As filed with the Securities and Exchange Commission on July __, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Resolve Staffing, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 7363 33-0860639
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(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
310 East Harrison
Tampa, FL 33602
Phone: (813) 225-1200
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(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
R. Gale Porter, President
c/o Resolve Staffing, Inc.
310 East Harrison
Tampa, FL 33602
Phone: (813) 225-1200
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With Copies to:
Herbert H. Sommer, Esq.
Sommer & Schneider LLP
595 Stewart Avenue, Suite 710
Garden City, NY 11530
Phone: (516) 228-8181
Columbialum Staffing, Inc.
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(former name or former address if changed since last report)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act 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(c) under the Securities Act, check the following box and list the Securities
Act 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, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of securities Amount to offering price aggregate Amount of
to be registered be registered per share offering price registration fee(1)
- ---------------- ------------- --------- --------------- -------------------
Common Stock (2) 5,000,000 $.15 $ 750,000 $ 69.00
Common Stock (3) 111,500 $.10 11,500 1.06
Common Stock (4) 1,218,866 $.04 48,755 4.49
--------- ---- -------- -------
TOTAL 6,330,366 $810,255 $ 74.55
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(1) The fee with respect to these shares has been calculated pursuant to Rules
457 under the Securities Act of 1933. There is no present public market for
the shares.
(2) Issuable upon exercise of outstanding warrants at $.15 per share.
(3) Issuable upon conversion of outstanding debentures at $.10 per share.
(4) Offered by Selling Security holders.
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The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall 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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION, DATED JULY___, 2002
P R O S P E C T U S
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6,330,366 Shares
Resolve Staffing, Inc.
Common Stock
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We are a professional, clerical, light industrial, and technical
staffing company. This prospectus relates to the offer and sale from time to
time of up to 6,330,366 shares of our common stock by the security holders named
in this prospectus. Some security holders own common stock and others would
acquire shares if they exercise outstanding warrants at $.15 per share or
convert outstanding convertible debentures at $.10 per share. Each selling
security holder will be deemed an underwriter of the shares of stock which they
are offering. This prospectus also covers such additional shares of our common
stock as may be issuable to the selling security holders in the event of a stock
dividend, stock split, recapitalization or other similar change in our common
stock.
We will not receive any proceeds from the sale of the shares by the
selling security holders. We will receive $.15 per share from warrant holders
that elect to take advantage of a "net exercise provision" contained in the
warrants. We will pay all expenses of registering these shares.
The selling security holders may resell common stock in any market in
which the shares are trading at the prevailing market price or in negotiated
transactions. There is no market for the shares of our common stock and no such
market may ever develop.
Our executive offices are located at 310 East Harrison, Tampa, Florida
33602, and our telephone number is (813) 225-1200.
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Investing in our common stock involves significant risks. See "Risk
Factors" beginning on page 4.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state or jurisdiction where the offer or sale is not
permitted.
The date of this prospectus is July ___, 2002.
TABLE OF CONTENTS
Page
About Resolve Staffing, Inc ........................................... 3
Special Note Regarding Forward Looking Statements...................... 4
Special Note Regarding Recent Changes in the Common Stock.............. 4
Risk Factors ......................................................... 4
Use of Proceeds ....................................................... 9
Market for the Registrant's Common Stock
and Related Shareholder Matters..................................... 9
Management's Discussion and Analysis
or Plan of Operation................................................ 10
Business............................................................... 14
Management............................................................. 18
Summary Compensation Table............................................. 19
Security Ownership of Certain Beneficial Owners
and Management...................................................... 20
Certain Relationships and Related Transactions......................... 22
Selling Security Holders .............................................. 22
Plan of Distribution................................................... 26
Description of Securities.............................................. 28
Legal Matters ......................................................... 30
Experts ............................................................... 30
Available Information ................................................. 31
You should rely only on the information contained in this prospectus.
Neither we nor any of the selling security holders have authorized anyone to
provide you with different information. This prospectus may only be used where
it is legal to sell these securities. The information in this prospectus may be
accurate only on the date of this prospectus.
If it is against the law in any state to make an offer to sell the
shares (or to solicit an offer from someone to buy the shares), then this
prospectus does not apply to any person in that state, and no offer or
solicitation is made by this prospectus to any such person.
2
ABOUT RESOLVE STAFFING, INC.
We are a staffing services firm providing client with professional,
clerical, light industrial, and technical personnel on a permanent, contract and
temporary placement basis. We presently target 87 companies in the Tampa,
Florida area and provide technical, clerical, administrative, accounting, sales,
human resources and light industrial staff.
Our company (formerly Columbialum Staffing, Inc., and Columbialum,
Ltd.) was organized in Nevada in April 1998 as a "blank check" or "shell"
company whose primary purpose was to merge with or acquire one or a number of
small private companies. On September 27, 2001, a limited liability company
controlled by Rene Morissette, acquired 97.4% of the outstanding common stock of
the company, changed management, and, in November 2001, entered into an
agreement to acquire Integra Staffing, Inc. We acquired Integra in December 2001
and its staffing business is the core of our business at the present time.
Integra was organized in August 1999 and, as of March 31, 2002,
provided approximately 42 flexible staffing personnel monthly in the Tampa,
Florida area. We plan to grow our business through the acquisition of private
companies that compliment each other and increased marketing efforts.
3
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for any historical information, the matters we discuss in this
prospectus concerning Resolve contain forward-looking statements. Any statements
in this prospectus that are not statements of historical fact, are intended to
be, and are, "forward-looking statements" under the safe harbor provided by
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Without limitation, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. The Risk Factors we discuss below, as
well as other factors identified in our filings with the SEC and those presented
elsewhere by our management from time to time, could cause actual results to
differ materially from those indicated by the forward-looking statements made in
this prospectus.
SPECIAL NOTE REGARDING RECENT CHANGES IN THE COMMON STOCK
On May 29, 2002, we filed an amendment to our articles of incorporation to
reverse split our outstanding common stock one-for-thirty. All share and per
share amounts in this prospectus have been adjusted to reflect this change.
RISK FACTORS
An investment in our common stock involves risks. You should carefully
consider the risks described below and the other information in this prospectus
before you decide to buy our common stock. You could lose all or part of your
investment as a result of these risks.
Risks Related to Our Business
We have a limited operating history of less than three years, making it
difficult to evaluate our future prospects
We were incorporated in April 1998, and through Integra, have only been
engaged in the staffing business since August 1999. We have a limited operating
history upon which an investor may evaluate our business and prospects. Our
potential for future profitability must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies in
their early stages of development, particularly companies in rapidly evolving
markets, such as staffing services in general and those catering to small to
medium businesses in particular. We may not successfully address any of these
risks. If we do not successfully address these risks, our business will be
seriously harmed.
We have lost money in each quarter since inception. We expect future losses and
may never become profitable
We have incurred net losses from operations in each quarter since
inception. Our net loss for the three months ended March 31, 2002 was $106,689
and as of March 31, 2002, had an accumulated deficit of $514,091. We expect to
continue to incur losses for the foreseeable future. We expect to increase
significantly our operating expenses in the near future as we attempt to build
our brand, expand our customer base and make acquisitions. To become profitable,
we must increase revenue substantially and achieve and maintain positive gross
margins. We may not be able to increase revenue and gross margins sufficiently
to achieve profitability.
Unless we find a new working capital funding source, we will be unable to pay
our employees on a daily basis or comply with the funding requirements of our
workers' compensation policies
4
We pay our flexible staffing employees on a weekly basis. However, on
average, we receive payment for these services from our customers 30 to 60 days
after the date of invoice. As we establish or acquire new offices, or as we
expand existing offices, we will have increasing requirements for cash to fund
these payroll obligations. Our primary sources of working capital funds for
payroll-related and workers' compensation expenditures have been loans or
private placements of securities to individuals, including certain of our
shareholders. If we do not obtain an institutional financing source and we are
unable to secure alternative financing on acceptable terms, our business,
financial condition, results of operations and liquidity would be materially
adversely affected.
We may have significant charges associated with acquisitions which will increase
our losses or reduce our earnings in the future
Our business plan includes the acquisition of one or more staffing
businesses, which may result in significant increases in goodwill and other
intangible assets. Unamortized goodwill and other intangible assets include
territory rights, customer lists, employee lists and covenants not to compete
acquired in the acquisitions. Net identifiable intangible assets are recorded at
fair value on the date of acquisition. Goodwill is the excess of cost over the
fair value of net assets of businesses acquired. We cannot assure you that we
will ever realize the value of the intangible assets we may acquire. On an
ongoing basis, we will make an evaluation based on undiscounted cash flows,
whether events and circumstances indicate that the carrying value of intangible
assets may be impaired or no longer be recoverable, in which case an additional
charge to earnings may be necessary. Any amount of goodwill expensed as a result
of this evaluation will increase our losses or reduce our earnings. Any future
determination requiring the write off of a significant portion of unamortized
intangible assets could have a material adverse effect on our financial
condition and results of operations.
Although we have not entered into an agreement for any acquisitions, we
plan to seek suitable candidates. Should we enter into any acquisition
agreements in the future, the resulting amortization of goodwill and other
intangible assets would reduce our operating income accordingly.
We are subject to government regulations and any change in these regulations, or
the possible retroactive application of these regulations could adversely affect
our business
As an employer, we are subject to all federal, state and local statutes
and regulations governing our relationships with our employees and affecting
businesses generally, including our employees assigned to work at client company
locations (sometimes referred to as worksite employees). Professional employer
organizations, or PEOs, provide their clients with a range of services
consisting of payroll administration, benefits administration, unemployment
services and human resources consulting services. PEO's become co-employers with
their clients as to the clients' worksite employees, with employment-related
liabilities contractually allocated between the PEO's and their clients. We may
be subject to certain federal and state laws related to PEO services. Because
many of these laws were enacted before the development of alternative employment
arrangements, such as those provided by PEOs and other staffing businesses, many
of these laws do not specifically address the obligations and responsibilities
of non-traditional employers. Interpretive issues concerning these relationships
have arisen and remain unsettled. Uncertainties arising under the Internal
Revenue Code of 1986, as amended, include, but are not limited to, the qualified
tax status and favorable tax status of certain benefit plans we and other
alternative employers provide. The unfavorable resolution of these unsettled
issues could have a material adverse effect on our results of operations,
financial condition and liquidity. In addition, the Internal Revenue Service has
formed an examination division, market segment specialization program, to
examine PEOs throughout the United States.
Our employee related costs are significant and will, if increased, and we are
unable to pass these costs on to our customers, adversely affect our
profitability
5
We are required to pay a number of federal, and state payroll taxes and
related payroll costs, including unemployment taxes, workers' compensation
insurance premiums and claims, Social Security, and Medicare, among others, for
our employees. We also incur costs related to providing additional benefits to
our employees, such as insurance premiums for health care. Health insurance
premiums, unemployment taxes and workers' compensation insurance premiums and
costs are significant to our operating results, and are determined, in part, by
our claims experience. We attempt to increase fees charged to our customers to
offset any increase in these costs, but we may be unable to do so. If the
federal or state legislatures adopt laws specifying additional benefits for
temporary workers, demand for our services may be adversely affected. In
addition, workers' compensation expenses are based on our actual claims
experiences in each state and our actual aggregate workers' compensation costs
may exceed estimates.
We may be exposed to employment related claims and costs that could materially
adversely affect our business
Temporary staffing companies, such as ours, employ people in the
workplace of their customers. This creates a risk of potential litigation based
on claims by customers of employee misconduct or negligence, claims by employees
of discrimination or harassment, including claims relating to actions of our
customers, claims related to the inadvertent employment of illegal aliens or
unlicensed personnel, payment of workers' compensation claims and other similar
claims. We may be held responsible for the actions at a job site of workers not
under our direct control.
We experience intense competition in our industry, which could limit our ability
to maintain or increase our market share or profitability
The flexible staffing market is highly fragmented and highly
competitive, with limited barriers to entry. Several very large full-service and
specialized temporary labor companies, as well as small local and regional
operations, compete with us in the flexible staffing industry. Competition in
the staffing market is intense, and both competitors and customers create price
pressure. We expect that the level of competition will remain high in the
future, which could limit our ability to maintain or increase our market share
or profitability.
If we are unable to recruit and retain our key local office managers and field
personnel, our results of operations would be adversely affected
We rely heavily on the performance and productivity of our local office
managers and field personnel who manage the operation of the recruiting and
dispatch offices, including recruitment and daily dispatch of temporary workers,
marketing and providing quality customer service. The loss of our key local
managers and field personnel may jeopardize existing customer relationships with
businesses that continue to use our staffing services based upon past
relationships with these local managers and field personnel. The loss of our key
local managers and field personnel could adversely affect our operations,
including our ability to establish and maintain customer relationships.
Our business would suffer if we could not attract temporary workers to fill the
jobs we offer
We compete with other temporary personnel companies to meet our
customer's needs. We must continually attract reliable temporary workers to fill
positions and may from time to time experience shortages of available temporary
workers. During periods of increased economic activity and low unemployment, the
competition among temporary staffing firms for qualified personnel increases.
