr. Mike Kostrich (2) 38 Mountbatten 155,250 1.2 0 0
Crescent, Barrie, Canada L4M 1T7
- -------------------------------------- -------------------- ------------------- ------------------- ----------------
Mr. Bruce Fein 6363 Woodway Drive 50,000 .4 0 0
Suite 965 Houston, TX 77057
- -------------------------------------- -------------------- ------------------- ------------------- ----------------
James Cousineau 2 Birchshire Drive 125,000 .9 125,000 .9
Barrie, Canada L4N 6W6
- -------------------------------------- -------------------- ------------------- ------------------- ----------------
Mark Galligan (3) Purple Hill Lane, 750,000 5.7 750,000 5.7
Creemore, ON, L0M 1G0
- -------------------------------------- -------------------- ------------------- ------------------- ----------------
All directors and named executive 1,380,050 10.4 1,125,000 7.2
officers as a group (4 persons)
(1) Includes the following shares for which Dr. Peter Donnelly is the beneficial
owner: 200,000 shares held by Ruth Donnelly Trust. Ruth Donnelly is
the wife of Dr. Peter Donnelly. Dr. Peter Donnelly disclaims beneficial ownership
of the remaining shares issued to him in connection with the software
purchase described in Items 15 and 19 below which are owned by a trust
for the benefit of his two daughters over which he has no control to
vote or direct the disposition of the shares.
(2) Includes the following shares for which Mr. Kostrich is the beneficial
owner: 104,640 shares owned by his wife, mother and children.
(3) Includes 262,500 shares owned by The Toure Jane Seymour Galligan Family
Trust. (4) Assuming all shares registered are sold.
This table is based upon information derived from our stock records. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, it believes that each of the shareholders named
in this table has sole or shared voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based upon
13,260,453 shares of common stock outstanding as of the date of this
registration statement.
DESCRIPTION OF SECURITIES
The following description as a summary of the material terms of the provisions
of our articles of incorporation and bylaws is qualified in its entirety. The
articles of incorporation and bylaws have been filed as exhibits to the
registration statement of which this prospectus is a part.
Common Stock
- ------------
We are authorized to issue 100,000,000 shares of common stock with no par value
per share. As of the date of this registration statement, there were 13,260,453
shares of common stock issued and outstanding held by 116 shareholders of
record. All shares of common stock outstanding are, and the common stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and non-assessable.
Each share of common stock entitles the holder to one vote, either in person or
by proxy, at meetings of shareholders. The holders are not permitted to vote
their shares cumulatively. Accordingly, the shareholders of our common stock who
hold, in the aggregate, more than fifty percent of the total voting rights can
elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of the such directors. The vote of
the holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the board of directors out of funds legally available. We
have not paid any dividends since our inception, and we presently anticipate
that all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions. Upon our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities.
There are not any provisions in our Articles of Incorporation or our by-laws
that would prevent or delay change in our control.
Preferred Stock
- ---------------
We are authorized to issue 1,000,000 shares each of Class A, B, C, D and E no
value par preferred stock. As of the date of this registration statement, there
are no preferred shares outstanding. We presently have no plans to issue any
shares of preferred stock. However, preferred stock may be issued with
preferences and designations as the board of directors may from time to time
determine. The board may, without stockholders approval, issue preferred stock
with voting, dividend, liquidation and conversion rights that could dilute the
voting strength of our common stockholders and may assist management in impeding
an unfriendly takeover or attempted changes in control.
There are no restrictions on our ability to repurchase or reclaim our preferred
shares while there is any arrearage in the payment of dividends on our preferred
stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
Our Financial Statements for the year ending July 31, 2001 and the period from
inception to July 31, 2000, have been included in this prospectus in reliance
upon Dohan and Company, Certified Public Accountant, as experts in accounting
and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
Our by-laws, subject to the provisions of Wyoming Corporation Law, contain
provisions which allow the corporation to indemnify any person against
liabilities and other expenses incurred as the result of defending or
administering any pending or anticipated legal issue in connection with service
to us if it is determined that person acted in good faith and in a manner which
he reasonably believed was in the best interest of the corporation. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
We were incorporated in Wyoming on December 14, 1999, under the name Psitek.org,
Inc. In April 2000, we changed our name to Careertek.org, Inc. On October 16,
2001 we changed our name to SecureStaff Systems, Inc.
Our mission is to simplify and enhance the personnel selection process through
interactive psychological profiling; providing performance predictability,
violence predictability and recruit retention, at the lowest cost to human
resource management.
Since our inception we have devoted our activities to the following:
o Raising capital;
o Establishing our website; and
o Developing markets for the services we offer on our website.
We have never been the subject of any bankruptcy or receivership action. We have
had no material reclassification, merger, consolidation, or purchase or sale of
a significant amount of assets outside the ordinary course of business.
PRINCIPAL PRODUCTS & SERVICES
We acquired our software on December 14, 1999. We operate websites at
www.securestaffsystems.com and www.careertek.org, which provide
security related and other personnel services to employers and job applicants.
The careertek.org website became operational in August 2000 and the
securestaffsystems.com website became operational in October 2001. The
careertek.org website performs no function other than to refer a person to the
securestaffsystems.com website.
We offer on-line psychological profiling. We have developed and tested
psychological profiling techniques and methods for industry, governments,
schools and individuals. Our profiles are designed to provide insight into a
person's personality, work habits, moral attitude, character and overall
abilities. The products we market include a system to provide violence
propensity predictors. Our products can be used for corporate security purposes,
as well as for recruiting or downsizing. Profiling is completed on- line at any
Internet connected computer. The results are immediately available to the client
through the Internet.
Our revenues are derived from the sale of these profiling services on our
website.
What Does Our Profile Measure?
- ------------------------------
Our profile is designed to help companies perform effective entry-level
selection and assessment for promotion potential. In addition, our expanded and
enhanced profiling system now incorporates the content materials that allow it
to predict the potential for violence in the workplace. With this combination of
matching applicants or promotion candidates to a job or career and at the same
time pointing out any penchant for violence, this application can assist in
developing workplace productivity, safety and security.
Personality And Temperament
- ---------------------------
First we identify the personality characteristics such as aggressiveness,
antisocial behavior, early forms of violent behavior and his/her attitudes
towards such behavior in him/herself and others. Then we ask the profilee to
rate his/her agreement with statements about him/herself in terms of these
characteristics.
Personal Life Control Issues
- ----------------------------
In the second part of our profile, we assess the degree to which the person sees
him/herself in control of his or her own life and future. In addition, we ask
questions about the profilee's view of the choices people and they themselves
can make to change life circumstances for themselves and others.
Background and Effort History Issues
- ------------------------------------
In the third section of our profile, we ask for responses relating to the
individual's personal and effort history. By effort history, we mean whether or
not an individual being evaluated tried their best, that is, worked as hard as
they could, to be successful in previous jobs. We describe this as a prediction
about whether or not the person will do the job rather than the issue of
can the person do the job. In the profiling questions we include specifics
relating to early difficulties of both a physical and psychological nature that
the person may have experienced with parents and peers, the approval of parents
for their academic and vocational choices, residential mobility/stability, and
academic success/failure. Also included are questions relating to peer and
sibling behavior, community shortcomings regarding drugs and firearms, community
disorganization, and supportive positive community resources that are/were
available and used by the profilee.
Profile System Characteristics - Basic Profile
All of the current versions of our profiling products measure the following
characteristics. In addition to the evaluation of the person's effort history,
here are the definitions of the measurements used.
o Self-management potential is defined as the natural inclination towards
being a person who is a planner, time manager and one who puts in the
effort to make the things he/she planned happen as planned.
o Achievement motivation is defined as the mix of a need for safety and
security, a need for being valued in the eyes of other people and a need
to be of value in one's own eyes that is independent of other people.
o Team leader - team member orientation is defined as the degree to which
one is a team member, a team leader and/or a highly independent
individual.
o People orientation is defined as the degree to which one is interested in
and motivated by the opportunity to interact with others - coworkers
and/or customers.
o Technical-intellectual orientation is defined as the degree to which one
is interested in and motivated by the opportunity to develop and use
one's technical know-how and to use logic in the solving of problems. It
also includes an appraisal of the likelihood that the person will be
detail oriented in their job.
o Focus of control is defined as the degree to which a person sees himself
or herself as being controlled by outside forces and circumstances as
compared to the degree to which the person feels in control of their
life.
Each characteristic has both positive and negative contributing words or short
phrases that are evaluated on a five point scale by the profilee as to how much
or how little each word or phrase applies to him or her. The scores are tallied
and a prediction equation is computed based on these scores and the effort
history score. The prediction equation in JobFit and CareerFit indicates where
the person is best suited to a variety of possible jobs/careers. In our future
StudentFit product, the prediction equation'directs the student to courses of
study leading to certain jobs and careers that might best fit his or her
personality and temperament.
How Our Website Services Work
- -----------------------------
The candidate answers multiple-choice questions and completes the profile
questionnaire over the Internet. On average the various questionnaires take
between thirty and forty-five minutes to complete. As soon as the questionnaire
is complete, the results are automatically scored and the reports and graphs are
generated and returned to the designated recipient, usually the employer or
institution, within seconds.
Our services work in the following manner:
o An applicant fills out a questionnaire at our website;
o Data from the website form is fed into our software program;
o Our software computes scores on eleven indices that we have
established as predictive of survival and success in a particular job
or job categories;
o For the job seeker, the program selects content paragraphs that are
placed in a report form based on the reported scores;
o For the job seeker, the report form is descriptive of the person
and provides guidance on how to overcome individual shortfalls in
potential;
o For the corporate employer, our software program computes, in a
report form, a numeric quotient that indicates specific probabilities
for the survival and success of each candidate.
Specific Products
- -----------------
Our current specific products are the following:
o JobFit - accounting for 75% of our revenues. This is our primary
product and we commenced offering this service on a limited basis in
September 2000.
This is our basic profile for all-purpose use for job applicants as to their
suitability and success in the job they seek. It measures the applicant's
qualities against the qualities of successful people in that job.
o RetailFit - accounting for 22% of our revenues. This product was
developed to fulfill the needs of the retail marketplace employers.
We began offering this product in September 2001.
This profile is specifically designed for people who meet the public all day
long such as retail sales clerks, receptionists, food and beverage servers,
sales people and telephone contact people.
o CareerFit - accounting for 3% of our revenues. We commenced offering
this product on a limited basis in September 2000.
The CareerFit profiling system is an offshoot of the JobFit profiling
system. It employs the same input questions as JobFit and the same scale
score calculations. However, it differs from JobFit in its interpretation
of the scale scores in that it reports its results from the perspective of
looking at the profilee from a personal counseling point of view rather
than from the selection point of view.
JobFit
A client can order a regular profile that shows the person's ability and
success probability in a specific job. Employers pay a fee of $19.95 to get
this JobFit report.