Many regions in which we operate are experiencing historically low rates of
unemployment and we have experienced, and may continue to experience,
significant difficulties in hiring and retaining sufficient number of qualified
personnel to satisfy the needs of our customers. Also, we may face increased
competitive pricing pressures during these periods of low unemployment rates.
Any significant economic downturn could result in businesses using fewer
temporary employees, which could materially adversely affect us
6
Historically, the general level of economic activity has significantly
affected the demand for temporary personnel. When economic activity increases,
temporary employees are often added before full-time employees are hired.
However, as economic activity slows, many companies reduce their use of
temporary employees before laying off full-time employees. In addition, we may
experience more competitive pressure to lower the prices we charge our clients
during periods of economic downturn. Fluctuations and interruptions in the
business of our clients may also reduce demand for temporary employees.
Therefore, any significant economic downturn could have a material adverse
impact on our financial condition and results of operations.
We will require significant additional capital in the future, which may not be
available on suitable terms, or at all
The expansion and development of our business will require significant
additional capital, which we may be unable to obtain on suitable terms, or at
all. If we are unable to obtain adequate funding on suitable terms, or at all,
we may have to delay, reduce or eliminate some or all of our advertising,
marketing, acquisition activity, general operations or any other initiatives. We
will require substantial additional funds to carry out and expand our planned
staffing activities. During the next 12 months, we expect to meet our cash
requirements with existing cash, cash equivalents bank and private financing,
and the proceeds of future private placements of our securities. If we issue
convertible debt or equity securities to raise additional funds, our existing
stockholders will be diluted.
We have risks associated with potential acquisitions or investments
In the future, we plan to expand our operations through acquisitions of
small and medium size private companies, or divisions or segments of major
private and public companies. We will do this to:
o recruit well-trained, high-quality professionals;
o expand our service offerings;
o gain additional industry expertise;
o broaden our client base; and
o expand our geographic presence.
We may not be able to integrate successfully businesses which we may
acquire in the future without substantial expense, delays or other operational
or financial problems. We may not be able to identify, acquire or profitably
manage additional businesses. We may also require debt or equity financing for
future acquisitions that may not be available on terms favorable to us, if at
all.
Also, acquisitions may involve a number of risks, including:
o diversion of management's attention;
o failure to retain key personnel;
o failure to retain existing clients;
o unanticipated events or circumstances;
o legal liabilities; and
o amortization of acquired intangible assets.
We cannot assure you that client satisfaction or performance problems
at a single acquired firm will not have a material adverse impact on our
reputation as a whole. Further, we cannot assure you that future acquired
businesses will generate anticipated revenues or earnings.
7
Risks Related to Our Offering
There is no trading market for our common stock
There is no trading market for our common stock and no market may exist
for our common stock after the effective date of this prospectus. We plan to
assist broker-dealers in complying with Rule 15c2-11 of the Securities Exchange
Act of 1934, as amended, so that such brokers can trade our common stock in the
Over-The-Counter Electronic Bulletin Board (the "Bulletin Board") and plan to
attempt to list our common stock on the "Bulletin Board Exchange" ("BBX")
proposed by the Nasdaq Stock Market, if it replaces the Bulletin Board. We
cannot assure investors that any broker-dealer will actually file the materials
required in order for such Bulletin Board trading to proceed or that we will be
able to list our common stock on the BBX.
Investors may find it difficult to trade our common stock on the Bulletin Board
We currently do not meet the requirements for listing on NASDAQ
Small-Cap market or any national stock exchange. If our common stock trades on
the Bulletin Board, an investor may find it difficult to sell or to obtain
accurate quotations as to the market value of our common stock. Furthermore, our
common stock will also be subject to certain rules promulgated by the SEC under
the Securities Exchange Act of 1934 for "penny stock." These rules require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a penny stock. Generally, a penny stock is any non-National
Market listed equity security that has a market price of less than $5.00 per
share, subject to certain exceptions. Our common stock may meet the definition
of a penny stock. The additional burdens imposed upon broker-dealers by such
requirements may discourage broker-dealers from affecting transactions on our
common stock and may limit the ability of purchasers of our common stock to
resell our common stock in a secondary market.
If plans to phase-out the OTC Bulletin Board are implemented, we may not qualify
for listing on the proposed Bulletin Board Exchange or any other marketplace, in
which event investors may have difficulty buying and selling our securities
We understand that, in 2003, subject to approval of the Securities and
Exchange Commission, The NASDAQ Stock Market intends to phase out the OTC
Bulletin Board, and replace it with the BBX. As proposed, the BBX will include
an electronic trading system to allow order negotiation and automatic execution.
The NASDAQ Stock Market has indicated its belief that the BBX will bring
increased speed and reliability to trade execution, as well as improve the
overall transparency of the marketplace. Specific criteria for listing on the
BBX have not yet been announced, and the BBX may provide for listing criteria
which we may not meet. If the OTC Bulletin Board is phased out and we do not
meet the criteria established by the BBX, there may be no transparent market on
which our securities may be included. In that event, investors may have
difficulty buying and selling our securities and the market for our securities
may be adversely affected thereby.
We are registering a large percentage of our common stock presently outstanding
The 6,330,366 shares of common stock being registered and offered
(including 111,500 shares underlying convertible debentures and 5,000,000 shares
underlying warrants) would represent approximately 61% of our total issued and
outstanding equity securities, if all the debentures and warrants are exercised
in full. Registering such a large percentage of our total issued and outstanding
securities is likely to have an adverse effect on the market price of our common
stock.
Our principal stockholders, officers and directors will own a controlling
interest in our voting stock
Upon completion of this offering our officers, directors and
stockholders with greater than 5% holdings will, in the aggregate, beneficially
own approximately 83% of our outstanding common stock. As a result, these
stockholders, acting together, will have the ability to control substantially
all matters submitted to our stockholders for approval, including:
8
o election of our board of directors;
o removal of any of our directors;
o amendment of our certificate of incorporation or bylaws; and
o adoption of measures that could delay or prevent a change in
control or impede a merger, takeover or other business
combination involving us.
These stockholders will have substantial influence over our management
and our affairs.
There are a large number of shares underlying our warrants that may be available
for future sale and the sale of these shares may depress the market price of our
common stock
As of June 30, 2002, we had 5,335,034 shares of common stock issued and
outstanding. We also had convertible debentures and warrants outstanding that
may be exercised or converted into 5,111,500 shares of common stock. All
6,330,366 of the shares offered, including all of the shares issuable upon
exercise of our warrants and conversion of our debentures, may be sold without
restriction. The sale of these shares may adversely affect the market price of
our common stock. The issuance of shares upon conversion or exercise of the
warrants may result in substantial dilution to the interests of other
stockholders.
USE OF PROCEEDS
The selling security holders will sell all of the shares of common
stock offered by this prospectus. Accordingly, we will not receive any of the
proceeds from the sale of these shares. We may receive proceeds from the
exercise of warrants for cash rather than by the exercise of "net exercise
provisions" contained in the warrants. We will use such proceeds, if any, for
general working capital purposes.
MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS
Market information
Our securities do not currently, and have not in the past, traded on
any public market. Thus, there is currently no market for our securities and
there can be no assurance that a trading market will develop or, if one
develops, that it will continue or provide liquidity into which shares may be
sold.
Number of shareholders
The number of shareholders of record of our common stock as of the
close of business on June 30, 2002 was 31.
Dividend policy
To date, we have declared no cash dividends on our common stock, and we
do not expect to pay cash dividends in the near term. We intend to retain future
earnings, if any, to provide funds for operation of our business.
9
Recent sales of unregistered securities
On November 16, 2001, we issued an aggregate of $7,300 principal amount
of 5% convertible subordinated debentures due December 31, 2002 to 26
individuals and entities, each of whom were accredited investors pursuant to
Rule 506 of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"). The transaction was made directly by our officers and
directors without a placement agent. The debentures were converted into 248,366
shares of our common stock which may be sold by using this prospectus.
On December 6, 2001, we issued an aggregate of $11,150 of 6%
convertible subordinated debentures due June 30, 2003 to 104 accredited and 32
non-accredited investors pursuant to Rule 506 of Regulation D under the
Securities Act. No placement agent was employed for this offering. The
debentures are convertible into restricted shares of our common stock for $.10
per share that may result in the issuance of up to 111,500 shares which may be
sold by using this prospectus.
On December 10, 2001, we issued 50,000 shares of our restricted common
stock to six individuals in exchange for all of the outstanding capital stock of
Integra, which exchange was exempt under Section 4(2) of the Securities Act.
On January 21, 2002, we issued 3,334 shares of our restricted common
stock to Apogee Business Consultants, LLC pursuant to our consulting agreement
with them. The shares were issued pursuant to Section 4(2) of the Securities
Act.
In March 2002 we issued $100,000 principal amount of 18% Subordinated
Convertible Notes due October 1, 2002 to two investors pursuant to Rule 506 of
Regulation D (described below). We permitted the holders of these notes to
exchange the notes for units consisting of shares of common stock and the
warrants, at face value.
On June 24, 2002, we issued 5,000,000 units to 19 accredited investors
pursuant to Rule 506 of Regulation D. The units each consisted of one share of
common stock and one warrant. The consideration we received consisted of cash,
the notes described above, relieving us from an obligation to repay certain debt
or a combination of these items equal to $.04 per unit for an aggregate of
$200,000. Of the $200,000 received, $40,000 was in cash, $100,000 was the notes
and we were relieved of $60,000 of debt. The securities were offered by our
directors and no commissions were paid. 5,000,000 shares which may be issued
upon the exercise of the warrants and 970,500 shares issued as part of the units
may be sold using this prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties, and our
actual results could differ materially from those forward-looking statements.
The following discussion regarding our financial statements should be read in
conjunction with the financial statements and notes thereto.
General overview
Our activities since inception were limited to organizational matters,
and did not have operating activity until we acquired Integra in December ,
2001.
We registered our common stock on a Form 10-SB Registration Statement
filed pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") and
Rule 12(g) thereof. We file periodic reports under Rule 13(a) of the Exchange
Act with the Securities and Exchange Commission, including quarterly reports on
Form 10-QSB and annual reports on Form 10-KSB.
10
Liquidity and capital resources
We have financed our operations through short-term credit facilities
and from the sale of convertible debentures:
o On November 16, 2001, we issued an aggregate of $7,300
principal amount of 5% convertible subordinated debentures due
December 31, 2002 to 18 individuals and entities, each of whom
were accredited investors pursuant to Rule 506 of Regulation D
under the Securities Act of 1933, as amended (the "Securities
Act"). The transaction was made directly by the officers and
directors of the Company without a placement agent.
o On December 6, 2001, we issued an aggregate of $11,150 of 6%
convertible subordinated debentures due June 30, 2003.
o In March 2002, we sold 18% Subordinated Convertible Notes due
October 1, 2002 in the aggregate principal amount of $100,000.
o We sold 5,000,000 units each consisting of one share of our
common stock and one five-year $.15 common stock purchase
warrant on June 24, 2002 for $200,000. Of the $200,000,
$40,000 was for cash , $100,000 was in exchange for the above
notes and $60,000 was for the satisfaction of outstanding
debt.
As of March 31, 2002, we had a working capital deficit of $57,869. As
of that date we had a liability to note holders and for short term advances in
the amount of $158,400, of which $140,000 was eliminated as a result of the
private offering on June 24, 2002. We plan to seek additional financing but
there is no assurance that we will be able to obtain financing. If we are not
able to obtain additional financing our operations may be curtailed or
discontinued and an investment in our common stock would be lost.
Critical accounting policies and estimates
Our significant accounting policies are more fully described in Note A
to our financial statements. However, certain of our accounting policies are
particularly important to the portrayal of our financial position and results of
operations and require the application of significant judgment by our
management; as a result they are subject to an inherent degree of uncertainty.
In applying these policies, our management uses their judgment to determine the
appropriate assumptions to be used in the determination of certain estimates.
Those estimates are based on our historical, terms of existing contracts, our
observance of trends in the industry, information provided by our customers and
information available from other outside sources, as appropriate. Our
significant accounting policies include:
o Revenue cost recognition: We record our service revenues from
our customers at the time our temporary employees perform
services on customer assignments. We record revenues from
permanent placement at the time the customer agrees to hire a
candidate we supply to them. Consistent with industry
practice, we are at risk for all employee salaries and wages,
employment-related taxes, workers compensation insurance and
other benefits we provide to the employee, whether or not we
are able to collect our accounts receivable from our
customers.
o Allowance for uncollectible accounts receivable: We estimate
and provide an allowance for uncollectible accounts receivable
based on analysis and age of our open accounts, our experience
with the particular customer, our own historical experience
with bad debts, as well as other information obtained from
outside sources.
11
o Workers compensation insurance: The cost of our workers
compensation insurance is based on premiums determined by our
insurance carrier for the particular type of service our
employees provide to our customers, modified by a factor
computed based on our claims history. A deterioration in our
claims experience would result in increased insurance costs
for future salary and wages base. Although we attempt to
estimate our future liability, often it is the result of
unanticipated claims for work related injuries.
o Long-lived assets: We depreciate property and equipment over
the respective asset's estimated useful life. We determine the
useful lives of each asset based of how long we determine the
asset will generate revenue or has a useful economic life. We
review the remaining useful life of the assets annually to
ascertain that our estimate is still valid. If we determine
the useful lives has materially changed, we either change the
useful life of the assets or in some cases, may write the
asset if we determined the asset has exhausted its useful
life.
o Income taxes: As part of the process of preparing our
financial statements, we are required to estimate our income
taxes. This process involved estimating our actual current tax
exposure together with assessing temporary differences
resulting from differing treatment of specific items, such as
depreciation, allowance for uncollectible accounts receivable
and others. These differences result in deferred tax assets
and liabilities. We must then assess the likelihood that our
deferred tax assets will be recovered from future taxable
income, and to the extent we believe that recovery is not
likely, we must establish a valuation allowance. To the extent
we establish a valuation allowance or increase the allowance
in a period, we must include an expense within the tax
provision in the statement of operations. We recorded a
valuation allowance of $112,600 as of December 31, 2001 due to
uncertainties relating to our ability to utilize some of our
deferred tax assets, consisting primarily of net operating
losses carried forward to the period over which they could be
recoverable. In the event that actual results differ from
these estimates or we adjust these estimates in future
periods, we may need to establish an additional valuation
allowance which could materially impact our financial position
and results of operations.
Comparison of operations for year ended December 31, 2001 (consolidated) to year
ended December 31, 2000.
Prior to our acquisition of Integra in December 2001 and its staffing
business which is the core of our business at the present time, we were
considered a "blank check" or "shell" without operations, no revenues and
nominal administrative expenses, therefore the following comparisons relate
substantially to the historical operations of Integra, our wholly owned
subsidiary.
Revenues for years ended December 31, 2001 to 2000 decreased to
$471,821 from $556,267 or a 15% decrease, due primarily to the Integra's
previous management inability to provide adequate funding and secondly to the
slowdown of business activity after the 9/11 disaster.
For the years December 31, 2001 and 2000 the major categories of
expenses, as a percent of revenue were as follows:
2001 2000
----------------- ----------------
Legal & professional 11% 1%
Advertising & promotion 5% 6%
Salaries and benefits 42% 34%
Payroll taxes 2% 2%
Penalties 4% -%
Rent & leases 5% 4%
Travel & entertainment 2% 2%
Administrative expenses 10% 7%
12
Legal & professional expense increased from $6,894 in 2000 to $52,621
in 2001, reflecting the increased legal costs associated with acquisition of
Integra, as well as costs associated with an outside consultant engaged to
assist our management with (a) the requirements for such acquisition, (b) the
increased level of compliance associated with the change of control, (c)
restructuring our common and preferred stock, and (d) assistance and
coordination with our stock transfer agent. The six-month agreement with this
consultant expires March 31, 2002.
Advertising and promotion expense decreased from $32,504 in 2000 to
$21,710 in 2001, reflecting a decreased level of operations and in order to
conserve resources.
Salaries and benefits increased from $187,715 in 2000 to $197,304 in
2001, reflecting the hiring of an additional salesperson in an attempt to boost
revenues. Related payroll taxes remained constant as they relate to salaries.
Payroll tax penalties increased from $659 in 2000 to $19,638 in 2001,
reflecting Integra's inability to secure financing in order to properly fund its
operations. Since that time the shareholders were able to properly fund the
operations, and therefore this cost is not expected to recur.
Rent & leases expense increased from $19,727 in 2000 to $22,626 in
2001, reflecting the temporary leasing of second operational office. The second
location was closed before the end of 2001.
Travel & entertainment increased from $9,356 in 2000 to $10,071 in
2001, but remained substantially constant as a percent of revenues.
Administrative expenses increased from $38,776 in 2000 to $48,551 in
2001 for a 3% increase related to revenues. The major components of
administrative expenses for year 2001 and 2000 were as follows: auto expense
$5,075 and $0 reflecting the prior management auto allowance; bank charges
$3,937 and $1,295 reflecting lower bank balance plus fees for non-sufficient
funds; telephone expense $8,511 and $7,179 reflecting the operations of the
second operational office; depreciation expense $4,473 and $3,104 reflecting the
increase assets to support two locations.
Comparison of operations for the three months ended March 31, 2002 to the three
months ended March 31, 2001
Revenues for the quarter ended March 31, 2002 to 2001 decreased from
$175,875 to $85,540 or a 51% decrease reflecting a slow down in the industry and
in the economy, especially subsequent to the September 11, 2001 disaster.
During the same period cost of revenues decreased from $130,995 to
$55,458 reflecting a commensurate decrease in relative costs of providing
services to our customers. The major components of costs of revenues decreased
as follows: labor, $116,612 to $51,177; workers compensation insurance $795 to
$355, and payroll taxes and benefits $13,003 to $3,894.
For this period salaries remained constant at $49,000 reflecting the
same salary structure for office and management personnel.
During the same period, legal and accounting expenses increased by
$50,810 reflecting substantially higher legal expenses incurred to discharge
Company's legal obligations under the Securities Exchange Act of 1934, including
mailings to shareholders,, quarterly and annual reports, and the cost of
auditing the Company's financial statements for 2001.
13
Additionally, for the same period, public company expense increased by
$1,700 reflecting filing fees and expenses in connection with the Company's
filing of compliance reports with the Securities and Exchange Commission. Rent
expense increased by $4,395 reflecting the increase in rent as well as
allocation of common area maintenance. Insurance increased by $5,000, reflecting
a more adequate level of coverage than previously available.
Other expenses decreased: Penalties decreased by $20,416 reflecting
better cash management and better funding. Advertising decreased $5,270
reflecting a cost reduction program and a more targeted advertising program.
INFLATION
Management believes that inflation has not had a material effect on our
results of operations.
BUSINESS
Background of the company
Resolve (formerly Columbialum Staffing, Inc. and Columbialum, Ltd.)was
organized under the laws of the State of Nevada on April 9, 1998, and was a
"blank check" or "shell" company whose primary purpose was to engage in a merger
with, or acquisition of one or a small number of private firms expected to be
private corporations, partnerships or sole proprietorships. On September 27,
2001, a limited liability company controlled by Rene Morissette acquired 97.4%
of our outstanding common stock, changed management, and in November 2001,
entered into an agreement to acquire Integra Staffing, Inc. ("Integra"). We
acquired Integra in December 2001 and its staffing business is the core of our
business at the present time.
Integra was organized in 1999, and as of March 31, 2002, was providing
approximately 42 flexible staffing personnel monthly in the Tampa, Florida area.
We plan to grow our business through the acquisition of private companies that
complement each other and through increased marketing efforts.
General
We are a local provider of human resource services focusing on the
professional, clerical, administrative and light industrial staffing market in
Tampa, Florida, through our Integra subsidiary. Integra recruits, trains and
deploys temporary personnel and provides payroll administration services to its
clients. Integra's clients, consisting primarily of local companies, include
businesses in the manufacturing, distribution, hospitality, and construction
industries.
As of June 30,, 2002, Integra provided approximately 42 flexible
staffing personnel monthly. Integra has approximately 37 clients.
Staffing companies provide one or more of three basic services to
clients: (i) flexible staffing; (ii) placement and search; and (iii)
outplacement. Based on information provided by the American Staffing
Association, formerly the National Association of Temporary and Staffing
Services, the National Association of Professional Employer Organizations and
Staffing Industry Analysts, Inc., staffing industry revenues for 2000 were
approximately $63.6 billion. Over the last five years, the staffing industry has
experienced significant growth, due largely to the utilization of temporary help
across a broader range of industries. Staffing industry revenues grew from
approximately $59.5 billion in 1999 to approximately $63.6 billion in 2000, or
6.9%. We believe that the industrial staffing market is highly fragmented and
that in excess of 75% of industrial staffing revenues are generated by small
local and regional companies.
14
Company services
Our Integra subsidiary focuses on meeting our clients' flexible
staffing needs, targeting opportunities in a fragmented, growing market that we
believe has been under-served by large full service staffing companies.
Significant benefits of Integra's services to clients include providing the
ability to outsource the recruiting and many logistical aspects of their
staffing needs, as well as converting the fixed cost of employees to the
variable cost of outsourced services.
- PAYROLL ADMINISTRATION. We assume responsibility for our
Integra service employees for payroll and attendant
record-keeping, payroll tax deposits, payroll tax reporting,
and all federal, state, payroll tax reports (including 941s,
940s, W-2s, W-3s, W-4s and W-5s), state unemployment taxes,
employee file maintenance, unemployment claims and monitoring
and responding to changing regulatory requirements.
- AGGREGATION OF STATUTORY AND NON-STATUTORY EMPLOYEE BENEFITS.
We provide workers' compensation and unemployment insurance to
our service employees. Workers' compensation is a
state-mandated comprehensive insurance program that requires
employers to fund medical expenses, lost wages, and other
costs that result from work related injuries and illnesses,
regardless of fault and without any co-payment by the
employee. Unemployment insurance is an insurance tax imposed
by both federal and state governments. Our human resources and
claims administration departments monitor and review workers'
compensation for loss control purposes.
We are the employer of record with respect to flexible industrial
staffing services and assume responsibility for most employment regulations,
including compliance with workers' compensation and state unemployment laws. As
part of our basic services in the flexible staffing market, we conduct a human
resources needs analysis for clients and client employees. Based on the results
of that review, we recommend basic and additional services that the client
should implement.
We provide certain other services to our flexible industrial staffing
clients on a fee-for-service basis. These services include screening,
recruiting, training, workforce deployment, loss prevention and safety training,
pre-employment testing and assessment, background searches, compensation program
design, customized personnel management reports, job profiling, description,
application, turnover tracking and analysis, drug testing policy administration,
affirmative action plans, opinion surveys and follow-up analysis, exit
interviews and follow-up analysis, and management development skills workshops.
Sales and Marketing
We market our flexible staffing services through a combination of
direct sales, telemarketing, trade shows and advertising. We have two full time
salespersons.
Clients
Our clients represent a cross-section of the industrial sector, of
which no single client represents more than 5% of our total revenues. Although
more than 99% of Integra's clients are local and regional companies, Integra's
client list does include some national companies. One customer, H. Lee Moffit
Medical Clinic, represented 16% of our revenue for the year ended December 31,
2001 and 0% of our revenue for the three months ended March 31, 2002.
We attempt to maintain diversity within our client base in order to
decrease our exposure to downturns or volatility in any particular industry, but
we cannot assure you that we will be able to maintain such diversity or decrease
our exposure to such volatility. All prospective clients fill out a
questionnaire to help us evaluate workers' compensation risk, creditworthiness,
unemployment history, and operating stability. Generally, flexible industrial
staffing clients do not sign long-term contracts.
15
Many of our clients are concentrated geographically in western Florida,
however we are not dependent on any one customer in any of the markets we serve.
Competition
The flexible staffing market is highly fragmented and characterized by
many small providers in addition to several large public companies, including
Ablest, Inc., Spherion, Adecco, S.A., Kelly Services, Inc., Manpower, Inc., and
others, which complete directly with our Company. There are limited barriers to
entry and new competitors frequently enter the market. Although a large
percentage of flexible staffing providers are locally operated with fewer than
five offices, most of the large public companies have significantly greater
marketing, financial and other resources than us. We believe that by focusing
primarily on customer service, we enjoy a competitive advantage over many of our
competitors that attempt to provide a broader range of staffing services. We
also believe that by targeting regional and local companies, rather than the
national companies that are generally being pursued by our competitors, we can
gain certain competitive advantages.
We believe that several factors contribute to obtaining and retaining
clients in the professional, clerical, administrative, light industrial and
technical support staffing market. These factors include an understanding of
clients' specific job requirements, the ability to reliably provide the correct
number of employees on time, the ability to monitor job performance, and the
ability to offer competitive prices. To attract qualified candidates for
flexible employment assignments, companies must offer competitive wages,
positive work environments, flexibility of work schedules, an adequate number of
available work hours and, in some cases, vacation and holiday pay. We believe we
are reasonably competitive in these areas in the markets in which we compete,
although we cannot assure you that we will maintain a competitive standing in
the future.
INDUSTRY REGULATION
Overview
As an employer, we are subject to federal, state, and local statutes
and regulations governing our relationships with our employees and affecting
businesses generally, including employees at client worksites.
We assume the sole responsibility and liability for the payment of
federal and state employment taxes with respect to wages and salaries paid to
our employees. Payroll taxes for the third quarter of 2001 were past due from
Integra in the amount of $13,275 at December 31, 2001, and an arrangement was
made with the IRS whereby this liability was paid in full in monthly
installments through May, 2002.