U.S clients can add on an extensive, additional profile that can also show
the basic character and attitudes of the person. When these extra questions
are blended in with the profile they produce a second report that focuses
on propensity for violence, moral attitudes, level of loyalty and basic
ethics. At the time of the Columbine High School disaster before coming to
work for us, our founder began development of a violence predictor scale
for young people. Later, the research refocused on potential violent adult
behavior. The client can also order a detailed and extensive personal
history report available for any adult that includes financial history,
motor vehicle record, criminal record, previous addresses, etc. This
information is obtained from a third party provider. The systems can be
applied to job applicants or existing employees.
Our psychological profiling systems provide an employer with a complete
work ethic profile against an extensive database in every major job
category in order to identify those most likely to be top performers as
well as those who share the employer's corporate values. Candidate results
rank the employment candidate on a scale ranging from unacceptable through
acceptable and up to excellent. The report forecasts the degree to which
the subject's intrinsic personality attributes match the target job and the
degree to which the candidate shares the employer's company values.
We have developed a number of other psychological techniques and profiles
that will demonstrate an employee's or job applicant's work ethic and a
predictor scale that indicates not only if a candidate can do a particular
job, but also whether the candidate will do the job. These profiles compare
the applicant to scores typical of successful people in the targeted area
and grade their suitability on a scale of one to eleven in ten key success
categories.
RetailFit
RetailFit was developed to focus on the retail employer. It profiles job
applicants as to their suitability and success in the job categories of
cashier, customer service, and task related positions. It measures the
applicant's qualities against the qualities of successful people in similar
positions in the retail sector. A simplified graphical report enables a
quick and efficient screening of multiple applicants for a job position
that is common in the retail industry. The price is $19.95 per report.
CareerFit
CareerFit is a resume enhancement tool for job seekers in general and in
particular for those who post their resumes on one or more of over 6,500
North American on line job banks. This product is designed to enhance our
clients' selection opportunities by providing them with a self-counseling
report that they may use to select jobs they wish to consider. They may
choose to pass a copy of their report on to potential employers. The
CareerFit report is designed to distinguish committed job seekers from
other candidates
The CareerFit profile is presented on the Internet as a questionnaire by
which someone seeking a career or job change can be advised of the best
kinds of employment to seek, for both best personal performance and
greatest satisfaction, and conversely, the kinds of jobs or careers to
avoid that would be at odds with his/her personality and temperament.
The client starts by completing an entry form, which includes the online
processing of a $19.95 fee to access the active pages of the CareerFit
Profile questionnaire. Upon completion of the CareerFit Profile
questionnaire, a CareerFit report is automatically scored and created and
it is immediately emailed to the consumer at the email address provided by
the consumer in the entry pages.
Our current services are geared to the following job applicants and employer
groups:
o Information and technology;
o Finance and accounting;
o Sales and marketing;
o Administration and management;
o Engineering;
o Manufacturing;
o Call centers;
o Teachers;
o Trucking;
o Publishing;
o Retail Sales;
o Customer Service;
o Retail Materials Management; and
o E-Commerce.
Our potential future product is the following:
o StudentFit - this product is still in development and we will commence
offering this product in July 2002.
StudentFit
This profile points out the areas where a young person is likely to excel
and what they will enjoy - very helpful in helping a student select
disciplines to pursue and courses for future study. Slotted in the general
questions of StudentFit is a second set of questions that produce a second
report that will examine the student's character and moral attitudes along
with measuring his or her propensity for violence.
The StudentFit Plus profile is presented as an electronic questionnaire by
which youth can be assessed and referred for counseling both as to their
future career potential and their penchant for violence. Its primary focus
is on matching a student to a range of possible future jobs and careers on
the basis of how his or her personality and temperament would be best
fulfilled and productive in certain jobs. The profile accomplishes this by
way of recommending for the student a course of study leading to these
possible jobs/careers. The profile takes about 40 minutes to complete
on-line via the Internet and the report generated from the responses of the
person profiled to the questions presented are computer-scored, the results
are analyzed and a comprehensive report is available within seconds.
A beta study of the new StudentFit system is planned for Q3 2002 and will
use both normal, historically non-violent adolescents, and young adults,
and they will be contrasted with an age and education comparable group with
a history of violence. This study will generate the normative data for
StudentFit.
From the normative data of the beta study, a series of descriptive and
prescriptive content materials will be developed to focus on life change
experiences needed to help the potential violence prone young person to
improve their self-image, their thinking, their conscience and their life
strategies to become a more `normal' and productive person. An added
benefit will be that the revised profile will also identify those youth who
are already service oriented and who would profit from service-learning
experiences such as volunteering, internships, religious organizations,
service clubs, youth groups, hospitals and a host of other possibilities.
The charge to the client per profile is in the $10 to $50 range depending
upon the volume purchased and the type of profile provided. Although we
have not yet sold any large scope studies, we anticipate that for large
scope studies such as entire school systems, we anticipate that the cost
can be dropped to as low as $3.00 per student in order to encourage broad
use of the program.
Employer Postings and Resume Management
- ---------------------------------------
JobCenter - An outsourcing tool to manage the resumes submitted to a client
by creating and managing a website for them. JobCenter is unique because it
offers corporate clients an opportunity to present job openings and collect
resumes exclusively for their organization without sharing their potential
candidates with the competition on the various commercial job sites.
This is a present offering that has not been implemented by any client as of
this date. It does not require any further development.
OUR MARKETING PROGRAM
We sell our products either directly through our website,
www.securestaffsystems.com, or as a result of our Internet affiliate web sites
directing customer traffic to our web site. We have links with "Wolf Gugler and
Associates", "Academy of Learning", www.academybarrie.com (located at
www.academybarrie.com/careerfit_profile.html) and "International Organization
for Entrepreneurs", www.ioe.org (located at www.ioe.org/personalprofile.html).
Each affiliate is linked into the SecureStaff Systems website through
specifically designed web pages on the SecureStaff Systems web servers
Our sales approach with potential corporate clients includes:
o Following up with a telephone call by a member of our sales staff to
schedule a sales presentation appointment in which we conduct a
demonstration of our online application and screening process and job
profile report.
Our products will be marketed to:
o Large corporations and their respective trade associations on a direct
sales basis;
o Small businesses and professional firms under licensing agreements; and
o Internet based career and educational service providers on a
revenue-sharing basis
Contracts with these corporations and/or their trade associations will be
based on a pre-estimated annual volume of candidates being screened;
specifically, the contracts will be based upon the number of employees, the
percent of annual turnover, or the $19.95/profile. These companies will
also be initially offered an evaluation of 50 existing employees at nominal
cost to establish company job specific statistically established selection
matching templates on a statistically valid and reliable basis. Through
this strategy we are attempting to gain market entry to companies that
screen thousands of candidates per year.
Internet Affiliate Sales
- ------------------------
We market through other websites, called affiliates. An affiliate web site
places a link, or full marketing page, on their website, offering our
profiling services. A visitor to the affiliate's web site, after deciding
to seek further information, or purchase a profile, is taken to a specially
designed web page created for that affiliate, on our servers, to continue
the purchase.
Websites in the top 100 web sites in the job offering, resume posting, or
career counseling categories, determined as set forth below, receive a
commission of 25% or $4.99 per profile purchased by a visitor to their
website. Affiliate web sites, which are not listed in the top 100 sites,
are paid 20% or $3.99 per profile purchased through their website by a
visitor.
The Top 100 approved web sites are those that have the greatest amount of
visitor traffic based on statistics provided to various statistic gathering web
sites. Sources that are used to gather these statistics include
http://www.interbiznet.com/top100/job-seeker.html,
http://www.interbiznet.com/top100/recruiter.html,
http://www.worldhot.com/business/jobs
Electronic tracking methods insure that the affiliate web site receives the
appropriate commission if a sale is completed. Affiliates are compensated
monthly.
Marketing Our Products to Small Businesses
- ------------------------------------------
We will attempt to highlight the cost advantages of our services by emphasizing
to our prospective small business employer clients that they can use our
recruiting services tools at a nominal cost. Currently, many small businesses
use conventional labor and cost intensive techniques to recruit and interview
job candidates. Our sales team, led by a local sales manager, will approach
small businesses, including those that are currently advertising in local and
regional newspapers. These companies will be offered valuable pre-screening
evaluation and interview tools. Our products will be sold on an annual needs
basis and paid in pre-determined auto withdrawal monthly installments.
At present, we have neither a sales team nor a local sales manager. We
anticipate that when hired, our account managers will receive for their services
a base salary plus a 10% commission of all revenues from sales of our services,
once a minimum revenue plateau of $500,000 has been reached.
Help Desk Services
- ------------------
The location of the call service center and e-Call service center is 2
Birchshire Drive, Barrie, Ontario, Canada L4N 6W6. The call center is serviced
by our administrative person from 9a.m.-5p.m. EST, Monday to Friday. Further,
the call center is serviced by our vice president of information technology and
Internet marketing by remote link from 7a.m.-8p.m. EST, seven days a week. Both
links can be subject to the failure of local and long distance fiber optic and
hard line delivery systems. Although there is a potentiality of a brief or
intermitted interruption of service, we are wholly dependent on these major
carriers in order to maintain continuity of both types of service.
FUTURE PLANS
- ------------
We plan to accomplish the following in the future. We need additional funds to
finance our business development in the next 12 months, as set forth below, but
we are not committed to make any of these expenditures. We have no source of
these funds identified. We hope to be able to raise additional funds from an
offering of our stock in the future. However, this offering may not occur, or if
it occurs, may not raise the desired funding. If we fail to secure adequate
funds to accomplish the objectives outlined below, we will be able to conduct
only limited operations. However, we believe that if we secure the required
funding on a timely basis, we can accomplish these objectives within the
projected time frames.
EVENT OR MILESTONE PERTAINING TO TIME FRAME FOR IMPLEMENTATION METHOD OF ACHIEVEMENT ESTIMATED COST
PRODUCT DEVELOPMENT [Low/High]
For all of our products, translate September 1, 2002 - August 31, Hire a professional None/$100,000
our questionnaire and reports into 2003 translation firm. Validate
Spanish and French. the translation
EVENT OR MILESTONE PERTAINING TO TIME FRAME FOR IMPLEMENTATION METHOD OF ACHIEVEMENT ESTIMATED COST
SALES AND MARKETING [Low/High]
Conduct a North American print media September 1, 2002 - August 31, Hire a professional $150,000/$350,000
advertising campaign. 2003 advertising firm. Place
print media advertisements
in nationally recognized
newspapers and trade
publications.
Conduct a North American promotions September 1, 2002 - August 31, Hire a professional $50,000/$250,000
campaign. 2003 promotions firm. Attend
various trade shows and
public engagements as
advised to promote our
services.
Conduct various business related September 1, 2002 - August 31, As required, depending on $45,000/$90,000
sales calls and travel throughout 2003 nature and duration of
North America. travel.
Hire a corporate sales manager and September 1, 2002 - August 31, Through in-house efforts. $50,000/$160,000
two in-house account managers. 2003
EVENT OR MILESTONE PERTAINING TO TIME FRAME FOR IMPLEMENTATION METHOD OF ACHIEVEMENT ESTIMATED COST
CUSTOMER SUPPORT [Low/High]
Hire three customer support staff. September 1, 2002 - August 31, Through in-house efforts. $25,000/$75,000
2003
Total Low - $320,000
Total High - $1,025,000
Excludes general working capital
The cost of these activities must all be funded with future debt or equity
financing.