Employee Benefit Plans. We plan to offer various benefit plans to our
worksite employees. These plans include a multiple-employer retirement plan, a
cafeteria plan, a group health plan, a group life insurance plan, a group
disability insurance plan and an employee assistance plan. Generally, employee
benefit plans are subject to provisions of both the Internal Revenue Code and
the Employee Retirement Income Security Act of 1974, as amended. In order to
qualify for favorable tax treatment under the Code, the benefit plans must be
established and maintained by an employer for the exclusive benefit of the
employer's employees. An IRS examination may determine that we were not the
employer of our worksite employees under Internal Revenue Code provisions
applicable to employee benefit plans. If the IRS were to conclude that we were
not the employer of our worksite employees for employee benefit plan purposes,
those employees would not have qualified to make tax favored contributions to
our multiple-employer retirement plans or cafeteria plan. If such conclusion
were applied retroactively, employees' vested account balances, could become
taxable immediately, we could lose our tax deduction to the extent the
contributions were not vested, the plan trust could become a taxable trust and
penalties could be assessed. In such a scenario, we could face the risk of
potential litigation by some of our clients. As such, we believe that a
retroactive application by the IRS of an adverse conclusion could have a
material adverse effect on our financial position, results of operations and
liquidity.
16
ERISA also governs employee pension and welfare benefit plans. The
United States Supreme Court has held that the common law test of employment must
be applied to determine whether an individual is an employee or an independent
contractor under ERISA. If we were found not to be an employer for ERISA
purposes, our employee benefit plans would not be subject to ERISA. As a result
of such finding, we and our employee benefit plans would not enjoy the
preemption of state law provided by ERISA and could be subject to varying state
laws and regulations, as well as to claims based upon state common law.
Workers' compensation
Workers' compensation is a state mandated comprehensive insurance
program that requires employers to fund medical expenses, lost wages and other
costs resulting from work-related injuries and illnesses. In exchange for
providing workers' compensation coverage for employees, employers are generally
immune from any liability for benefits in excess of those provided by the
relevant state statutes. In most states, the extensive benefits coverage for
both medical costs and lost wages is provided through the purchase of commercial
insurance from private insurance companies, participation in state-run insurance
funds, self-insurance funds or, if permitted by the state, employer self
insurance. Workers' compensation benefits and arrangements vary on a
state-by-state basis and are often highly complex. In Florida, for instance,
employers are required to furnish, solely through managed care arrangements, the
medically necessary remedial treatment for injured employees.
Trademarks and service marks
We do not have any registered trade or service marks. It is our
intention to develop service marks as appropriate and seek federal registration
when possible. We have begun the process of registering the mark "Resolve
Staffing(TM)", and the name "Resolve Staffing" with a design, and, if federal
registration is granted, we intend to develop Resolve Staffing as our brand
identity.
Corporate employees
As of March 31, 2002 , we had 47 employees, of whom 42 were employed in
our Integra subsidiary as worksite employees and 5 were employed in sales and
administrative capacities. We believe that our relationships with our employees
are good.
Expansion program
We plan to acquire competitive temporary staffing firms operating in
larger metropolitan cities including Tampa, Florida and surrounding areas.
Target companies being sought will have recognized local brands and a network of
office locations able to collectively produce positive cash flows. Our principal
areas of interest are in the southeast and mid-west market places. We plan to
operate acquired companies under their existing brand identities to minimize
alienation of the local community by a name change. Where possible, we plan to
consolidate administrative and record keeping functions in an effort to improve
operating efficiency.
Our acquisition program will be focused on acquiring businesses that
have a strong presence in the office administration, data processing, network
administration, and technical production support market segments within the
staffing industry. We believe that our expertise and service regimes, once
integrated into operating procedures of the acquired companies, will allow these
businesses to be more competitive and attractive to staffing service consumers
in these critical market segments.
In addition, we plan to acquire or develop platform entry business in
the emerging Professional Employer Organization ("PEO") industry. PEO's provide
their clients with a range of services consisting of payroll administration,
benefits administration, unemployment services and human resources consulting
services. PEO's become co-employers with their clients as to the clients
worksite employees, with employment related liabilities contractually allocated
between the PEO's and their clients. While PEO co-employment relationships raise
questions concerning the employer/employee relations under tax and welfare
benefit laws, we believe that offering these services to our clients will create
revenue growth potential.
17
Property
Our executive offices consist of 2,000 square feet of office space,
without rent, at a facility provided by R. Gale Porter, our President, Chief
Operating Officer and a director.
Effective July 1, 2002, we occupy approximately 1,056 square feet
office space, housing our operating offices, pursuant to a three-year lease with
an unrelated landlord, expiring June 30, 2005 .
The space, together with the executive offices provided by Mr. Porter,
has been adequate for our present level of operations. We will require
additional facilities in which to centralize our accounting, training, human
resource, risk management and executive work activities. . We will require
larger scale data processing and network communication capabilities in order to
facilitate the assimilation of acquired companies into our methods of operating
and accounting standards, and to provide customers state-of-the-art service and
support.
Previously we occupied a 1,540 square feet office space, housing our
operating offices, pursuant to a three-year lease expiring October 30, 2002. The
space has been leased to another tenants, therefore, we have been relieved of
any liability on the remainder of the lease after August 31, 2002.
MANAGEMENT
The following table sets forth the names and ages of our current
directors and executive officers, the principal offices and positions held by
each person and the date such person became a director or executive officer. The
executive officers are elected annually by the Board of Directors. The directors
serve one-year terms until their successors are elected. The executive officers
serve terms of one year or until their death, resignation or removal by the
Board of Directors. There are no family relationships between any of the
directors and executive officers. In addition, there was no arrangement or
understanding between any executive officer and any other person pursuant to
which any person was selected as an executive officer.
Our directors and executive officers as of June 30, 2002, are as
follows:
Name Age Position
---- --- --------
R. Gale Porter 68 President, COO and Director
Cristino L. Perez 58 CFO, Secretary, Treasurer, and Director
Mr. Porter has served as our President and a director since December
12, 2001. Mr. Porter has served as President and Director of Integra since
October 2001. Prior to his association with Integra, Mr. Porter served from
March 1996 to September 2000 as President and Member of All Trades Direct, Inc.,
and predecessors, a company specializing in temporary employment services for
the construction industry. All Trades Direct developed from one to 27 offices
with revenues of $1 million per month prior to its sale in September 2000. Mr.
Porter earned a BA degree in Economics from Florida State University.
Mr. Perez has served as our Chief Financial Officer, Secretary,
Treasurer and Director since December 12, 2001. Mr. Perez served as Secretary,
Treasurer and Director of Integra since October 2001. From October 1999 to June
2002, Mr. Perez was employed by Baumann, Raymondo & Company, P.A., Certified
Public Accountants with primary responsibilities for development of accounting
and auditing services to small publicly held enterprises. From 1993 to 1999, Mr.
Perez operated his own tax and accounting service, with concentration of
services to small private and publicly held companies. Mr. Perez earned a BA
degree in Accounting from the University of South Florida.
18
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who own more than ten percent of
our Common Stock to file with the SEC initial reports of ownership and reports
of changes in ownership. Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. To our knowledge, during the year ended December
31, 2001, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten percent shareholders were complied
with, except that the William Brown Trust, Cristino Perez, Charles Lincoln and
R. Gale Porter each filed their Form 3 reports late.
Executive compensation
We do not have employment contracts with any of our management
personnel.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information
for services rendered in all capacities for the three fiscal years ended
December 31, 2001 for each person that served as our Chief Executive Officer. No
executive officer's salary and bonus exceeded $100,000 in any of the applicable
years.
SUMMARY COMPENSATION TABLE
Other
Year Annual Restricted All Other
Name and Principal Ended Compen- Stock Options/ LTIP Compen-
Position Dec. 30 Salary Bonus sation Awards SARs Payouts sation
- ------------------- ------- ------ ----- ------ ------------ -------- ------- -----------
M. Richard Cutler, 2001 -0- -0- -0- -0- -0- -0- -0-
President, Treasurer 2000 -0- -0- -0- -0- -0- -0- -0-
and Secretary (1) 1999 -0- -0- -0- -0- -0- -0- -0-
Rene Morissette, 2001 750 -0- -0- -0- -0- -0- -0-
President, Treasurer 2000 -0- -0- -0- -0- -0- -0- -0-
and Secretary (2) 1999 -0- -0- -0- -0- -0- -0- -0-
Charles Lincoln, 2001 -0- -0- -0- -0- -0- -0- -0-
Chairman and 2000 -0- -0- -0- -0- -0- -0- -0-
CEO (3) 1999 -0- -0- -0- -0- -0- -0- -0-
R. Gale Porter, 2001 -0- -0- -0- -0- -0- -0- -0-
President and COO 2000 -0- -0- -0- -0- -0- -0- -0-
- -----------
(1) Appointed April 9, 1998; resigned September 27, 2001.
(2) Appointed September 26, 2001; resigned January 11, 2002.
(3) Appointed December 12, 2001;, resigned March 18, 2002.
(4) Assumed the duties of Chief Executive on March 18, 2002.
19
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
- ---------------------------------------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options/SAR's
Options/SAR's Granted to Employees Exercise of
Name Granted (#) in Fiscal Year Base Price ($ / SH) Expiration Date
- ---- ----------- -------------- ------------------- ---------------
M. Richard Cutler None N/A N/A N/A
Rene Morissette None N/A N/A N/A
Charles Lincoln None N/A N/A N/A
R. Gale Porter None N/A N/A N/A
- -----------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Shares Value of Unexercised
Acquired on Value Number of Unexercised Options In-the-Money Options
Name Exercise Realized Exercisable / Unexercisable Exercisable / Unexercisable
- ---- -------- -------- --------------------------- ---------------------------
M. Richard Cutler N/A N/A None N/A
Rene Morissette N/A N/A None N/A
Charles Lincoln N/A N/A None N/A
R. Gale Porter N/A N/A None N/A
Compensation of directors
Directors were not separately compensated for their services in the
year ended December 31, 2001.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 2002, certain
information with respect to our equity securities owned of record or
beneficially by (i) each of our officers and directors; (ii) each person who
owns beneficially more than 5% of each class of our outstanding equity
securities; and (iii) all directors and executive officers as a group.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling security holder has sole or shared voting power or investment power
and also any shares that the selling security holder has the right to acquire
within 60 days. The actual number of shares of Common Stock issuable upon the
conversion of the debentures is subject to adjustment depending on, among other
factors, the number of shares outstanding at the time of conversion and could be
materially less than the number estimated in the table.
20
Beneficial Ownership
--------------------
Name of Beneficial Owner Shares Percentage
- ------------------------ ------ ----------
Charles Lincoln (1) 93,852 1.76%
R. Gale Porter (2) 3 ,060,444 44.82%
Cristino L. Perez (3) 1,876,775 30.02%
William A. Brown Family Trust (4) 66,836 1.25%
William A. Brown Family Limited Partnership 3,034,600 44.29%
(5)
Venancio Pardo (6) 559,065 10.00%
All Officers and Directors as a 4,937,219 63.74%
group (2 persons) (7)
- -----------------
Footnotes for this table on following page
21
(1) Charles Lincoln was our Chairman and Chief Executive Officer until March
18, 2002. Includes 81,567 shares which he owns directly, owns jointly with
his spouse, and which are owned by corporations wholly owned by him, and
12,285 corresponding to his interest in a limited liability corporation.
(2) Mr. R. Gale Porter is our Chief Operating Officer, President, and a
director of the Company. Includes 1,493,400 shares issuable upon the
conversion of warrants, which he owns jointly with his spouse, and 3,079
shares corresponding to his interest in limited liability corporation.
(3) Cristino L. Perez is our Chief Financial Officer, Secretary, Treasurer, and
is a director of the Company. Includes 45,025 shares owned directly by him,
his spouse or jointly, 34,400 shares issuable upon the conversion of
warrants, 914,350 shares owned by his spouse's individual retirement
account in two limited liability corporations and 883,000 issuable upon
conversion of warrants by one of these limited liability corporations
(4) Includes 66,836 shares owned directly by the Trust controlled by William A.
Brown, Trustee.
(5) Includes 1,517,300 shares owned directly by the partnership, and 1,517,300
shares issuable upon conversion of warrants by the partnership controlled
by William A. Brown.
(6) Includes 9,400 shares owned directly by him, 9,400 shares issuable upon the
conversion warrants, and 285,265 shares owned through individual retirement
account's interest in two limited liability companies , and 255,000 shares
issuable upon conversion of warrants by one of the limited liability
companies.
(7) Includes 2,410,800 that may be obtained by officers and directors and their
related parties upon the conversion of outstanding warrants .
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 16, 2001, Resolve borrowed $7,300 from former shareholders
of Integra and unrelated individuals secured by 5% convertible debentures due
December 31, 2002. The debentures were convertible into Resolve's $0.001 par
value common stock at $0.001 per share through the debenture's maturity date. On
March 30, 2002, the debentures and accrued interest were converted into 248,667
common shares of the Company.
On June 24, 2002, Resolve sold 5,000,000 units, each consisting of one
share of our common stock and one five-year $.15 common stock purchase warrant
for $.04 per unit. Of that amount:
o 1,527,800 were sold to our officers and directors for $1,376
in cash, the cancellation of $19,736 in notes, and the
satisfaction $40,000 in outstanding debt of the Company.
o 2,890,200 units were sold to our shareholders owning 10% or
more of the Company's common stock for $18,664 in cash, the
cancellation of $76,944 in notes, and the satisfaction of
$20,000 in outstanding debt of the Company.