PRODUCT DEVELOPMENT
We and our founders have spent the following estimated amounts for our product
development:
The following information is derived from information furnished by Dr. Peter
Donnelly to our auditors, based upon Dr. Peter Donnelly's financial records:
o From inception to July 31, 2000 - $64,000 Comprised of cash of $17,000 to
Dr. Peter Donnelly for the Insight Profile; $40,000 to Dr. Peter Donnelly for further
development of the profile system after the software was acquired; and $7,000
for computers and software for profile development after the software was
acquired.
Additional development costs incurred:
o From August 1, 2000 to July 31, 2001 - $169,240 Comprised of
programming costs in software development to four companies, and salaries
to Dr. Peter Donnelly and James Cousineau for development of the software.
Daedalian Solutions (Toronto, Ontario, Canada), Artistic Web (Elliott Lake,
Ontario Canada), NetMost Solutions (Toronto, Ontario, Canada), and
Pavliks.com Inc. (Barrie, Ontario, Canada).
None of these development funds were provided in customer sponsored research
activities.
We plan to conduct validation studies, focus groups, and consultative research
in the development of new products during the next two years. We estimate
development cost of $100,000 for our projected new products.
MATERIAL AGREEMENTS
We use HostMySite.com as our web site hosting service. Our agreement with
HostMySite.com is oral and is paid for on a monthly basis at a rate of $469
per month. HostMySite.com has provided a dedicated Windows 2000 Server,
built exclusively for our account. We own the full licenses for the Windows 2000
Server operating system, the SQL 7 software for the profiling database, and the
iMail server software for our e-mail server. These services are all hosted at
HostMySite.com. We have full-time service in the event of failure of our servers.
We also maintain a back-up shared server account site at ClickHost.net of
Stratford, Ontario, Canada, to address the potential of a failure, or extended
interruption of the HostMySite.com service, and to host our beta testing and
development profiling systems. The ClickHost.net server agreement is oral and
paid for on a monthly basis at a rate of $6.95 per month.
PRODUCT LIABILITY
We do not offer warranties and we have not obtained warranty or product
liability insurance. In addition, we have not established a reserve fund for
such purposes. We have been selling our products since September 2000 and no
claims have been made against us.
EMPLOYEES
We have one part-time employee:
Mr. James Cousineau
We intend to search for a new CEO as soon as funds are available.
We have no collective bargaining agreements. We consider our relationship with
our employee to be excellent.
COMPETITIVE BUSINESS CONDITIONS:
The personnel service industry is increasingly competitive with hundreds,
possibly thousands of competitors on the Internet alone. In addition, because
barriers to market entry are relatively low and new competitors can establish
new sites at a relatively low cost utilizing a variety of market available
software, we expect competition to become increasingly intensified in the
future. Therefore, competition is rapidly evolving and very competitive and
there are no assurances that we can keep pace with the intense competition in
this market. There are hundreds of websites that operate similar businesses to
us.
Many of our competitors have significantly greater brand recognition, customer
bases, operating histories and financial and other resources. In addition, many
companies have expanded the size of their operations by acquiring other
complimentary companies to form advantageous strategic alliances. We compete
with on-line psychological profiling services and well as off-line providers,
including traditional employment agencies, psychological profiling centers, and
career counseling centers. Some of these services are provided at no cost to job
seekers or employers. In addition, many of our competitors offer the less
effective but similar services at less cost than us and have the financial
resources to create more attractive pricing.
Our primary on-line competitors are:
o CareerLeader which is a career self-assessment tool;
o MAPP, which is an abbreviation for Motivational Appraisal of
Personal Potential, is a guidance and motivation assessment tool to
achieve educational and career potential;
o The Computer Psychologist is a job-oriented personality test, which
determines work-related activities at which the candidate would
likely excel as well as those that pose potential limitations.
These competitors have the following advantages over the services that we now
offer:
o A larger sales force;
o Greater brand recognition; and
o A longer corporate history.
Because we do not offer an exclusive set of services and products, we will
encounter difficulties in distinguishing our services and products from others.
In addition, much of the same information accessible through our business will
be available elsewhere on the Internet or in other informational formats offered
by our competitors. We intend to compete effectively or overcome these
competitive advantages by:
o Promoting our product to chief executive officers and human
resource managers through "free" trial offers; and
o Offering our service at a competitive price.
CUSTOMER DEPENDENCY
Each of our three main clients, Wilson Logistics, MVP Personnel, and Zellers,
have accounted for more than 10% of our aggregate revenue to date as follows:
Wilson Logistics: 40%
MVP Personnel: 22%
Zellers: 22%
We anticipate that we will be dependent upon Zellers for more than 10% of our
revenues in 2002.
COPYRIGHTS
Our psychological profiling system has been created, developed and copyrighted
in 1996, 1997, 1998, and 2000 by Dr. Peter Donnelly, a psychologist who was one
of our founders but who resigned as our Acting CEO in May 2002. On
December 15, 1999 we received our intellectual property pursuant to a written
agreement between us and Dr. Peter Donnelly and Mr. Mark Galligan.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS
We are not aware of any governmental regulations that will affect our business
plan. However, due to increasing usage of the Internet, a number of laws and
regulations may be adopted relating to the Internet, covering user privacy,
pricing, and characteristics and quality of products and services. Furthermore,
the growth and development for Internet commerce may prompt more stringent
consumer protection laws imposing additional burdens on those companies
conducting business over the Internet. The adoption of any additional laws or
regulations may decrease the growth of the Internet, which, in turn, could
decrease the demand for Internet services and increase the cost of doing
business on the Internet. These factors may have an adverse effect on our
business, results of operations and financial condition.
Moreover, the interpretation of sales tax, libel and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
- --------
We offer on-line psychological profiling. Our profiles are designed to provide
insight into a person's personality, work habits, moral attitude, character and
overall abilities. The products we market include a system to provide violence
propensity predictors. Our products can be used for corporate security purposes,
as well as for recruiting or downsizing. Profiling is completed on-line at any
Internet connected computer. The results are immediately available to our client
through the Internet.
Our revenues are derived from the sale of the following profiling services on
our website:
o JobFit - accounting for 75% of our revenues.
o RetailFit - accounting for 22% of our revenues.
o CareerFit - accounting for 3% of our revenues.
These reports are delivered quickly and at a low cost to the user over the
Internet. We utilize our proprietary automated software program, the Insight
Profile(C), to generate the profiles.
Our ability to continue as a going concern is dependent on our ability to raise
funds to implement our planned development; however we may not be able to raise
sufficient funds to do so. Our independent auditors have indicated that there is
substantial doubt about our ability to continue as a going concern over the next
twelve months. Our poor financial condition could inhibit our ability to achieve
our business plan, because we are currently operating at a substantial loss with
no operating history and revenues, an investor cannot determine if we will ever
become profitable.
In May 2002 our Acting CEO resigned as an officer and director due to our
current financial condition. He currently provides no services to us. He has
advised us that he is available for consultation on a contract basis. Our
remaining employee only devotes 25% of his time to our business. Unless we
generate additional revenues or secure additional funding, we may not be able to
replace our CEO and our remaining employee will continue to devote limited time
to our business. We have no definitive plan in place that is capable of removing
the threat to the continuation of our business.
Nonetheless, we continue to own our software, which we believe to be a valuable
asset and tool in generating reports for prospective employers, employees and
others. We will continue to explore possibilities for utilizing this asset to
bring value to our business.
Current Results of Operations and Financial Status
We have not generated any significant revenues. Our first sale was made in
November 2000.
Our website is complete and our JobFit(C), RetailFit(C), and
CareerFit(C)software programs through which we offer our services are fully
operational.
We anticipate that revenues will increase as our products gain acceptance;
however, our future profitability is uncertain. Our operational expenses will
increase according to the implementation of our growth plans.
Since July 31, 2000, we have raised $363,127 from the sale of 1,031,149 shares
of our common stock, adjusted for the 3 for 4 reverse split in 2000.
Each of our three main clients, Wilson Logistics, MVP Personnel, and Zellers,
have accounted for more than 10% of our aggregate revenue to date, as follows:
Wilson Logistics: 40%
MVP Personnel: 22%
Zellers: 22%
Pay per use means that the client company is not contractually bound to purchase
a given number of profiles. Rather it pays for just those profiles it uses.
Under this type of agreement, the client company can continue or discontinue use
at their discretion. While profile use with these companies is in our infancy,
we believe that the volume of profiles used by these companies will grow as they
decide to expand their application of the product beyond the current pilot areas
to include all areas requiring staffing solutions.
July 31, 2001 vs. July 31, 2000
Income Statement Year end July 31 Amount Percentage Reason
increase increase
(decrease) (decrease)
2001 2000
Revenues $4,702 $0 $4,702 999.9% We had sales.
Operating Expenses: $432,719 $160,336 $272,383 169.8% We expended funds on product
development.
Consulting Services $98,041 $20,590 $77,451 376.2% Sales, marketing, and management
consultants
Professional Fees $19,096 $9,714 $9,382 96.6% Preparation and consultation for SB2 -
lawyers and accountants.
Computer and website $44,481 $0 $44,481 999.9% Purchase of two new web servers,
maintenance installation of same, and redesign of
existing website.
Foreign currency valuation $(3,029) $0 $(3,029) 999.9% US/CDN dollar exchange
adjustment
Net Income ($428,131) ($160,336) ($267,795) 167.0% Expenses increased faster than revenues.
Balance Sheet Year ended July 31 Amount Percentage Reason
increase increase
(decrease) (decrease)
2001 2000
Current Assets $9,720 $15,485 ($5,765) (37.2%) We expended funds on product development.
Fixed Assets $15,926 $17,492 ($1,566) (8.9%) Depreciation expense and currency
exchange adjustment
Trade Payables $51,533 $46,239 $5,294 11.4% We expended funds on product development.
Other Liabilities $77,884 $75,500 $2,384 3.2% Change wasn't significant.
April 30, 2002 vs. April 30, 2001
Income Statement Nine months ended April 30 Amount Percentage Reason
increase increase
(decrease) (decrease)
200 2 200 1
Revenues $2,142 $4,587 $(2,445) (53.3%)
No new sales or
marketing during
additional development
phase.
Operating Expenses $210,194 $325,989 $(115,075) (35.5%)
Lower office space rent
and overhead.
Consulting Fee $27,089 $89,579 $(62,490) (69.6%)
Did not renew
sales/management
contracts during new
development phase.
Professional Fees $39,633 $21,255 $18,378 86.5%
Preparation of new SB2
submission - lawyers,
accountants, auditors.
Net $(200,026) $(321,520) $121,494 (37.8%)
Income Reduction of new sales
efforts
Balance Sheet Amount Percentage Reason
increase increase
(decrease) (decrease)
April 30, July 31,
2002 2001
Current Assets $161 $9,720 $(9,559) (983.4%)
Reduced A/R
Fixed Assets $13,774 $17,492 $ (3,718) (21.3%)
Depreciation of furniture
and computers.
Trade Payables $84,150 $51,533 $32,617 63.3%
Printing of marketing
material, new stationary,
etc.
Other Liabilities $166,959 $77,884 $89,075 1,143.7%
Balance of previous
office lease and dispute
with previous programming
company.
Liquidity and Capital Resources
- -------------------------------
We acquired our software on December 14, 1999. From our inception to April 30,
2002, we incurred operating losses of ($788,493) and had a net working capital
deficiency of $250,948. In addition, as of April 30, 2002, we had only $161 of
current cash available. Our cash resources of $161 are not sufficient to satisfy
our cash requirements over the next 12 months. We will need to secure a minimum
of $145,000 to satisfy such requirements, but we need an additional minimum of
$320,000 to finance our planned expansion in the next 12 months, which funds
will be used for product development, marketing, and customer support. However
in order to become profitable on a long-term basis we will still need to secure
additional debt or equity funding.
We have no definitive plan in place capable of removing the threat to the
continuation of the business. We hope to be able to raise additional funds from
an offering of our stock in the future. We have not taken any steps to effect
this offering or secure any other outside financing. The offering may not occur,
or if it occurs, may not raise the required funding.
We have obligations due First Foundation for $81,000 and Daedalian for $37,400.
The obligation due First Foundation is an oral agreement requiring repayment
upon demand with no interest. We do not intend to pay the note to Daedalian. See
Item 9 Legal Proceedings above at page 21.
Plan of Operation for the Period September 1, 2002 - August 31, 2003
- --------------------------------------------------------------------
We plan to take a number of steps to develop our products, sales and marketing
and customer support. See "Business - Future Plans," at page 32. We estimate the
total minimum funds needed to be $320,000 and the total maximum funds needed to
be $1,025,000. These estimates are based upon our estimates of costs of product
development, sales and marketing customer. Amounts necessary for these items may
increase. Accordingly, our actual costs may exceed our cost estimates. We are
not committed to make any of these expenditures.
We have no source of these funds identified. We hope to be able to raise
additional funds from an offering of our stock in the future. However, this
offering may not occur, or if it occurs, may not raise the desired funding. If
we fail to secure adequate funds to accomplish the objectives outlined below, we
will be able to conduct only limited operations.
DESCRIPTION OF PROPERTY
Our offices are located at 2 Birchshire Drive, Barrie, Ontario, Canada L4N 6W6
at the home of Mr. Cousineau, who charges us no rent. Our present offices are
700 square feet with plans to relocate to larger premises in the same city,
and we believe that we will be able to locate office space upon commercially
reasonable terms. Our offices are in good condition and are sufficient to
conduct our operations. Our telephone numbers are 705-722-3033 (Barrie),
866-679-8688 (North America Toll Free), and 705-722-3674 (Fax).
Our mailing address is 22 Commerce Park Drive, Unit C-1, Suite 244, Barrie,
Ontario, Canada L4N 8W8.
We do not intend to renovate, improve, or develop properties. We are not subject
to competitive conditions for property and currently have no property in insure.
We have no policy with respect to investments in real estate or interests in
real estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 15, 1999, we paid Dr. Peter Donnelly and Mark L. Galligan the
following in exchange for our proprietary software:
o Cash in the total amount of $17,000 to Dr. Peter Donnelly;
o 3,000,000 shares common stock to Dr. Peter Donnelly and designees; and
o 1,050,000 shares of common stock to Mark Galligan and designees.
These shares numbers are before our 3 for 4 stock split. After the split, the
share numbers are:
o 2,250,000 shares common stock to Dr. Peter Donnelly and designees; and
o 787,500 shares of common stock to Mark Galligan and designees.
This software is the basis of all of our profiling products. The software
is used to generate all of the reports we offer under various product names.
We would not have been able to conduct our business without the acquisition of
this software. Proprietary software valuation figures are recorded on the
financial statements based upon historical cost. The founder's historical cost
was $592,960 and it was fully developed as a Windows-based application at the
time, but has been further developed as an Internet based application with
additional content since then. Thus, the effective price per share post-split
for this acquisition was $.18.5.
The price was determined by mutual agreement of the parties based upon what they
believed was the fair value of these rights at the time of transfer. This
conclusion is supported by contemporaneous third party sales of our securities
as follows:
o In May 2000, we issued 675,000 shares of common stock to four
consultants as compensation for services of software development. This
stock was valued at an aggregate $12,600 or $.019 per share.
o In May 2000 we sold 8,212,500 shares to 17 non-US investors for total
net proceeds of $169,994 or approximately $.21 per share.
In May 2000 we issued Mr. Cousineau an aggregate of 125,000 shares for software
development and web site design services which we valued at $2,375 by mutual
agreement.
In August 2001 we issued Dr. Donnelly 50,000 shares for software development
services which we valued at $950 by mutual agreement.
In July 2000 Mr. Kostrich and other family members purchased an aggregate of
155,250 shares for $.34 per share, the same price paid by non-affiliates in an
offering.
Dr. Peter Donnelly and Mr. Galligan were our founders. Dr. Donnelly was the
director of client services and Chairman of our Board of Directors but has now
resigned. Mr. Cousineau is an officer. Mr. Kostrich is a director.
In August 2001 we issued 50,000 shares to William McGinley, a then-officer, for
software development services which we valued at an aggregate of $4,450 by
mutual agreement.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, and nominee for director,
beneficial owner of five percent or more of our common stock, or family members
of such persons. Also, we have not had any transactions with any promoter. We
are not a subsidiary of any company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
- ------------------
There is no established public trading market for our securities and a regular
trading market may not develop, or if developed, may not be sustained. A
shareholder in all likelihood, therefore, will not be able to resell his or her
securities should he or she desire to do so when eligible for public resales.
Furthermore, it is unlikely that a lending institution will accept our
securities as pledged collateral for loans unless a regular trading market
develops. We have no plans, proposals, arrangements, or understandings with any
person with regard to the development of a trading market in any of our
securities.
Options, Warrants, Convertible Securities
- -----------------------------------------
We have no options, warrants or convertible securities outstanding.
Penny Stock Considerations
- --------------------------
Our shares will be "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 to mean equity securities with a price of less
than $5.00. Our shares thus will be subject to rules that impose sales practice
and disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to
anyone other than an established customer or accredited investor must make a
special suitability determination regarding the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $100,000 individually or
$300,000 together with his or her spouse is considered an accredited investor.
In addition, under the penny stock regulations the broker-dealer is required to:
o Deliver, prior to any transaction involving a penny stock, a disclosure
schedule prepared by the Securities and Exchange Commissions relating to the
penny stock market, unless the broker-dealer or the transaction is otherwise
exempt;
o Disclose commissions payable to the broker-dealer and our registered
representatives and current bid and offer quotations for the securities;
o Send monthly statements disclosing recent price information pertaining to
the penny stock held in a customer's account, the account's value and
information regarding the limited market in penny stocks; and
o Make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction, prior to conducting any penny stock transaction in the
customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell shares of our common stock, which may affect the ability of
selling shareholders or other holders to sell their shares in the secondary
market and have the effect of reducing the level of trading activity in the
secondary market. These additional sales practice and disclosure requirements
could impede the sale of our securities, if our securities become publicly
traded. In addition, the liquidity for our securities may be decreased, with a
corresponding decrease in the price of our securities. Our shares in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.
Holders
- -------
As of the date of this registration statement, we had 116 holders of record of
our common stock.
Dividends
- ---------
We have not declared any cash dividends on our common stock since our inception
and do not anticipate paying such dividends in the foreseeable future. We plan
to retain any future earnings for use in our business. Any decisions as to
future payments of dividends will depend on our earnings and financial position
and such other facts, as the board of directors deems relevant.
Reports to Shareholders
- -----------------------
As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission.
Where You Can Find Additional Information
- ------------------------------------------
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2, File No. 333-82990 with respect to the common stock in
this offering. This prospectus, which constitutes a part of the registration
statement, does not contain all the information set forth in the registration
statement. For further information about us and the shares of common stock to be
sold in the offering, please refer to the registration statement and the
exhibits and schedules thereto. The registration statement and exhibits may be
inspected, without charge, and copies may be obtained at prescribed rates, at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The registration statement
and other information filed with the SEC are also available at the web site
maintained by the SEC at http://www.sec.gov.
EXECUTIVE COMPENSATION
Executive Compensation
- ----------------------
The following table sets forth summary information concerning the compensation
received for services rendered to us during the fiscal years ended July 31, 2001
and 2000 respectively by our Acting Chief Executive Officer. No other executive
officers received aggregate compensation during our last fiscal year that
exceeded, or would exceed on an annualized basis, $100,000.
Name Position Year Salary
Dr. Peter Donnelly director of client services 2001 $38,217
2000 $38,217
No other annual compensation, including a bonus or other form of compensation;
and no long-term compensation, including restricted stock awards, securities
underlying options, LTIP payouts, or other form of compensation, were paid to
Dr. Donnelly during these periods.
Employment Contracts
- --------------------
Due to cash flow difficulties, the employment contract with Mr. Cousineau has
been suspended. Instead, we have agreed to pay Mr. Cousineau the sum of $1,000
per month for no more than 25% of his time until we receive funding or our cash
flow position improves.
We are currently not paying him under the contract but under the arrangement set
forth above.
The employment contract with Dr. Donnelly is no longer in force due to his
resignation in May 2002.
Board Compensation
- ------------------
Members of our Board of Directors do not receive cash compensation for their
services as Directors, although some Directors are reimbursed for reasonable
expenses incurred in attending Board or committee meetings.
FINANCIAL STATEMENTS
The financial statements of SecureStaff Systems, Inc. in response to this Item
are as follows:
SecureStaff Systems, Inc. and Subsidiary
f/k/a CareerTek.Org, Inc.
FINANCIAL STATEMENTS
April 30, 2002, and July 31, 2001 and
July 31, 2000
CONTENTS
PAGE
----
INDEPENDENT AUDITOR'S REPORT F-2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Cash Flows F-5
Consolidated Statements of Shareholders' Equity F-6
Calculation of Earnings Per Share F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 to F-13
F-1
Dohan and Company, CPA's 7700 North Kendall Drive, #200
CERTIFIED PUBLIC ACCOUNTANTS Miami, Florida 33156-7564
A Professional Association Telephone: (305) 274-1366
Facsimile: (305) 274-1368
INDEPENDENT AUDITOR'S REPORT
Stockholders and Board of Directors
SecureStaff Systems, Inc. f/k/a CareerTek.Org, Inc.
Toronto, Ontario, Canada
We have audited the accompanying consolidated balance sheets of SecureStaff
Systems, Inc. f/k/a CareerTek.org, Inc. and Subsidiary, as of July 31, 2001 and
2000, and the related consolidated statements of operations, shareholders'
equity and cash flows for the year ended July 31, 2001, and for the period from
inception (December 14, 1999) to July 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SecureStaff Systems,
Inc. and Subsidiary at July 31, 2001 and 2000, and the results of their
operations, their shareholders' equity and their cash flows for the periods then
ended in conformity with accounting principles generally accepted in the United
States of America.