SELLING SECURITY HOLDERS
The table below sets forth information concerning the resale of the
shares of common stock by the selling security holders. We will not receive any
proceeds from the resale of the common stock by the selling security holders.
22
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling security holder has sole or shared voting power or investment power
and also any shares which the selling security holder has the right to acquire
within 60 days. The actual number of shares of common stock issuable upon the
conversion of the debentures is subject to adjustment depending on, among other
factors, the number of shares outstanding at the time of conversion and could be
materially less than the number estimated in the table.
The following table also sets forth the name of each person who is
offering the resale of shares of common stock by this prospectus, the number of
shares of common stock beneficially owned by each person, the number of shares
of common stock that may be sold in this offering and the number of shares of
common stock each person will own after the offering, assuming they sell all of
the shares offered.
Beneficial Ownership Beneficial Ownership
Name of Prior to Offering Shares After Offering
Selling Security Holders Shares Percentage Offered (1) Shares Percentage
- ------------------------ ------ ---------- ----------- ------ ----------
R. Gale Porter (2) 3,057,365 44.77% 1,598,365 1,459,000 21.37%
Cristino L. Perez (3) 79,425 1.48% 71,675 7,750 0.14%
William A. Brown Family Trust (4) 66,836 1.25% 54,151 12,685 0.24%
William A. Brown Family Limited (5) 3,034,600 44.29% 1,584,600 1,450,000 21.16%
Partnership
Global Partners, LLC (6) 2,776,420 41.45% 1,638,420 1,138,000 16.99%
C. Bruce Gordy 119,906 0.04%
2.22% 117,973 1,933
Frank Hartman 81,654 1.52% 79,780 1,874 0.03%
Ronald E. Dowdy 119,906 2.22% 117,973 1,933 0.04%
Video Concepts Ltd., Inc. 59,954 1.12% 58,987 967 0.02%
Rene Morissette (7) 43,069 0.81% 15,510 27,559 0.52%
Charles & Lorraine Lincoln 81,567 1.53% 71,317 10,250 0.19%
Apogee Business Consultants, LLC 103,333 1.92% 100,000 3,333 0.06%
Arthur G. Knox 204,000 3.75% 204,000 0 0.00%
Willard Hunter 200,000 3.68% 200,000 0 0.00%
Brenda Holson 50,000 0.93% 50,000 0 0.00%
Susan Morisette. IRA 15,510 0.29% 15,510 0 0.00%
TBC Investments, Inc. 44,463 0.83% 44,463 0 0.00%
R. J. Diamond Consulting, Inc. 44,463 0.83% 44,463 0 0.00%
Contracts Consultants 44,463 0.83% 44,463 0 0.00%
International, Inc.
Premier Ventures, Inc. 88,416 1.64% 88,416 0 0.00%
Venancio Pardo (8) 18,800 0.35% 18,800 0 0.00%
Adam T. Parson (9) 200 * 200 0 0.00%
Emileigh Bernstein (9) 150 * 150 0 0.00%
Gregory A. Brigham (9) 150 * 150 0 0.00%
Christian Brigham (9) 150 * 150 0 0.00%
Michelle Bernstein (9) 200 * 200 0 0.00%
Phil Poole (9) 200 * 200 0 0.00%
Heather Borgendale (9) 400 * 400 0 0.00%
Susan Borgendale (9) 500 * 500 0 0.00%
Peter La Bruzzo (9) 175 * 175 0 0.00%
Lech Zychlinski (9) 175 * 175 0 0.00%
23
Beneficial Ownership Beneficial Ownership
Name of Prior to Offering Shares After Offering
Selling Security Holders Shares Percentage Offered (1) Shares Percentage
- ------------------------ ------ ---------- ----------- ------ ----------
Rose Rosa (9) 50 * 50 0 0.00%
Tom Pryor (9) 100 * 100 0 0.00%
Mildred Cruz (9) 100 * 100 0 0.00%
Jorge Cruz (9) 100 * 100 0 0.00%
Sandra Rizzi (9) 100 * 100 0 0.00%
David Rizzi (9) 100 * 100 0 0.00%
Alfred Hoornik, Jr. (9) 500 * 500 0 0.00%
Steven D. Hamilton (9) 500 * 500 0 0.00%
Selwyn Dusheiko (9) 1,000 * 1,000 0 0.00%
Selwyn Dusheiko f/b/o Joshua (9) 250 * 250 0 0.00%
Edelman
William C. Rawheiser (9) 300 * 300 0 0.00%
Juan Carnovali (9) 3,000 * 3,000 0 0.00%
Orlando Jr. or Caridad Sosa (9) 1,000 * 1,000 0 0.00%
Rosario Pardo (9) 2,000 * 2,000 0 0.00%
Rafael C. and/or Juana E. (9) 1,000 * 1,000 0 0.00%
Couvertie
Monica Pardo (9) 2,000 * 2,000 0 0.00%
Kyoung Eun Ahn (9) 250 * 250 0 0.00%
Vinicio Ramirez (9) 750 * 750 0 0.00%
Patricia Pardo (9) 1,000 * 1,000 0 0.00%
Daniel and/or Lori J. Alonso (9) 2,000 * 2,000 0 0.00%
Jose C Tejeda (9) 1,000 * 1,000 0 0.00%
Veronica and/or Alfred M. (9) 2,000 * 2,000 0 0.00%
Desrosiers
Wilfredo and/or Maria del (9) 2,000 * 2,000 0 0.00%
Carmen Alonso
Lisa Jalayer (9) 1,000 * 1,000 0 0.00%
Celia Rodriguez (9) 1,000 * 1,000 0 0.00%
Tracy L Blevins (9) 200 * 200 0 0.00%
Kelly Kauffman (9) 200 * 200 0 0.00%
William F and Alice V Merlin (9) 1,000 * 1,000 0 0.00%
Alice V and William F Merlin (9) 1,000 * 1,000 0 0.00%
Wade L Kohn (9) 1,000 * 1,000 0 0.00%
Willard C Hunter (9) 1,000 * 1,000 0 0.00%
R. Gale Porter, Jr. (9) 1,000 * 1,000 0 0.00%
Deborah A Erdahl (9) 200 * 200 0 0.00%
William F Merlin, Jr. (9) 1,000 * 1,000 0 0.00%
William K Porter (9) 1,000 * 1,000 0 0.00%
Michele Walters (9) 1,000 * 1,000 0 0.00%
Lillian G Weaver (9) 200 * 200 0 0.00%
J. Bryan Yoho (9) 1,000 * 1,000 0 0.00%
Barbara Green (9) 200 * 200 0 0.00%
Nilda Hoornik (9) 1,000 * 1,000 0 0.00%
John Toledo (9) 250 * 250 0 0.00%
Maria J. Toledo (9) 300 * 300 0 0.00%
Joe or Isabel Martinez (9) 500 * 500 0 0.00%
Michael Toledo (9) 250 * 250 0 0.00%
Luis and/or Helen Diaz, Jr. (9) 500 * 500 0 0.00%
Raul Lavin (9) 500 * 500 0 0.00%
Arcilio Valdivia (9) 500 * 500 0 0.00%
Mark D. Chamberlain (9) 350 * 350 0 0.00%
Heinrich W.W. Bracker (9) 350 * 350 0 0.00%
Tom Nichols (9) 350 * 350 0 0.00%
24
Beneficial Ownership Beneficial Ownership
Name of Prior to Offering Shares After Offering
Selling Security Holders Shares Percentage Offered (1) Shares Percentage
- ------------------------ ------ ---------- ----------- ------ ----------
Lucy Barbeiro (9) 300 * 300 0 0.00%
Sean Austin (9) 300 * 300 0 0.00%
Hannah L. Miller (9) 750 * 750 0 0.00%
Carole Lynn Morris (9) 750 * 750 0 0.00%
Kevin J. Collins (9) 1,000 * 1,000 0 0.00%
Chandra A. Rusk (9) 500 * 500 0 0.00%
Stacy L Bagley (9) 1,000 * 1,000 0 0.00%
Kimberly Covey (9) 1,000 * 1,000 0 0.00%
Camille Lamar Roberts (9) 1,000 * 1,000 0 0.00%
Gina M. Owen (9) 1,000 * 1,000 0 0.00%
Jimmie Beck (9) 1,000 * 1,000 0 0.00%
Kaaren E. Richardson (9) 500 * 500 0 0.00%
Marco T. Villalobos (9) 100 * 100 0 0.00%
Sandra Lee Vitale (9) 200 * 200 0 0.00%
Suzanne Mainzer (9) 200 * 200 0 0.00%
Peter La Manna (9) 500 * 500 0 0.00%
Sergio G. Menendez (9) 1,000 * 1,000 0 0.00%
Kenneth E. O'Rorke (9) 1,000 * 1,000 0 0.00%
Rekha M. Bakarania (9) 1,000 * 1,000 0 0.00%
Vivek R. Rao (9) 1,000 * 1,000 0 0.00%
Stewart Nazzaro (9) 1,000 * 1,000 0 0.00%
Raghavendra R. Vijayanagar (9) 1,000 * 1,000 0 0.00%
Jess G. Tucker (9) 1,000 * 1,000 0 0.00%
Brendon K. Rennert (9) 1,000 * 1,000 0 0.00%
Daedalus Consulting, Inc (9) 1,000 * 1,000 0 0.00%
Rebecca Weightman (9) 200 * 200 0 0.00%
William F. Lincoln, MD (9) 1,000 * 1,000 0 0.00%
Jacqueline Anne Lincoln (9) 1,000 * 1,000 0 0.00%
Bradford G. Shulkin (9) 1,000 * 1,000 0 0.00%
Hilary Ponticelli (9) 1,000 * 1,000 0 0.00%
Tyler Tuchow (9) 1,000 * 1,000 0 0.00%
Stacy Tuchow (9) 1,000 * 1,000 0 0.00%
Gloria Reinhardt (9) 1,000 * 1,000 0 0.00%
Joi-Phyle Hallem (9) 1,000 * 1,000 0 0.00%
Jay C. Jumper (9) 1,000 * 1,000 0 0.00%
Dawn L. Jumper (9) 1,000 * 1,000 0 0.00%
Mathew A. Stanchie (9) 1,000 * 1,000 0 0.00%
Patricia L Scanlan (9) 1,000 * 1,000 0 0.00%
Alex J. Sparra, II (9) 1,000 * 1,000 0 0.00%
Marilynn K. Obrig (9) 1,000 * 1,000 0 0.00%
Olen Serrat (9) 500 * 500 0 0.00%
Craig A. Kessinger (9) 500 * 500 0 0.00%
Roy M. Barnhart (9) 1,000 * 1,000 0 0.00%
Patricia B. Stewart (9) 1,000 * 1,000 0 0.00%
Vernon Barclay (9) 1,000 * 1,000 0 \0.00%
John Kingman Keating (9) 1,000 * 1,000 0 0.00%
Cole Whitaker (9) 1,000 * 1,000 0 0.00%
James E. Meyer (9) 1,000 * 1,000 0 0.00%
Richard Rankin (9) 1,000 * 1,000 0 0.00%
Erin Dowdy (9) 1,000 * 1,000 0 0.00%
Megan Dowdy (9) 1,000 * 1,000 0 0.00%
George Chaconas Trust (9) 1,000 * 1,000 0 0.00%
John V. Trujillo I/T/F John V. (9) 1,000 * 1,000 0 0.00%
Trujillo, Jr. and Jayna J.
Trujillo
25
Beneficial Ownership Beneficial Ownership
Name of Prior to Offering Shares After Offering
Selling Security Holders Shares Percentage Offered (1) Shares Percentage
- ------------------------ ------ ---------- ----------- ------ ----------
Brenda Holson (9) 1,000 * 1,000 0 0.00%
John E. Helms (9) 1,000 * 1,000 0 0.00%
Christina H. Brown (9) 2,000 * 2,000 0 0.00%
Jerry Knox (9) 1,000 * 1,000 0 0.00%
Arthur G. Knox (9) 1,000 * 1,000 0 0.00%
Vernon Strokes (9) 1,000 * 1,000 0 0.00%
John L. Muench (9) 1,000 * 1,000 0 0.00%
Matt Patterson (9) 200 * 200 0 0.00%
ICBM Corporation (9) 1,750 * 1,750 0 0.00%
Terence McCarty (9) 1,000 * 1,000 0 0.00%
Roberta Dantico (9) 1,000 * 1,000 0 0.00%
Michael J. Echevarria (9) 1,000 * 1,000 0 0.00%
Tony Muniz, Jr. (9) 1,000 * 1,000 0 0.00%
Michael S. McConnell (9) 1,000 * 1,000 0 0.00%
Randy R. Barbas (9) 1,000 * 1,000 0 0.00%
Philip J. Ciaravella (9) 1,000 * 1,000 0 0.00%
Robert E. Johnson (9) 1,000 * 1,000 0 0.00%
Allen Kinley (9) 1,000 * 1,000 0 0.00%
1Mundo, Inc. (9) 1,000 * 1,000 0 0.00%
Michael Edward Eggleston (9) 1,000 * 1,000 0 0.00%
Malcolm G. Taaffee (9) 1,000 * 1,000 0 0.00%
Jose A. Torrado (9) 2,000 * 2,000 0 0.00%
Fiero Partners (9) 2,000 * 2,000 0 0.00%
- -----------------
* Less than .01%
(1) Represents 111,500 shares of common stock issuable upon conversion of 6%
debentures held by the selling security holders. The 6% debentures are due
June 30, 2003 and are convertible at the rate of $.10 per share. Because
the number of shares of common stock issuable upon conversion of the
debentures is dependent in part upon the number of shares of the common
stock outstanding prior to a conversion, the actual number of shares of
common stock that will be issued upon conversion will fluctuate and cannot
be determined at this time. However, each selling security holder has
contractually agreed to restrict its ability to convert its debentures and
receive shares of our common stock such that the number of shares of common
stock held by it and its affiliates after such conversion or exercise does
not exceed 4.99% of the then issued and outstanding shares of common stock.