The financial statements for the year ended July 31, 2001 and for the period
from inception (December 14, 1999) to July 31, 2000 were audited by us, and we
expressed an unqualified opinion on them in our report dated December 7, 2001
but we have not performed any auditing procedures since that date.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
consolidated financial statements, the Company has suffered losses from
operations and has an accumulated deficit that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 10. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Dohan and Company, P.A.
Certified Public Accountants
Miami, Florida
December 7, 2001
F-2
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Balance Sheets
April 30 July 31,
ASSETS 2002 2001 2000
(Unaudited) (Restated)
---------- --------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 161 $ 241 $ 15,485
Due from related parties - 9,479 -
---------- ---------- -----------
TOTAL CURRENT ASSETS 161 9,720 15,485
---------- ---------- -----------
PROPERTY AND EQUIPMENT, NET 13,774 17,492 -
---------- ---------- -----------
OTHER ASSETS
Software development costs, less accumulated amortization
of $63,398, $38,013, and $-0-, respectively 485,268 532,188 592,960
Deferred offering costs - - 68,000
Website development costs, less accumulated amortization
of $11,338 and $5,667 and $-0-, respectively 108,195 118,508 57,120
Deferred income tax asset, less valuation allowance of $114,267,
$73,270, and $24,050 - - -
Security deposits - 3,262 3,392
---------- ---------- -----------
TOTAL OTHER ASSETS 593,463 653,958 721,472
---------- ---------- -----------
TOTAL ASSETS $ 607,398 $ 681,170 $ 736,957
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 84,150 $ 51,533 $ 46,239
Accrued liabilities 29,524 19,032 75,500
Demand note payable 34,650 35,965 -
Demand loans payable 102,785 22,887 -
---------- ---------- -----------
TOTAL CURRENT LIABILITIES 251,109 129,417 121,739
---------- ---------- -----------
SHAREHOLDERS' EQUITY
Preferred stock, classes A through E, 1,000,000 shares of each
Class authorized; none issued - - -
Common stock, no par value, 100,000,000 shares authorized;
13,260,453, 12,945,149 and 12,200,550 shares issued 1,165,372 1,137,191 900,470
and outstanding
Accumulated deficit (788,493) (588,467) (160,336)
Stock subscription receivable - - (124,916)
Foreign currency valuation adjustment (20,590) 3,029 -
---------- ---------- -----------
TOTAL SHAREHOLDERS' EQUITY 356,289 551,753 615,218
---------- ---------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 607,398 $ 681,170 $ 736,957
========== ========== ===========
(The accompanying notes are an integral part of this financial statement)
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Statements of Operations
For the Nine For the Three
Months Ended Months Ended
April 30, April 30,
2002 2001 2002 2001
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
REVENUES $ 2,142 $ 4,587 $ - $ 338
---------- ---------- ---------- ----------
OPERATING EXPENSES
Compensation and related taxes 80,122 93,266 5,513 32,569
Consulting fees 27,089 89,576 4,410 25,321
Depreciation and amortization 36,528 36,242 12,176 14,109
Rents 11,642 16,959 - 6,731
Office 3,078 2,755 447 -
Professional fees 39,633 21,255 2,152 15,794
Computer and website maintenance 5,334 14,578 1,382 10,785
Other general and administrative 7,488 51,358 631 11,525
---------- ---------- ---------- ----------
TOTAL EXPENSES 210,914 325,989 26,711 116,834
OTHER INCOME (EXPENSE)
Canadian general sales tax refund 8,746 - - -
Interest income - 80 - 34
Interest expense - (198) - -
---------- ---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSE) 8,746 (118) - 34
LOSS BEFORE INCOME TAX BENEFIT (200,026) (321,520) (26,711) (116,462)
PROVISION FOR INCOME TAXES - - - -
---------- ---------- ---------- ----------
Net ( Loss) (200,026) (321,520) (26,711) (116,462)
OTHER COMPREHENSIVE LOSS
Foreign currency valuation adjustment (23,619) - (1,561) -
---------- ---------- ---------- ----------
TOTAL OTHER COMPREHENSIVE LOSS - - - -
---------- ---------- ---------- ----------
COMPREHENSIVE LOSS $(200,026) $(321,520) $ (26,711) $ (116,462)
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING (basic and diluted) 13,260,453 12,489,142 13,260,453 12,447,764
NET LOSS PER SHARE (basic and diluted) (0.0131) (0.0164) (0.0033) (0.0101)
COMPREHENSIVE LOSS PER SHARE (basic and diluted) (0.0131) (0.0164) (0.0033) (0.0101)
(The accompanying notes are an integral part of this financial statement.)
F-3
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Statements of Operations
For the period
from Inception
For the Year (December 14, 1999)
Ended Through
July 31, 2001 July 31, 2000
(Restated)
------------- -------------
REVENUES $ 4,702 $ -
------------- -------------
OPERATING EXPENSES
Compensation and related taxes 137,721 101,202
Consulting fees 98,041 20,590
Depreciation and amortization 47,487 -
Rents 19,693 11,675
Office 9,270 10,015
Professional fees 19,096 9,714
Computer and website maintenance 44,481 -
Other general and administrative 56,930 7,140
------------- -------------
TOTAL EXPENSES 432,719 160,336
OTHER INCOME (EXPENSE)
Canadian general sales tax refund - -
Interest income 77 -
Interest expense (191) -
------------- -------------
TOTAL OTHER INCOME (EXPENSE) (114) -
------------- -------------
LOSS BEFORE INCOME TAX BENEFIT (428,131) (160,336)
PROVISION FOR INCOME TAXES - -
------------- -------------
Net ( Loss) (428,131) (160,336)
OTHER COMPREHENSIVE LOSS
Foreign currency valuation adjustment (3,029) -
------------- -------------
TOTAL OTHER COMPREHENSIVE LOSS (3,029) -
------------- -------------
COMPREHENSIVE LOSS $ (431,160) $ (160,336)
============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING (basic and diluted) 12,563,715 7,143,205
NET LOSS PER SHARE (basic and diluted) $ (0.0340) $ (0.0224)
------------- -------------
COMPREHENSIVE LOSS PER SHARE (basic and diluted) (0.0343) (0.0224)
(The accompanying notes are an integral part of this financial statement.)
F-4
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Statements of Cash Flows
For the period
from Inception
For the Nine For the Nine For the Year (December 14, 1999)
Months Ended Months Ended Ended Through
April 30, 2002 April 30, 2001 July 31, 2001 July 31, 2000
(Unaudited) (Unaudited) (Restated)
-------------- -------------- ------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (200,026) $ (321,520) $ (428,131) $(160,336)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Amortization 32,652 33,150 43,679 -
Depreciation 3,078 1,226 3,808 -
Common stock issued for professional services 23,421 - 3,270 12,600
(Increase) decrease in assets:
Accounts receivable - -
Advances to officers - (9,375)
Security Deposits 3,262 - 130 (3,392)
Increase (decrease) in liabilities:
Accounts payable 32,617 (2,206) 5,294 46,239
Accrued liabilities 10,492 (63,883) 11,532 7,500
-------------- -------------- ------------- --------------
Net Cash used by operating activities (94,504) (362,608) (360,418) (97,389)
-------------- -------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - 264,904 233,451 169,994
Proceeds from demand loan payable - 34,650 22,887 -
Proceeds from stock subscription receivable - 124,916 124,916 -
Proceeds from notes payable 78,583 - 35,965 -
Payments to (loans from) related party - - (9,479) -
Payments on note payable - - - -
-------------- -------------- ------------- --------------
Net cash provided by financing activities 78,583 424,470 407,740 169,994
-------------- -------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - (21,300) (21,300) -
Web design - (44,295) (44,295) (57,120)
-------------- -------------- ------------- --------------
Net cash used in investing activities - (65,595) (65,595) (57,120)
-------------- -------------- ------------- --------------
Effect of Foreign currency translation on cash 15,841 (9,897) 3,029 -
-------------- -------------- ------------- --------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (80) (13,630) (15,244) 15,485
CASH AND EQUIVALENTS - BEGINNING 241 15,485 15,485 -
-------------- -------------- ------------- --------------
CASH AND EQUIVALENTS - ENDING $ 161 $ 1,169 $ 241 $ 15,485
============== ============== ============= ==============
SUPPLEMENTAL DISCLOSURES:
Interest received $ - $ - $ 80 $ -
Interest paid $ - $ - $ 191 $ -
Income taxes paid $ - $ - $ - $ -
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
Common stock issued for professional services $ - $ - $ 3,270 $ 12,600
Common stock issued for software development $ - $ - $ - $ 592,960
Common stock issued for stock subscription receivable $ - $ - $ - $ 124,916
(The accompanying notes are an integral part of this financial statement.)
F-5
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Statement of Shareholders' Equity
For the Period from Inception (December 14, 1999) through April 30, 2002
Common Stock
Number Accumulated Subscription
of Shares Amount Deficit Receivable
Issuance of common stock for :
Software development 3,037,500 $ 592,960 - -
Consulting services 675,000 12,600 - -
Private placement - May 8,212,500 169,994 - -
Private placement - July 275,550 124,916 - (124,916)
Net Loss for the year ended July 31, 2000 - - (160,336) -
---------- ---------- ---------- ----------
Balance - July 31, 2000 (Restated) 12,200,550 900,470 (160,336) (124,916)
Issuance of common stock for services 10,000 3,270 - -
Sales of common stock 734,599 233,451 - -
Collection from stock subscriptions receivable - - - 124,916
Foreign currency valuation adjustment - - - -
Net loss for the year ended July 31, 2001 - - (428,131) -
---------- ---------- ---------- ----------
Balance - July 31, 2001 12,945,149 1,137,191 (588,467) -
Issuance of common stock for services 294,304 23,421 - -
Private placement of common stock 21,000 4,760 - -
Foreign currency valuation adjustment - - - -
Net loss for the nine months ended April 30, 2002 - - (200,026) -
---------- ---------- ---------- ----------
Balance - April 30, 2002 13,260,453 $ 1,165,372 $(788,493) $ -
========== ========== ========== ==========
SECURESTAFF SYSTEMS, INC. and SUBSIDIARY
(f/k/a CAREERTEK.ORG, INC.)
Consolidated Statement of Shareholders' Equity
For the Period from Inception (December 14, 1999) through April 30, 2002
Foreign Total
Currency Shareholders'
Valuation Equity
Adjustments in Assets
Issuance of common stock for :
Software development $ - $ 592,960
Consulting services - 12,600
Private placement - May - 169,994
Private placement - July - -
Net Loss for the year ended July 31, 2000 - (160,336)
---------- ----------
Balance - July 31, 2000 (Restated) - 615,218
Issuance of common stock for services - 3,270
Sales of common stock - 233,451
Collection from stock subscriptions receivable - 124,916
Foreign currency valuation adjustment 3,029 3,029
Net loss for the year ended July 31, 2001 - (428,131)
---------- ----------
Balance - July 31, 2001 3,029 551,753
Issuance of common stock for services - 23,421
Private placement of common stock - 4,760
Foreign currency valuation adjustment (23,619) (23,619)
Net loss for the nine months ended April 30, 2002 - (200,026)
---------- ----------
Balance - April 30, 2002 $ (20,590) $ 356,289
========== ==========
(The accompanying notes are an integral part of this financial statement.)
F-6
SecureStaff Systems, Inc. and Subsidiary
f/k/a CareerTek.Org, Inc.
Notes to Consolidated Financial Statements
The accompanying unaudited consolidated financial statements of SecureStaff
Systems, Inc. f/k/a CareerTek.org, Inc. and Subsidiary, as of April 30, 2002,
reflect all adjustments, which, in the opinion of management, are necessary for
a fair presentation of the financial position and the results of operations for
the interim period presented. All adjustments are of a recurring nature.
NOTE 1. BUSINESS AND ORGANIZATION
SecureStaff Systems, Inc. (the Company) was incorporated under the laws of the
State of Wyoming on December 14, 1999, under the name of Psitek.Org, Inc. On
April 25, 2000, the corporate name was changed to CareerTek.Org, Inc. On October
16, 2001 the corporate name was changed to SecureStaff Systems, Inc. The Company
owns 100% of a Barrie, Ontario, Canada-based operating subsidiary, also known as
SecureStaff Systems, Inc., which was incorporated under the Ontario Business
Corporation Act on May 4, 2000.
The Company has developed proprietary software to perform psychological
profiling of individuals for use in matching employees with employers. The
Company's mission is to simplify and enhance the personnel selection
process through , accurate, and interactive psychological profiling;
providing performance predictability, and recruit retention, at the
lowest cost to human resource management.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary. All material
intercompany transactions have been eliminated.
CASH AND CASH EQUIVALENTS The Company considers all financial instruments with
an original maturity of three months or less at the date of purchase to be cash
equivalents.
PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Expenditures
for major betterments and additions are capitalized, while replacements,
maintenance, and repairs that do not improve or extend the lives of the
respective assets are expensed as incurred.
Depreciation is computed using the straight-line method, based on the estimated
useful lives of the assets, which is five years.
IMPAIRMENT OF LONG-LIVED ASSETS The Company follows FASB Statement No. 121 (SFAS
121) "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". SFAS 121 requires that impairment losses are to be
recorded when long-lived assets to be held and used are reviewed for impairment
whenever events or changes in circumstances indicate that the related carrying
amount may not be recoverable. When An impairment loss would be recognized when
the sum of the expected future net cash flows is less than the carrying amount
of the asset. Long-lived assets to be disposed of, if any, are reported at the
lower of the carrying amount or the fair value less cost to sell.
F-7
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTERNAL USE SOFTWARE DEVELOPMENT COSTS The Company follows Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," ("SOP 98-1") issued by the American Institute of
Certified Public Accountants is effective for financial statements beginning
after December 15, 1998, SOP 98-1 requires that costs incurred in the
preliminary stage of a development project be expensed as incurred, and that
subsequent costs be capitalized or expensed, depending on criteria defined
within SOP 98-1. Capitalized costs should be amortized on a straight-line basis
unless another systematic basis is more representative of the software's use.
Capitalized software development costs are stated at cost. The software
transferred to the Company is the Company's 'core' product. This product is
customized and updated to meet the various needs of our customers. These assets
are being amortized using the straight-line method based on the estimated useful
lives of the assets, estimated by management to be fifteen years.
WEBSITE DEVELOPMENT COSTS The Emerging Issues Task Force (EITF) of the FASB
reached a consensus on EITF Issue 00-2, "Accounting for Web Site Development
Costs". This consensus provides guidance on what type of costs incurred to
develop websites should be capitalized or expensed. The Company adopted this
consensus on July 31, 2000.
Capitalized website development costs are stated at cost. These assets are being
amortized using the straight-line method based on the estimated useful lives of
the assets, which is fifteen years.
USE OF ESTIMATES The process of preparing financial statements in conformity
with generally accepted accounting principles requires the use of estimates and
assumptions that affect certain types of assets, liabilities, revenues and
expenses. Such estimates primarily relate to unsettled transactions and events
as of the date of the financial statements. Accordingly, upon settlement, actual
results may differ from estimated amounts.
DEVELOPMENT STAGE COMPANY The Company had been previously devoting its efforts
to activities such as raising capital, establishing sources of information, and
developing markets for its planned operations. The Company began operations and
generating revenues in November of 2000, therefore, it is no longer considered a
development stage company.
START-UP ACTIVITIES Statement of Position 98-5 "Reporting on the Costs of
Start- up Activities," ("SOP 98-5") issued by the American Institute
of Certified Public Accountants is effective for financial statements beginning
after December 15, 1998. SOP 98-5 requires that the costs of start-up
activities, including organization costs, be expensed as incurred.
Start-up activities are defined broadly as those one-time activities related to
opening a new facility, introducing a new product or service, conducting
business in a new territory, conducting business with a new class of customers
(excluding ongoing customer acquisition costs, such as policy acquisition costs
and loan origination costs) or beneficiary, initiating a new process in an
existing facility, or commencing some operation.
FOREIGN CURRENCY TRANSLATION The functional currency of the wholly-owned
subsidiary located in Barrie, Ontario, Canada is the Canadian Dollar (CDN$).
All account balances have been translated to U.S. dollars in accordance with
SFAS No. 52, "Foreign Currency Translation." Assets and liabilities
are translated at exchange rates in effect on the balance sheet date. The
exchange rates in effect as of July 31, 2001 and 2000, were $0.6800 and $0.6569,
(US$ to CDN$) respectively. The statements of operations were translated based
on the average exchange rate for the year. Translation gains and losses are
accumulated as a component of shareholders' equity.
F-8
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIC NET LOSS PER SHARE Basic net loss per share is computed by dividing the
net loss applicable to common shareholders by the weighted average number of
common shares outstanding during each period. In periods where losses are
reported, the weighted average number of common shares outstanding excludes
common stock equivalents, because their inclusion would be anti-dilutive.
REVENUE RECOGNITION Service and sales revenues are recognized when services have
been rendered. There are no contractual agreements for service arrangements.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (SFAS 109), Accounting for
Income Taxes. SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of the difference in events that have been recognized in the
Company's financial statements compared to the tax returns.
ADVERTISING COSTS Advertising costs are expensed as incurred. Advertising
expense amounted to $387 for the year ended July 31, 2001 and $2,632 for the
period from inception (December 14, 1999) to July 31, 2000.
RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as
incurred.
COMPREHENSIVE INCOME (LOSS) The Company adopted FASB Statement No. 130 (SFAS
130) "Reporting Comprehensive Income". This statement establishes
standards for reporting comprehensive income (loss) and its components
(revenues, expenses, gains, losses) in financial statements and requires that
all items required to be recognized under accounting standards as components of
the same prominence as other financial statements. Comprehensive income (loss)
consists of foreign currency translation gain or loss and is presented in the
Consolidated Statements of Shareholders' Equity.
RECLASSIFICATIONS AND RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS Certain
amounts in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation of the current year
financial statements. Additionally, retroactive effect has been given to prior
period financial statements. The prior period financial statements have been
restated for the cancellation of stock and the associated subscription
agreements.
RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting
Standards Board issued of Financial Accounting Standards No. 142 (SFAS 142),
"Goodwill and Other Intangible Assets". The standard includes
provisions for the reassessment of the useful lives of existing recognized
intangibles and the reclassification of certain intangibles out of previously
reported figures. The provisions of SFAS 142 will be effective for fiscal years
beginning after December 15, 2001. The impact of SFAS 142 on the financial
statements has not yet been determined.
F-9
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
April 30, July 31,
2002 2001
---------- ----------
Computer equipment $ 20,650 $ 21,300
Less accumulated depreciation (6,876) (3,808)
---------- ----------
Property and equipment, net $ 13,774 $ 17,492
========== ==========
Depreciation expense for the nine month period ended April 30, 2002, and the
year ended July 31, 2001, and for the period from inception (December 1, 1999)
through July 31, 2000, amounted to $3,078, $3,808 and $0, respectively.
NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, receivables, accounts payable, debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their fair value
due to the short-term nature of these amounts or due to variable rates of
interest which are consistent with current market rates. Fair value estimates
are subjective in nature and involve uncertainties and matters of significant
judgment; therefore, fair value cannot be determined with precision.
NOTE 5. SOFTWARE AND WEBSITE DEVELOPMENT
As a result of the closing of the agreement discussed below, the Company owns,
including all distribution and marketing rights, proprietary psychological
profiling artificial intelligence software. The Company expects to use
technology to deliver the Company's proprietary software which was developed to
perform profiling of individuals for use in matching employees with employers.
Pursuant to the exchange, the Company obtained the proprietary software, which
was fully developed as a Windows-based application at the time, and in exchange
they issued 3,037,500 shares of restricted common stock as such term is defined
under the Rule 144 promulgated under the Securities Act of 1933 as well as
paying $17,000 cash.
In accordance with Accounting Principles Board Opinion No. 16 (APB 16),
"Business Combination", the exchange of 3,037,500 shares of the Company's common
stock for the software created a business combination with the software owner
becoming a major shareholder. APB 16 requires that the value recorded for the
software license is best represented by a transfer at the owner's historical
cost of $592,960. Amortization has been recorded for the software license, based
on the straight-line method over the estimated useful life of 15 years. The
website of the Company was placed in Service and became operational in August
2000 and the Company began then amortizing these costs.
Amortization expense for the nine months ended April 30, 2002, the year ended
July 31, 2001, and the period from inception (December 14, 1999) to July 31,
2000 amounted to $32,652, $43,679 and $0, respectively.
F-10
NOTE 6. - DEMAND NOTE PAYABLE
In March 2000, the Company entered into a service agreement with a consulting
company pursuant to which the consulting company would develop a website and
certain computer software applications for the Company. In September 2000, the
Company entered into a debt agreement with this consulting company and the
outstanding balance was reduced by approximately $31,000. The agreement provided
for a promissory note of $34,870 securing the remaining outstanding amount and
for the issuance of 300,000 common shares to this consulting company. The
Company has not paid the $35,965 due pursuant to the promissory note. Further,
the common shares referred to above were not issued to the consulting company.
Since, the Company did not comply with some terms and provisions of the
agreement, the balance of the debt was restored to its original amount of
$97,878 of which $32,784 has not been paid, $34,870 is documented as a demand
note payable and the remaining $30,224 are included in accounts payable.
NOTE 7. DEMAND LOANS PAYABLE
The Company has borrowed, from May 2000 through July 2001, $76,080 on a
non-interest-bearing basis. These loans are payable on demand and were used for
working capital.