Also includes 5,000,000 shares issuable upon conversion of warrants at $.15
per share and includes 1,218,866 shares currently issued and outstanding.
(2) Mr. R. Gale Porter is the Company's Chief Operating Officer, President, and
a director of the Company. Includes 1,563,965 shares which he owns jointly
with his spouse and 1,493,400 shares issuable upon conversion of warrants.
(3) Cristino L. Perez is the Company's Chief Financial Officer, Secretary,
Treasurer, and is a director of the Company. Includes 37,275 shares which
he or his spouse own directly and jointly with his spouse and 34,400 shares
issuable upon conversion of warrants. This ownership does not include the
underlying interest of 910,181 shares owned by a limited liability
corporation in which Mr. Perez' spouse has a 64.59% interest, and 883,000
shares issuable upon conversion of warrants owned by this limited liability
corporation.
(4) William A. Brown Family Trust consists of 66,836 shares owned by the trust
controlled by William A. Brown as Trustee.
(5) William A. Brown Family Limited Partnership consists of 1,517,300 shares
owned by the partnership controlled by William A. Brown, as General
Partner, and 1,517,300 shares issuable upon conversion of warrants owned by
the partnership.
(6) Global Partners, LLC consisting of 1,412,920 shares owned by the company
and 1,363,500 shares issuable upon conversion of warrants owned by them.
These shares are beneficially owned, based on their interest in the
corporation as follows: Elona Perez, individual retirement account, 64.59%;
Venancio Pardo, individual retirement account, 19.17%, Fiero Partners,
12.06%, and others, 4.18%.
(7) Rene Morissette consisting of 8,010 shares owned directly by him, and 7,500
shares issuable upon conversion of warrants owned by him, and 27,559 shares
owned by Work Holding, LLC, a limited liability company in which he is the
sole managing director. These shares are beneficially owned, based on their
interest in the corporation as follows: Charles Lincoln, 44.58%; R. Gale
Porter, 11.17%; Venancio Pardo, individual retirement account, 29.12%; and
Cristino L. Perez, 15.13%.
(8) Venancio Pardo consisting of 9,400 shares owned directly by him, and 9,400
shares issuable upon conversion of warrants owned by him. This ownership
does not include the underlying interest in 277,239 shares owned by a
limited liability corporation in which Mr. Pardo has a 19.17% interest, and
255,000 shares issuable upon conversion of warrants owned by this limited
liability corporation.
(9) Consists solely of shares issuable upon conversion of a debenture.
26
PLAN OF DISTRIBUTION
The shares may be sold or distributed from time to time by the selling
security holders named in this prospectus, by their donees or transferees, or by
their other successors in interest. The selling security holders may sell their
shares at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices, or at fixed prices, which
may be changed. Each selling security holder reserves the right to accept or
reject, in whole or in part, any proposed purchase of shares, whether the
purchase is to be made directly or through agents.
The selling security holders may offer their shares at various times in
one or more of the following transactions:
o in ordinary brokers' transactions and transactions in which
the broker solicits purchasers;
o in transactions involving cross or block trades or otherwise
on an appropriate market;
o in transactions in which brokers, dealers or underwriters
purchase the shares as principal and resell the shares for
their own accounts pursuant to this prospectus;
o in transactions "at the market" to or through market makers in
the common stock or into an existing market for the common
stock;
o in other ways not involving market makers or established
trading markets, including direct sales of the shares to
purchasers or sales of the shares effected through agents;
o through transactions in options, swaps or other derivatives
which may or may not be listed on an exchange;
o in privately negotiated transactions;
o in transactions to cover short sales; or
o in a combination of any of the foregoing transactions.
The selling security holders also may sell their shares in accordance
with Rule 144 under the Securities Act of 1933.
From time to time, one or more of the selling security holders may
pledge or grant a security interest in some or all of the shares owned by them.
If the selling security holders default in performance of the secured
obligations, the pledgees or secured parties may offer and sell the shares from
time to time. The selling security holders also may transfer and donate shares
in other circumstances. The number of shares beneficially owned by selling
security holders who transfer, donate, pledge or grant a security interest in
their shares will decrease as and when the selling security holders take these
actions. The plan of distribution for the shares offered and sold under this
prospectus will otherwise remain unchanged, except that the transferees, donees
or other successors in interest will be selling security holders for purposes of
this prospectus.
A selling security holder may sell short the common stock. The selling
security holder may deliver this prospectus in connection with such short sales
and use the shares offered by this prospectus to cover such short sales.
A selling security holder may enter into hedging transactions with
broker-dealers. The broker-dealers may engage in short sales of the common stock
in the course of hedging the positions they assume with the selling security
holder, including positions assumed in connection with distributions of the
shares by such broker-dealers. A selling security holder also may enter into
option or other transactions with broker-dealers that involve the delivery of
the shares to the broker-dealers, who may then resell or otherwise transfer such
shares. In addition, a selling security holder may loan or pledge shares to a
broker-dealer, which may sell the loaned shares or, upon a default by the
selling security holder of the secured obligation, may sell or otherwise
transfer the pledged shares.
27
The selling security holders may use brokers, dealers, underwriters or
agents to sell their shares. The persons acting as agents may receive
compensation in the form of commissions, discounts or concessions. This
compensation may be paid by the selling security holders or the purchasers of
the shares for whom such persons may act as agent, or to whom they may sell as
principal, or both. The compensation as to a particular person may be less than
or in excess of customary commissions. The selling security holders and any
agents or broker-dealers that participate with the selling security holders in
the offer and sale of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act. Any commissions they receive and any profit they
realize on the resale of the shares by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Neither we nor any selling
security holders can presently estimate the amount of such compensation.
If a selling security holder sells shares in an underwritten offering,
the underwriters may acquire the shares for their own account and resell the
shares from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. In such event, we will set forth in a supplement to this
prospectus the names of the underwriters and the terms of the transactions,
including any underwriting discounts, concessions or commissions and other items
constituting compensation of the underwriters and broker-dealers. The
underwriters from time to time may change any public offering price and any
discounts, concessions or commissions allowed or reallowed or paid to
broker-dealers. Unless otherwise set forth in a supplement, the obligations of
the underwriters to purchase the shares will be subject to certain conditions,
and the underwriters will be obligated to purchase all of the shares specified
in the supplement if they purchase any of the shares.
We have advised the selling security holders that during such time as
they may be engaged in a distribution of the shares, they are required to comply
with Regulation M under the Securities Exchange Act. With certain exceptions,
Regulation M prohibits any selling security holder, any affiliated purchasers
and any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made
in order to stabilize the price of a security in connection with the
distribution of that security. The foregoing restrictions may affect the
marketability of the shares.
Under our agreements with the selling security holders, we are required
to bear the expenses relating to this offering, excluding any underwriting
discounts or commissions, brokerage fees, stock transfer taxes and fees of legal
counsel to the selling security holders. We estimate these expenses will total
approximately $40,000.
We have agreed to indemnify most of the selling security holders
against certain liabilities, including certain liabilities under the Securities
Act.
It is possible that a significant number of shares could be sold at the
same time. Such sales, or the perception that such sales could occur, may
adversely affect prevailing market prices for the common stock.
This offering by any selling security holder will terminate two years
from the date of this prospectus or, if earlier, on the date on which the
selling security holder has sold all of his shares.
DESCRIPTION OF SECURITIES
The following discussion is qualified by reference to our Articles of
Incorporation, as amended which is filed as an exhibit to reports incorporated
by reference into this prospectus.
28
Common Stock
Each share of our common stock entitles its holder to one vote upon all
matters on which holders of our common stock are entitled to vote under
applicable law or otherwise. Stockholders are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than 50% of the issued and
outstanding shares of common stock can elect all of our directors. Holders of
common stock have no preemptive or other subscription rights, conversion rights,
redemption or sinking fund provisions. In the event of our liquidation,
dissolution or winding up, whether voluntary or involuntary, each share of
common stock will be entitled to share ratably in any assets available for
distribution to holders of our equity securities after satisfaction of all
liabilities and after providing for each class of stock, if any, having
preference over the common stock.
The rights of the holders of common stock are subject to any rights
that may be fixed for holders of preferred stock, when and if any preferred
stock is issued. All outstanding shares of common stock are, and the shares
underlying all options, warrants and convertible securities will be, duly
authorized, validly issued, fully paid and non-assessable.
Serial Preferred Stock
Our board of directors is authorized by our certificate of
incorporation to issue up to ten million shares of one or more series of serial
preferred stock. No shares of serial preferred stock have been authorized or
designated for future issuance by our board. In addition, we have no present
plans to issue any such shares.
In the event that our board of directors does authorize, designate and
issue shares of serial preferred stock, it may exercise its discretion in
establishing the terms of such serial preferred stock. In the exercise of such
discretion, our board may determine the voting rights, if any, of the series of
serial preferred stock being issued, which could include the right to vote
separately or as a single class with our common stock and/or other series of
serial preferred stock; to have more or less voting power per share than that
possessed by our common stock or other series of serial preferred stock; and to
vote on certain specified matters presented to the shareholders or on all of
such matters or upon the occurrence of any specified event or condition. On our
liquidation, dissolution or winding up, the holders of serial preferred stock
may be entitled to receive preferential cash distributions fixed by our board
when creating the particular series of preferred stock before the holders of our
common stock are entitled to receive anything. Serial preferred stock authorized
by our board could be redeemable or convertible into shares of any other class
or series of our capital stock.
The issuance of serial preferred stock by our board of directors could
adversely affect the rights of holders of our common stock by, among other
things, establishing preferential dividends, liquidation rights or voting
powers. The issuance of serial preferred stock could be used to discourage or
prevent efforts to acquire control of our company through the acquisition of
shares of our common stock, even if a change in control were in our
stockholders' interest.
Warrants
Each of the 5,000,000 outstanding warrants represent the right to
acquire one share of common stock at an initial exercise price of $.15 per share
for a period of five years ending June 30, 2007. The exercise price and the
number of shares issuable upon exercise of the warrants will be adjusted upon
the occurrence of the following events:
o issuance of common stock as a dividend on shares of common
stock,
o subdivisions, reclassifications or combinations of the common
stock or similar events.
The warrants do not contain provisions protecting against dilution
resulting from the sale of additional shares of common stock for less than the
exercise price of the warrants or the current market price of our securities and
do not entitle warrant holders to any voting or other rights as a shareholder
until such warrants are exercised and common stock is issued.
29
The warrants contain a provision referred to as a "net exercise
provision" that allows the holder to convert the warrants into shares of our
common stock, without making any cash payment. If the holder elects to exercise
this net exercise right, the holder authorizes the company to withhold the
number of shares that would have to be sold at the prevailing market price at
the time of exercise to pay the exercise price. For example, if our stock has a
market price of $.60 per share and a holder exercises the net exercise right for
10,000 warrants, the holder would receive 7,500 shares. This is because the
holder would have had to sell 2,500 shares at $.60 in order to pay the $1,500
exercise price for 10,000 shares (10,000 x $.15 = $1,500). This example is an
illustration and should not be interpreted as any indication of whether a market
for our common stock will develop.
Holders of warrants may exercise their warrants for the purchase of
shares of common stock and resell such shares only if a current prospectus
relating to such shares is then in effect and only if such shares are qualified
for sale, or deemed to be exempt from qualification under applicable state
securities laws. We are required to use our best efforts to maintain a current
prospectus relating to such shares of common stock at all times when the market
price of the common stock exceeds the exercise price of the warrants until the
expiration date of the warrants, although there can be no assurance that we will
be able to do so.
The shares of common stock issuable on exercise of the warrants will
be, when issued in accordance with the warrants, duly and validly issued, fully
paid and non-assessable. At all times that the warrants are outstanding, we will
authorize and reserve at least that number of shares of common stock equal to
the number of shares of common stock issuable upon exercise of all outstanding
warrants.