NOTE 8. INCOME TAXES
As of July 31, 2001, the Company has net operating loss carry forwards available
as follows:
Year Amount Year Expires
2000 $160,336 2020
2001 $428,131 2021
A valuation allowance must be established to reduce deferred income tax benefits
if it is more likely than not that a portion of the deferred income tax benefits
will not be realized. It is management's opinion that it is more likely
than not that the entire deferred tax benefit may not be recognized in future
years because the utilization of the remaining carry forwards is dependent on
the Company's ability to generate sufficient taxable income during the
carry forward periods and no further significant changes in ownership. Therefore,
a valuation allowance equal to the deferred tax benefit of $114,267, $73,270 and
$24,050 has been established for the nine months ended April 30, 2002, the year
ended July 31, 2001, and the period from inception(December 14, 1999) to July
31, 2000, respectively, resulting in no deferred tax assets as of the balance
sheet dates.
F-11
NOTE 9. SHAREHOLDERS' EQUITY
RESCINDED CONSULTING AGREEMENT The Company had a financial and strategic
consulting agreement with a company to provide consulting services. This
agreement, dated April 15, 2000, was for an initial term of twelve months. The
consulting fees of $68,000 were included in deferred offering costs and included
in accrued liabilities in an equal amount as of July 31, 2000. The consulting
services were not rendered and the agreement was subsequently rescinded. No
services were ever received from the consultant. Accordingly, during the fiscal
year ended July 31, 2001, the deferred offering costs and the related accrued
liabilities were removed.
STOCK ISSUED FOR SOFTWARE Pursuant to the "Agreement for Purchase of
Software", dated December 15, 1999, the Company acquired software in exchange
for the issuance of 3,037,500 shares of the Company's common stock.
STOCK ISSUED FOR SERVICES In May 2000, the Board of Directors authorized the
issuance of 675,000 shares of common stock to consultants as compensation for
services in connection with creating and implementing the Company's
strategic and business plan. This stock was valued at $12,600, an agreed upon
price of $.019 per share.
In November 2000, the Board of Directors authorized the issuance of 10,000
shares of common stock to consultants as compensation for services in connection
with website maintenance expenses. This stock was valued at an agreed price of
$.327 per share, for a total of $3,270.
In August 2001, the Board of Directors authorized the issuance of 150,000 shares
of common stock to a professional association as compensation for professional
services. This stock was valued at an agreed price of $.149 per share, for a
total of $22,440. In October 2001, the Board of Directors authorized the
issuance of 144,304 shares of common stock to a consultant as compensation for
services. This stock was valued at an agreed price of $.327 per share, for a
total of $981.
PRIVATE OFFERING In May 2000, the Board of Directors authorized the Company to
offer and sell to qualified investors up to 11,000,000 shares of its common
stock at a price of approximately $.02 per share under a private placement
pursuant to an exemption available under the Securities Act of 1933. Under this
offering, 8,212,500 shares were issued generating net proceeds of $169,994.
In July 2000, the Board of Directors authorized the Company to offer and sell to
qualified investors up to 1,000,000 shares of its common stock at a price of
approximately $.45 per share under a private placement pursuant to an exemption
available under the Securities Act of 1933. Under this offering, 492,819 shares
were originally issued. Of this amount, 166,500 and 50,769 shares were
subsequently cancelled. The financial statements for July 31, 2000 have been
restated for the cancellation of common stock and the associated stock
subscription agreement to show actual issuance of 275,500 shares and net
proceeds of $124,916.
In November 2000, the Board of Directors authorized the Company to offer and
sell to qualified investors up to 1,000,000 shares of its common stock at a
price of approximately $.35 per share under a private placement, pursuant to an
exemption available under the Securities Act of 1933. Under this offering,
734,599 shares were issued in the following months, generating proceeds of
$233,451.
In August 2001, the Board of Directors authorized the Company to offer and sell
to qualified investors up to 1,000,000 shares of its common stock at a price of
approximately $.25 per share under a private placement, pursuant to an exemption
available under the Securities Act of 1933. Under this offering, 21,000 shares
were issued for the quarter ended October 31, 2001, generating proceeds of
$4,760.
NOTE 10. GOING CONCERN AND MANAGEMENT'S PLANS
The Company has had minimal income from services. Since its inception, the
Company has been dependent upon the receipt of capital investment or other
financing to fund its continuing activities. In addition to the normal risks
associated with a new business venture, there can be no assurance that the
Company's product development will be successfully completed or that it
will be a commercial success. Further, the Company is dependent upon certain
related parties to provide continued funding and capital resources.
F-12
NOTE 10. GOING CONCERN AND MANAGEMENT'S PLANS (CONTINUED)
The Company's expected revenues would result from being able to rapidly
deliver products over the Internet. This is a new type of service, which carries
with it uncertainty as to the market for the Company's services. In
addition, changes in general market conditions and competition could adversely
affect future operations.
The Company has minimal capital resources presently available to meet
obligations, which normally would be expected to be incurred by similar
companies, and has an accumulated deficit of $788,493 at April 30, 2002. These
factors raise substantial doubt about the Company's ability to continue as
a going concern. In order to begin any significant operations the Company will
have to pursue other sources of capital, such as additional equity financing or
debt financing. There is no assurance that the Company will be able to obtain
such financing. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
NOTE 11. COMMITMENTS
OFFICE FACILITIES The Company leased its executive offices located in Toronto,
Ontario, Canada, under a two-year operating lease that expired on January 31,
2002. Total rent expense was $11,642, $19,693 and $11,675 for the nine months
ended April 30,, 2002, the year ended July 31, 2001 and the period from
inception (December 14, 1999) to July 31, 2000, respectively.
OPERATING LEASE The Company also leased its office furniture under a non-
cancelable lease that expired on January 20, 2001. Rent expense under this
operating lease was $1,364.
NOTE 12 - MAJOR CUSTOMERS
The Company has three (3) major customers that comprise 84% of its revenues.
F-13
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE None.
Inside Front and Outside Back Cover Pages of Prospectus
PRELIMINARY PROSPECTUS
SECURESTAFF SYSTEMS, INC.
SUBJECT TO COMPLETION, DATED
Selling Shareholders are offering up to 1,248,849 shares of common stock.
The selling shareholders may offer their shares at any price. We will not
receive any proceeds from the sale of the shares by the selling shareholders. We
will pay all expenses of registering the securities, currently estimated at
$50,000.
Our common stock is not now listed on any national securities exchange, the
NASDAQ stock market or the Over the Counter Bulletin Board.
Dealer Prospectus Delivery Obligation
- -------------------------------------
Until _________ (90 days from the date of this prospectus) all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
Part II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Articles of Incorporation and By-laws, subject to the provisions of Wyoming
law, contain provisions that allow the corporation to indemnify any person under
certain circumstances.
Wyoming law provides the following:
17-16-851. Authority to indemnify.
(a) Except as otherwise provided in this section, a corporation may
indemnify an individual who is a party to a proceeding because he is a director
against liability incurred in the proceeding if:
(i) He conducted himself in good faith; and
(ii) He reasonably believed that his conduct was in or at least
Not opposed to the corporation's best interests; and
(iii) In the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful; or
(iv) He engaged in conduct for which broader indemnification has
been made permissible or obligatory under a provision of the articles of
incorporation, as authorized by W.S. 17-16-202(b)(v).
(b) A director's conduct with respect to an employee benefit plan for
a purpose he reasonably believed to be in the interests of the participants in
and beneficiaries of the plan is conduct that satisfies the requirement of
paragraph (a)(ii) of this section.
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) Unless ordered by a court under W.S. 17-16-854(a)(iii) a
corporation may not indemnify a director under this section:
(i) In connection with a proceeding by or in the right of the
corporation, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the standard of conduct
under subsection (a) of this section; or
(ii) In connection with any proceeding with respect to conduct for
which he was adjudged liable on the basis that he received a financial benefit
to which he was not entitled.
(e) Repealed By Laws 1997, ch. 190,ss.3.
17-16-852. Mandatory indemnification.
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he was a party
because he was a director of the corporation against reasonable expenses
incurred by him in connection with the proceeding.
17-16-853. Advance for expenses.
(a) A corporation may, before final disposition of a proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding because he is a director if he delivers
to the corporation:
(i) A written affirmation of his good faith belief that he has met
the standard of conduct described in W.S. 17-16-851 or that the proceeding
involves conduct for which liability has been eliminated under a provision of
the articles of incorporation as authorized by W.S. 17-16-202(b)(iv); and
(ii) His written undertaking to repay any funds if he is
not entitled to mandatory indemnification under W.S. 17-16-852 and it is
ultimately determined that he has not met the standard of conduct described in
W.S. 17-16-851.
(iii) Repealed By Laws 1997, ch. 190,ss.3.
(b) The undertaking required by paragraph (a)(ii) of this section
shall be an unlimited general obligation of the director but need not be secured
and may be accepted without reference to the financial ability of the director
to make repayment.
(c) Authorizations under this section shall be made:
(i) By the board of directors:
(A) If there are two (2) or more disinterested directors, by a
majority vote of all the disinterested directors (a majority of whom shall for
such purpose constitute a quorum) or by a majority of the members of a
committee of two (2) or more disinterested directors appointed by such a vote;
or
(B) If there are fewer than two (2) disinterested directors, by
the vote necessary for action by the board in accordance with W.S. 17-16-824(c),
in which authorization directors who do not qualify as disinterested directors
may participate; or
(ii) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the authorization.
17-16-854. Court-ordered indemnification and advance for expenses.
(a) A director who is a party to a proceeding because he is a
director may apply for indemnification or an advance for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the court shall:
(i) Order indemnification if the court determines that the
director is entitled to mandatory indemnification under W.S. 17-16-852;
(ii) Order indemnification or advance for expenses if the court
determines that the director is entitled to indemnification or advance for
expenses pursuant to a provision authorized by W.S. 17-16-858(a); or
(iii) Order indemnification or advance for expenses if the court
determines, in view of all the relevant circumstances, that it is fair and
reasonable:
(A) To indemnify the director; or
(B) To advance expenses to the director, even if he has not met
the standard of conduct set forth in W.S. 17-16-851(a), failed to comply with
W.S. 17-16-853 or was adjudged liable in a proceeding referred to in W.S.
17-16-851(d)(i) or (ii), but if he was adjudged so liable his indemnification
shall be limited to reasonable expenses incurred in connection with the
proceeding.
(b) If the court determines that the director is entitled to
indemnification under paragraph (a)(i) of this section or to indemnification or
advance for expenses under paragraph (a)(ii) of this section, it shall also
order the corporation to pay the director's reasonable expenses incurred in
connection with obtaining court-ordered indemnification or advance for expenses.
If the court determines that the director is entitled to indemnification or
advance for expenses under paragraph (a)(iii) of this section, it may also order
the corporation to pay the director's reasonable expenses to obtain
court-ordered indemnification or advance for expenses.
17-16-855. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under W.S. 17-16-851
unless authorized for a specific proceeding after a determination has been made
that indemnification of the director is permissible because he has met the
standard of conduct set forth in W.S. 17-16-851.
(b) The determination shall be made:
(i) If there are two (2) or more disinterested directors, by the
board of directors by majority vote of all the disinterested directors (a
majority of whom shall for such purpose constitute a quorum), or by a majority
of the members of a committee of two (2) or more disinterested directors
appointed by such a vote;
(ii) Repealed By Laws 1997, ch. 190,ss.3.
(iii) By special legal counsel:
(A) Selected in the manner prescribed in paragraph (i) of this
subsection; or
(B) If there are fewer than two (2) disinterested directors,
selected by the board of directors (in which selection directors who do not
qualify as disinterested directors may participate); or
(iv) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director may not be voted on the determination.
(c) Authorization of indemnification shall be made in the same manner
as the determination that indemnification is permissible, except that if there
are fewer than two (2) disinterested directors, authorization of indemnification
shall be made by those entitled under paragraph (b)(iii) of this section to
select special legal counsel.
17-16-856. Officers.
(a) A corporation may indemnify and advance expenses under this
subarticle to an officer of the corporation who is a party to a proceeding
because he is an officer of the corporation:
(i) To the same extent as a director; and
(ii) If he is an officer but not a director, to such further
extent as may be provided by the articles of incorporation, the bylaws, a
resolution of the board of directors or contract, except for:
(A) Liability in connection with a proceeding by or in the right
of the corporation other than for reasonable expenses incurred in connection
with the proceeding; or
(B) Liability arising out of conduct that constitutes:
(I) Receipt by him of a financial benefit to which he is not
entitled;
(II) An intentional infliction of harm on the corporation or
the shareholders; or
(III) An intentional violation of criminal law.
(iii) A corporation may also indemnify and advance expenses to a
Current or former officer, employee or agent who is not a director to the
Extent, consistent with public policy that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors or
contract.
(b) The provisions of paragraph (a)(ii) of this section shall apply
to an officer who is also a director if the basis on which he is made a party to
the proceeding is an act or omission solely as an officer.
(c) An officer of a corporation who is not a director is entitled to
mandatory indemnification under W.S. 17-16-852, and may apply to a court under
W.S. 17-16-854 for indemnification or an advance for expenses, in each case to
the same extent to which a director may be entitled to indemnification or
advance for expenses under those provisions.
Our Articles and By-Laws also provide for indemnification to the fullest extent
permitted under Wyoming law.
With regard to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by our Corporation in
connection with the issuance and distribution of the securities being offered by
this prospectus. Items marked with an asterisk (*) represent estimated expenses.
We have agreed to pay all the costs and expenses of this offering. Selling
security holders will pay no offering expenses.
ITEM AMOUNT
SEC Registration Fee* $ 2,500
Legal Fees and Expenses $22,500
Accounting Fees and Expenses* $10,000
Miscellaneous* $15,000
Total* $50,000
* Estimated Figure
RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to the Agreement for Purchase of Software dated December 15, 1999, we
acquired software from 2 individuals in exchange for the issuance of 3,037,500
[adjusted for split] shares of our common stock. The price was determined by
mutual agreement of the parties based upon what they believed was the fair value
of these rights at the time of transfer. Proprietary software valuation figures
are recorded on the financial statements based upon historical cost. The
founder's historical cost was $592,960 and it was fully developed as a
Windows-based application at the time, but has been further developed as an
Internet based application with additional content since then. The effective
post-split price per share was $.185.
o None of these issuance involved underwriters, underwriting discounts or
commissions;
o We placed restrictive legends on all certificates issued;
o No sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment;
o No offers or sales were made to persons in the United States; and
o No direct selling efforts were made in the United States.
In May 2000, we issued 675,000 shares of common stock to four consultants as
compensation for services of software development. The aggregate value of these
services was $12,600. Thus, this issuance was for $12,600 or $.019 per share.
We relied upon Regulation S of the Securities Act of 1933, as amended for the
above issuances. We believed that Regulation S was available because:
o None of these issuance involved underwriters, underwriting discounts or
commissions;
o We placed restrictive legends on all certificates issued;
o No sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment;
o No offers or sales were made to persons in the United States; and
o No direct selling efforts were made in the United States.
In May 2000 we sold 8,212,500 shares to 17 non-US citizens or residents who
were either accredited or sophisticated non-affiliated investors for total net
proceeds of $169,994 or approximately $.21 per share.
We relied upon Regulation S of the Securities Act of 1933, as amended for the
above issuances. We believed that Regulation S was available because:
o None of these issuance involved underwriters, underwriting discounts or
commissions;
o We placed restrictive legends on all certificates issued;
o No US sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment;
o No offers or sales were made to persons in the United States; and
o No direct selling efforts were made in the United States.
In July 2000, we sold 246,250 shares of common stock to 23 non-US citizens or
residents who were either accredited or sophisticated non-affiliated investors
for total net proceeds of $112,046 or approximately $.45 per share
We relied upon Regulation S of the Securities Act of 1933, as amended for the
above issuances.
We believed that Regulation S was available because:
o None of these issuances involved underwriters, underwriting discounts
or commissions;
o We placed restrictive legends on all certificates issued;
o No US sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment;
o No offers or sales of stock under the Regulation S offering were made
to persons in the United States;
o No direct selling efforts of the Regulation S offering were made in the
United States.
In July 2000, we sold 29,250 shares of common stock to 2 US accredited or
sophisticated non-affiliated investors for total net proceeds of $12,870 or
approximately $.44 per share.
We relied upon Section 4(2) of the Securities Act of 1933, as amended for the
above issuances. We believed that Section 4(2) was available because:
o None of these issuances involved underwriters, underwriting discounts
or commissions;
o We placed restrictive legends on all certificates issued;
o No sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment.
In November 2000, we issued 10,000 shares of common stock to a consultant for
software development. The value of the services was $3,270. This stock
was valued at an agreed price of $.327 per share, for a total of $3,270.
Between August 2000 and July 2001, we sold 719,599 shares of common stock to
31 non-US citizens or residents who were either accredited or sophisticated
non-affiliated investors for an aggregate of $226,851 or approximately $.21 per
share.
We relied upon Regulation S of the Securities Act of 1933, as amended for the
above issuances.
We believed that Regulation S was available because:
o None of these issuances involved underwriters, underwriting discounts
or commissions;
o We placed restrictive legends on all certificates issued;
o No US sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the risks of the investment;
o No offers or sales of stock under the Regulation S offering were made
to persons in the United States;
o No direct selling efforts of the Regulation S offering were made in the
United States.
Between August 2000 and July 2001, we sold 15,000 shares of common stock to 2 US
accredited or sophisticated non-affiliated investors for an aggregate of $6,600
or approximately $.44 per share.
We relied upon Section 4(2) of the Securities Act of 1933, as amended for the
above issuances.
We believed that Section 4(2) was available because:
o None of these issuances involved underwriters, underwriting discounts
or commissions;
o We placed restrictive legends on all certificates issued;
o No sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment.
Between August 2001 and October 2001, we issued 169,304 shares to 8 Canadian
employees, former employees and consultants who rendered services in connection
with the development of our software and our products. The aggregate value of
these services was $13,544 . This stock was valued at an agreed price of $13,544
or $.08 per share. We relied upon Regulation S of the Securities Act of 1933, as
amended for the above issuances. We believed that Regulation S was available
because:
o None of these issuance involved underwriters, underwriting discounts or
commissions;
o We placed restrictive legends on all certificates issued;
o No US sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the risks of the investment;
o No offers or sales were made to persons in the United States; and
o No direct selling efforts were made in the United States.
Between August 2001 and October 2001, we issued 125,000 shares to 4 U.S.
employees, and consultants who rendered services in connection with the
development of our software and our products. The aggregate value of these
services was $9,877. This stock was valued at an agreed price of $9,877 or $.08
per share.
We relied upon Section 4(2) of the Securities Act of 1933, as amended for the
above issuances.
We believed that Section 4(2) was available because:
o None of these issuances involved underwriters, underwriting discounts
or commissions;
o We placed restrictive legends on all certificates issued;
o No sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the risks of the investment.
Between August 2001 and October 2001, we sold 21,000 shares to two existing
Canadian non-affiliated sophisticated or accredited shareholders for an
aggregate of $4,760 or approximately $.22 per share. We relied upon Regulation S
of the Securities Act of 1933, as amended for the above issuances. We believed
that Regulation S was available because:
o None of these issuance involved underwriters, underwriting discounts or
commissions;
o We placed restrictive legends on all certificates issued;
o No US sales were made by general solicitation or advertising;
o Sales were made only to accredited investors or investors who were
sophisticated enough to evaluate the
risks of the investment;
o No offers or sales were made to persons in the United States; and
o No direct selling efforts were made in the United States.
In connection with the above transactions, although some of the investors may
have also been accredited, we provided the following to all investors:
o Access to all our books and records.
o Access to all material contracts and documents relating to our
operations.
o The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
Prospective investors were invited to review at our offices at any reasonable
hour, after reasonable advance notice, any materials available to us concerning
our business. Prospective Investors were also invited to visit our offices.
EXHIBITS
Item 3
1 Articles of Incorporation of psitek.org, Inc., a Wyoming
Corporation, including two amendments thereto
2 Name Change Amendment to Articles of Incorporation of
Careertek.org, Inc., a Wyoming Corporation
3 By-laws of SecureStaff Systems, Inc. [f/k/a psitek.org, Inc.],
a Wyoming Corporation
4 Articles of Incorporation of Careertek.org, Inc., an Ontario
Corporation
5 By-laws of Careertek.org, Inc., an Ontario Corporation
Item 4
1 Form of common stock Certificate of the SecureStaff Systems, Inc. (1)
Item 5
1 Legal Opinion of Bruce Fein, Esq., Bruce F. Fein, PC
Item 10
1 Employment Agreement with Dr. Peter Donnelly
2 Employment Agreement with James Cousineau
3 Agreement for Purchase and Sale of Software
Item 23
1 Consent of Dohan and Company, P.A. *
2 Consent of Bruce Fein, Esq., Bruce F. Fein, PC (included in Exhibit 5.1)
All exhibits previously filed, except for 23.1
All other Exhibits called for by Rule 601 of Regulation SB-2 or SK are not
applicable to this filing.
(1) Information pertaining to our common stock is contained in our Articles of
Incorporation and By-Laws.
UNDERTAKINGS
Information pertaining to our common stock is contained in our Articles of
Incorporation and By-Laws. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to:
1. File, during any period in which we offer or sell securities, a
post-effective amendment to this registration statement to:
i. Include any prospectus required by section 10(a)(3) of the Securities Act;
ii. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and Notwithstanding the forgoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation From the low or high end of
the estimated maximum offering range may be reflected in the form of prospects
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement. iii. Include any additional
or changed material information on the plan of distribution.
2. For determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.
3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in Barrie, Ontario, Canada on September 12
2002.
SecureStaff Systems, Inc.
Title Name Date Signature
Principal Executive Officer James Cousineau 9-12 -02 /s/ James Cousineau
Principal Accounting James Cousineau 9-12 -02 /s/ James Cousineau
Officer
Principal Financial Officer James Cousineau 9-12 -02 /s/ James Cousineau
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
SIGNATURE NAME TITLE DATE
/s/ Bruce Fein Mr. Bruce Fein Director 9-12 -02
/s/ Mike Kostrich Mr. Mike Kostrich Director 9-12 -02