For the term of the warrants, the holders thereof are given the
opportunity to profit from an increase in the per share market price of our
common stock, with a resulting dilution in the interest of all other
stockholders. So long as the warrants are outstanding, the terms on which we
could obtain additional capital may be adversely affected. The holders of the
warrants might be expected to exercise the warrants at a time when we would, in
all likelihood, be able to obtain additional capital by a new offering of
securities on terms more favorable than those provided by the warrants.
Transfer and Warrant Agent
Florida Atlantic Stock Transfer, Inc. acts as our transfer agent.
LEGAL MATTERS
The validity of our common stock offered hereby is being passed upon
for Resolve Staffing, Inc. by the law offices of Sommer & Schneider LLP, 595
Stewart Avenue, Suite 710, Garden City, New York 11530.
EXPERTS
The financial statements as of and for the years ended December 31,
2001 and 2000 included in this Prospectus have been so included in reliance on
the report of Timothy M. Griffiths, CPA, independent certified public
accountant, given on the authority of said firm as experts in auditing and
accounting.
Changes in and disagreements with accountants on accounting and financial
disclosure
On March 1, 2002, our Board of Directors adopted a resolution changing
our independent accountant from Haskell & White, LLP (the "Former Accountant")
to the firm of Timothy M. Griffiths, Certified Public Accountant (the "New
Accountant"). The action was taken principally because we had completed the
acquisition of Integra and the board decided it would be in our best interest to
utilize the services of Integra's auditor. During the fiscal year ended December
31, 2000 and 1999, and for the periods from inception on April 9, 1998 through
30
December 31, 2000, and any subsequent interim period to the date of the
dismissal (February 26, 2002), we had no disagreement with our Former Accountant
on any matter of accounting principal or practice, financial statement
disclosure or auditing scope or procedure which would have caused the Former
Accountant to make reference in its report upon the subject matter of
disagreement. The Former Accountant previously issued a report dated March 27,
2001 on our financial statements as of and for the year ended December 31, 2000
and 1999, and for the period from inception on April 9, 1998 through December
31, 2000. The report did not contain an adverse opinion or disclaimer of opinion
or qualification as to audit scope or accounting principle. The Former
Accountant's report did contain additional disclosure relating to uncertainty as
to our ability to continue as a going concern but did not contain any adjustment
for the disclosed uncertainties. The Former Accountant reviewed this disclosure
and has furnished us with a letter addressed to the SEC that did not contain any
new information or clarification of the disclosure.
We did not consult with the New Accountant regarding any matters prior
to its engagement, including matters relating to the application of accounting
principles, although the New Accountant rendered an unqualified audit report on
Integra's balance sheets as of December 31, 2000 and 1999 and related statements
of operations, cash flows and stockholders' equity for the year ended December
31, 2000 and the period from inception (August 16, 1999) to December 31, 1999,
which was included in our Form 8-K dated December 12, 2001, as amended.
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the
Securities Act of 1933, as amended, relating to the shares of common stock being
offered by this prospectus, and reference is made to such registration
statement. This prospectus constitutes the prospectus of Resolve Staffing, Inc.,
filed as part of the registration statement, and it does not contain all
information in the registration statement, as certain portions have been omitted
in accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC").
We are subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") which requires us to file reports,
proxy statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information may be
inspected at public reference facilities of the SEC at Judiciary Plaza, 450
Fifth Street N.W., Washington D.C. 20549; Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 5670 Wilshire
Boulevard, Los Angeles, California 90036. Copies of such material can be
obtained from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C. 20549 at prescribed rates. Because we file
documents electronically with the SEC, you may also obtain this information by
visiting the SEC's Internet website at http://www.sec.gov.
We intend to furnish our stockholders with annual reports containing
audited financial statements.
This prospectus includes statistical data that were obtained from
industry publications. These industry publications generally indicate that the
authors of these publications have obtained information from sources believed to
be reliable, but do not guarantee the accuracy and completeness of their
information. While we believe these industry publications to be reliable, we
have not independently verified their data.
31
FINANCIAL STATEMENTS
The Financial Statements required by Item 304 of Regulation S-B are
stated in U.S. dollars and are prepared in accordance with U.S. Generally
Accepted Accounting Principles. PAGE
Independent Auditor's Report F-1
Financial Statements -
Balance sheets as of March 31, 2002 (Unaudited) and
December 31, 2001 (consolidated) and 2000 F-2
Statements of operations for the three months ended
March 31, 2002 (Unaudited), and for the years ended
December 31, 2001 (consolidated) and 2000 F-3
Statements of cash flows for the three months ended
March 31, 2002 (Unaudited), and for the years ended
December 31, 2000 (consolidated) and 2000 F-4
Statements of stockholders' equity for the three months
ended March 31, 2002 (Unaudited), and for the year
ended December 31, 2001 (consolidated) and 2000 F-5
Notes to Financial Statements F-6
32
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Resolve Staffing, Inc.,
(formerly Columbialum Staffing, Inc.)
Tampa, Florida
I have audited the accompanying balance sheets of Resolve Staffing, Inc.
(formerly Columbialum Staffing, Inc.) as of December 31, 2001 (consolidated) and
2000, and the related statements of operations, cash flows and stockholders'
equity for the years ended December 31, 2001 (consolidated) and 2000. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
our audit.
I conducted the audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits 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.
I believe that my audits provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Resolve Staffing, Inc. at December
31, 2001 (consolidated) and 2000, and the result of its operations, its cash
flows and stockholders' equity for the years ended December 31, 2001
(consolidated) and 2000 in conformity with accounting principles generally
accepted in the United States of America.
/s/ Timothy M. Griffiths, CPA
TIMOTHY M. GRIFFITHS, CPA
Tampa, Florida
March 6, 2002, except for Note P,
which is as of March 24, 2002
F-1
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(Unaudited)
March 31, (Consolidated)
ASSETS 2002 2001 2000
------------------ ------------------- -------------------
CURRENT ASSETS
Cash $ 43,887 $ 19,467 $ 19,697
Accounts receivable, net of allowance
for bad debts 51,589 30,069 58,051
Prepaid and other assets 96,821 8,317 2,616
------------------ ------------------- -------------------
Total current assets 192,297 57,853 80,364
------------------ ------------------- -------------------
PROPERTY AND EQUIPMENT
Property and equipment 28,382 28,382 11,736
Less: Accumulated depreciation 9,682 8,202 3,729
------------------ ------------------- -------------------
Net property and equipment 18,700 20,180 8,007
------------------ ------------------- -------------------
TOTAL ASSETS $ 210,997 $ 78,083 $ 8,371
================== =================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 9,803 $ 23,698 $ 6,530
Accrued payroll taxes 6,781 17,171 66,630
Accrued salaries 62,204 - 9,985
Notes and advances payable 158,400 - -
Debentures payable 11,150 18,450 -
Customer deposits - - 8,558
Other current liabilities 1,828 642 1.924
------------------ ------------------- -------------------
Total current liabilities 250,166 59,961 93,627
------------------ ------------------- -------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.0001 par value,
50,000,000 shares authorized, issued
and outstanding: 2001 - 83,334 shares;
2000 - 37,500 shares (restated) 34 8 4
Paid-in capital 474,888 425,467 107,496
Retained earnings (deficit) (514,091) (407,403) (112,756)
------------------ ------------------- -------------------
Total stockholders' equity (deficit) (39,169) 18,072 (5,256)
------------------ ------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 210,997 $ 78,033 $ 88,371
================== =================== ===================
Read independent auditor's report. The
accompanying notes are an integral part of these financial statements.
F-2
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Unaudited)
March 31, (Consolidated)
2002 2001 2000
----------------- -------------------- --------------------
SERVICE REVENUES $ 85,540 $ 471,821 $ 556,267
DIRECT COST OF SERVICES 55,458 359,742 351,263
---------------- ------------------- -------------------
GROSS MARGIN 30,082 112,079 205,004
OPERATING EXPENSES
Legal & professional fees 53,385 52,621 6,894
Advertising/Promotion 2,648 21,710 32,504
Salaries and benefits 49,125 197,304 187,715
Payroll taxes 3,337 7,808 8,435
Penalties - 19,638 659
Rent & leases 9,328 22,626 19,727
Travel & entertainment 2,035 10,071 9,356
Administrative expenses 15,111 48,551 38,776
---------------- ------------------- -------------------
Total operating expenses 134,969 380,329 304,066
---------------- ------------------- -------------------
LOSS FROM OPERATIONS (104,887) (268,250) (99,062)
OTHER INCOME (EXPENSES)
Interest and other income - 326 181
Interest expense (1,802) (21,598) (226)
---------------- ------------------- -------------------
Net other income (expenses) (1,802) (21,272) (45)
---------------- ------------------- -------------------
NET INCOME (LOSS) $ (106,689) $ (289,522) $ (99,107)
================= ==================== ====================
LOSS PER SHARE
Basic $ (1.20) $ (3.47) $ (2.65)
================= ==================== ====================
Fully diluted $ (.53) $ (.66) $ (.25)
================= ==================== ====================
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 88,569 83,333 37,443
================= ==================== ====================
Fully diluted 200,069 438,166 392,276
================= ==================== ====================
Read independent auditor's report. The
accompanying notes are an integral part of these financial statements.
F-3
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
STATEMENTS OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 2001 AND 2000
(Unaudited)
March 31, (Consolidated)
2002 2001 2000
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (106,688) $ (89,522) $ (99,107)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation 1,480 4,473 3,104
Allowance for bad debt - 1,800
Contribution of assets, interest and services 20,051 (7,825) -
Conversion of equity to capital (5,125) -
Decrease (increase) in current assets:
Accounts receivable (21,520) 27,982 (59,851)
Prepaid and other assets (88,504) (5,701) (2,084)
Increase (decrease) in current liabilities:
Accounts payable (13,895) 17,168 6,530
Payroll tax accruals (10,390) (49,459) 65,988
Salary accrual - (9,985) 9,885
Customer deposits - (8,558) 8,558
Other current liabilities 1,186 (1,282) (1,282)
-------------- -------------- --------------
Total adjustments 111,592 (38,312) 32,648
-------------- -------------- --------------
Net cash (used) by operating activities (218,280) (327,834) (66,459)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - (8,821) (2,212)
-------------- -------------- --------------
Net cash (used) by investing activities - (8,821) (2,212)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of capital stock, net of redemption 317,975 74,992
Proceeds from convertible debentures 18,450 -
Loan from stockholder, net 158,400 - (19,321)
Proceeds from receivable financing 62,204 - -
Capital contribution 22,096 - 32,500
-------------- -------------- --------------
Net cash provided by financing activities 242,700 336,425 88,171
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH 24,420 (230) 19,500
CASH, BEGINNING OF THE PERIOD 19,467 19,697 197
-------------- -------------- --------------
CASH, END OF THE PERIOD $ 43,887 $ 19,467 $ 19,697
============== ============== ==============
Read independent auditor's report.
The accompanying notes are an integral part of these financial statements.
F-4
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(RESTATED)
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------- ------ ---------- --------------- -------------
Balance, December 31, 1999 33,333 $ 3 $ 997 $ (1,520) $ (520)
Recapitalization of public
company for Integra merger 4,167 1 106,499 (12,129) 94,371
Net loss for the year - - - (99,107) (99,107)
------- ------ ---------- --------------- -------------
Balance, December 31, 2000 37,500 4 107,496 (112,756) (5,256)
Recapitalization of public
company for Integra merger 45,834 4 317,971 (5,125) 312,850
Net loss during period - - - (289,522) (289,522)
------- ------ ---------- --------------- -------------
Balance, December 31, 2001 83,334 8 425,467 (407,403) 18,072
Issuance of common stock for services 3,333 1 99 - 100
Donated services - - 19,800 - 19,800
Contributed capital by shareholder - - 22,096 - 22,096
Issuance of common stock on conversion
of debentures 248,366 25 7,426 - 7,451
Net loss for the period - - - (106,689) (106,689)
------- ------ ---------- --------------- -------------
Balance, March 31, 2002 (Unaudited) 335,034 $ 34 $ 474,888 $ (514,091) $ (39,169)
======= ====== ========== =============== =============
Read independent auditor's report. The
accompanying notes are an integral part of these financial statements.
F-5
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Resolve Staffing, Inc.
("Resolve") is presented to assist in understanding Resolve's financial
statements. The financial statements and notes are the representation of
Resolve's management who is responsible for their integrity and objectivity.
These accounting policies conform to accounting principles generally accepted in
the United States of America consistently applied in the preparation of the
financial statements.
Nature of Operations
Resolve Staffing, Inc. (formerly Columbialum Staffing, Inc.) was organized under
the laws of the State of Nevada on April 9, 1998. Integra Staffing, Inc., was
organized under the laws of the State of Florida on August 16, 1999
(collectively referred to as "Resolve").
Resolve was in the development stage until its merger with Integra Staffing,
Inc. on December 10, 2001.
Integra Staffing, Inc. (Integra) is a temporary staffing company. Integra's
strategy has been to provide efficient and affordable solutions to its
customers' employment and labor force needs.
Reverse Merger Method of Accounting
Following the acquisition, the former management of Integra became the
management of Resolve and the former stockholders of Integra were issued
approximately 60% of the outstanding shares of Resolve's $0.001 par value common
stock. In accordance with accounting principles generally accepted in the United
States of America, Resolve's acquisition of Integra has been accounted for as a
reverse merger. As a result, Integra has been treated as the acquiring entity
and Resolve has been treated as the acquired entity for accounting purposes. The
historical financial statements of Integra have become the historical financial
statements of Resolve in connection with the acquisition. Similarly, the
historical equity and retained deficit of Integra prior to the acquisition have
been retroactively restated for the equivalent number of shares issued in
connection with the acquisition. The balance sheet reflects the financial
position of Resolve at December 31, 2001. The related statements of operations,
cash flow and stockholders' equity reflect the operations of Resolve for the
year ended December 31, 2001.
Principles of Consolidation
The consolidated financial statements include the accounts of Resolve Staffing,
Inc. (formerly Columbialum Staffing, Inc.) and its wholly owned subsidiary
Integra Staffing, Inc. All significant intercompany accounts and transactions
have been eliminated.
Basis of Accounting
Resolve maintains its financial records and financial statements on the accrual
basis of accounting. The accrual basis of accounting provides for matching of
revenues and expenses.
Read independent auditor's report.
F-6
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue and Cost Recognition
Service revenues generated from employees on customer assignments to its
clients, under client service agreements, are recognized as income at the time
service is provided, while service revenues generated from permanent placement
services are recognized at the time the customer agrees to hire a candidate
supplied by the Company. In consideration for payment of such service fees,
Resolve agrees to pay the following direct costs associated with the worksite
employees: (a) salaries and wages, (b) employment-related taxes and (c) workers'
compensation insurance premiums. These costs are recorded on the accrual
accounting of accounting.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Resolve considers amounts held by
financial institutions and short-term investments with an original maturity of
90 days or less to be cash and cash equivalents.
Concentration of Credit Risk
Financial instruments, which potentially expose Resolve to concentrations of
credit risk, as defined by FASB Statement No. 105, Disclosure of Information
about Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Risk, consist principally of trade
receivables.
Resolve's trade accounts receivable result from the sale of its services with
customers based in West Central Florida, and consist primarily of private
companies. In order to minimize the risk of loss from these private companies,
credit limits, ongoing credit evaluation of its customers, and account
monitoring procedures are utilized. Collateral is not generally required.
Allowances for potential credit losses are maintained, when realized, have been
within management's expectations.
The Company is obligated to pay the salaries, wages and related benefit costs
and payroll taxes of worksite employees. Accordingly, the Company's ability to
collect amounts due from customers could be affected by economic fluctuations in
its markets or these industries.
Financial Instruments
Resolve estimates that the fair value of all financial instruments at December
31, 2001 and 2000 do not differ materially from the aggregate carrying value of
its financial instruments recorded in the accompanying balance sheets.
Property and Equipment
Property and equipment are recorded at historical cost and include expenditures,
which substantially increase the useful lives of existing property, plant and
equipment. Maintenance and repairs are charged to operations when incurred.
Read independent auditor's report
F-7
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Depreciation of property and equipment is computed primarily using the
straight-line method based on estimated useful lives (furniture and fixtures, 6
to 7 years, office equipment 5 to 7 years, and computers and software, 3 to 5
years). Depreciation for income tax purposes is computed principally using
straight line method and lives.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The Company provides for workers' compensation, health care insurance and
unemployment taxes related to its employees. A deterioration in claims
experience could result in increased costs to the Company in the future. The
Company records an estimate of any existing liabilities under these programs at
each balance sheet date. The Company's future costs could also increase if there
are any material changes in government regulations related to employment law or
employee benefits.
Advertising Costs
Advertising costs, except for costs associated with direct-response advertising,
are charged to operations when incurred. The costs of direct-response
advertising are capitalized and amortized over the period during which future
benefits are expected to be received. Resolve does not have direct-response
advertising during the years ended December 31, 2001 and 2000.
Income Taxes
Resolve records its federal and state income tax liability in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes". Deferred taxes payable are provided for differences between the basis of
assets and liabilities for financial statements and income tax purposes, using
current tax rates. Deferred tax asset is the expected benefit of a net operating
loss carryover and general business credits that are available to offset future
income taxes.
Loss Per Share
Resolve records basic and fully diluted loss per share in accordance with
Financial Accounting Standards Board Statement No. 128, "Earnings per Share".
Basic earnings (loss) per share includes no dilution and is computed by dividing
income (loss) available to common stockholders by the weighted average number of
shares outstanding for the period. Diluted earnings (loss) per share reflect the
potential dilution of securities that could share in the earnings (loss) of the
entity.
Read independent auditor's report.
F-8
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Dividend Policy
Resolve has not yet adopted a policy regarding payment of dividends.
Fiscal Year
Resolve has elected December 31 as its fiscal year end.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2001 and 2000 is summarized as
follows:
2001 2000
--------------- ----------------
Computer software $ 5,590 $ 2,197
Computers 6,187 2,827
Furniture and fixtures 5,079 2,500
Office equipment 11,576 4,212
-------------- ---------------
28,382 11,736
Less accumulated depreciation (8,203) (3,729)
-------------- ---------------
Net property and equipment $ 20,179 $ 8,007
============== ===============
Depreciation expense for the years ended December 31, 2001 and 2000 was $4,473
and $3,104, respectively.
NOTE C - CONVERTIBLE DEBENTURES PAYABLE
On November 16, 2001, Resolve borrowed $7,300 from an former shareholders of
Integra and unrelated individuals secured by a 5% convertible debenture due
December 31, 2002. The debenture is convertible into Resolve's $0.0001 par value
common stock at $0.001 per share through the debenture's maturity date.
On December 6, 2001, Resolve borrowed $11,150 from an unrelated individuals
secured by a 6% convertible debenture due June 30, 2003. The debenture is
convertible into Resolve's $0.0001 par value common stock at $0.10 per share
through the debenture's maturity date.
Read independent auditor's report.
F-9
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE D - AMENDMENT OF ARTICLES OF INCORPORATION
During the year ended December 31, 2001, Resolve approved an amendment its
articles of incorporation to (a) change the name of the company from
Columbialum, Ltd. to Columbialum Staffing, Inc.; (b) reduce the par value of its
common stock and preferred stock from $0.01 to $0.0001; (d) increase the number
of common shares Resolve is authorized to issue from 20,000,000 to 50,000,000;
and (e) increase the number of preferred shares Resolve is authorized to issue
from 2,000,000 to 10,000,000 shares.
NOTE E - INCOME TAXES
From its inception through December 31, 2001, Resolve has an accumulated loss of
$402,278, which can be used to offset future income through 2014 for financial
reporting purposes.
For income tax purposes Resolve has a net operating loss carryover of $402,278
which can be used to offset future Federal and state taxable income through 2016
as indicated below:
Year ended December 31, Losses
---------------
2014 $ 13,649
2015 99,107
2016 289,522
---------------
Total $ 402,278
===============
The potential tax benefit of these losses and credits is estimated as follows:
Future tax benefit $ 112,600
Valuation allowance (112,600)
---------------
Future tax benefit $ -
===============
At December 31, 2001 and 2000, no deferred tax assets or liabilities were
recorded in the accompanying financial statements.
NOTE F - LOSS PER SHARE
Resolve has reported basic loss per share based on the weighted average number
of shares outstanding for the period, and has reported fully diluted loss per
share including the 7,411,000 (354,833 after the stock split) reserved for the
conversion of the 5% and 6% convertible debentures dated November 16, 2001 and
December 6, 2001, respectively.
NOTE G - EQUITY INCENTIVE PLAN
During the year ended December 31, 2001, Resolve adopted a 2001 Equity Incentive
Plan ("Incentive Plan") for the benefit of key employees (including officers and
employee directors) and consultants of Resolve and its affiliates. The Incentive
Plan is intended to provide those persons who have substantial responsibility
for the management and growth of Resolve with additional incentives and an
opportunity to obtain or increase their proprietary interest in Resolve,
encouraging them to continue in the employ of Resolve. Resolve allocated
3,000,000 shares of its common stock to the Incentive Plan.
Read independent auditor's report.
F-10
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE H - COMMITMENTS AND CONTINGENCIES
Operating Leases
Currently, Resolve leases its operating office space on a 3 year lease through
October 31, 2003, at the current rate of approximately $1,618 per month. The
lease includes an escalation clause and allocation of common area maintenance
costs. During the current year, Resolve terminated a lease previously assumed on
a second location. The president of Resolve provides executive office space to
the company until such time as Resolve raises sufficient funds for an adequate
level of operations.
The future maturities of minimum lease payments under these leases are as
follows:
Year ended December 31, Amount
--------------
2002 $ 21,334
2003 18,920
Thereafter 0
--------------
Total $ 30,254
==============
NOTE I - MERGER AND CHANGE OF MANAGEMENT
On September 27, 2001, the shareholders of Resolve entered into a Securities
Exchange Agreement, as amended, to exchange 100% of the issued and outstanding
common stock of Integra Staffing, Inc., ("Integra") for an aggregate of
1,500,000 shares (50,000 shares post reverse split) of Resolve's $0.0001 par
value common stock.
The effective date of the transaction was December 10, 2001. On the effective
date of the transaction, the former shareholders of Integra owned approximately
60% of the outstanding stock of Resolve. The transaction was recorded as a
reverse merger. In connection with the transaction, a related party contributed
$6,400 due to him by Resolve to paid-in capital.
On the effective date of the transaction, Rene Morissette, the former President,
Treasurer, Secretary and sole Director of Resolve resigned, and Charles Lincoln,
CEO and Director of Integra became CEO and Chairman of Resolve. Additionally, R.
Gale Porter, former President and Director of Integra became President of
Resolve, and Cristino L. Perez, former Secretary, Treasurer and Director of
Integra became Secretary and Treasurer of Resolve.
NOTE J - CASH FLOW SUPPLEMENTAL INFORMATION
Cash paid for interest during the years ended December 31, 2001 and 2000
amounted to $21,598 and $226 respectively.
NOTE K - NON-CASH TRANSACTIONS
In connection with the acquisition of Integra Staffing, Inc., Resolve issued
1,500,000 shares (50,000 shares post reverse split) of its $0.0001 par value
common stock in exchange for 100% of the outstanding common stock of that
company. Also, a shareholder contributed property and equipment with an adjusted
basis of $7,825. as paid-in capital.
Read independent auditor's report.
F-11
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE L - SUBSEQUENT EVENTS
Mr. Charles Lincoln resigned as an officer and director of Resolve by letter
dated March 18, 2002, citing disagreements with matters relating to the
Resolve's operations, policies, practices, and lack of confidence in the
management of the Resolve and solely to comply with the terms of a funding offer
approved by the Board of Directors. Management believes Mr. Lincoln's assertions
are without merit and is responding to Mr. Lincoln's assertions in an
information statement being filed with the Securities and Exchange Commission on
Form 8-K.
The Board of Directors authorized the issue and sale of its 18% Subordinated
Convertible Note due October 1, 2002 in the aggregate principal amount of not
more than U.S. $250,000. Resolve has the option to extend the maturity date for
up to two successive three months periods ending January 1, 2003 and April 1,
2003. The principal amount of the notes are convertible into shares of Resolve's
$0.0001 par value common stock at $2 per share ($60 per share post-split). As of
March 24, 2002, notes have been issued in the amount of $100,000.
NOTE M - OTHER ITEMS (UNAUDITED)
Amendment of Articles of Incorporation and Stock Incentive Plan
On April 17, 2002, Resolve approved an amendment its articles of incorporation
to (a) change the name of the company from Columbialum Staffing, Inc. to Resolve
Staffing, Inc.; (b) reverse split the outstanding shares of common stock
one-for-thirty; (c) maintain the par value of Resolve's common stock at $0.0001;
(d) restore the number of common shares Resolve is authorized to issue to
50,000,000. Resolve's 2001 Stock Incentive Plan was also amended to restore the
number of shares which may be issued under the plan to 3,000,000 and to permit
the issuance of unrestricted shares. The number of shares outstanding and the
earnings per share calculations have been retroactively restated for the 1 for
30 reverse stock split.
Sale of Securities
On June 24, 2002, Resolve sold 5,000,000 units each consisting of one share of
common stock and one five-year $.15 common stock purchase warrant for $200,000.
Of the $200,000, $40,000 was for cash , $100,000 was in exchange for 18%
promissory notes and $60,000 was for the satisfaction of outstanding debt
Read independent auditor's report.
F-12
================================================================================
6,330,366 Shares
Resolved Staffing, Inc.
Common Stock
------------------------
P R O S P E C T U S
__________, 2002
------------------------
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Certificate of Incorporation and By-laws of the Company provide
that the Company shall indemnify to the fullest permitted by Nevada law any
person whom it may indemnify thereunder, including directors, officers,
employees and agents of the Company. Such indemnification (other than as ordered
by a court) shall be made by the Company only upon a determination that
indemnification is proper in the circumstances because the individual met the
applicable standard of conduct i.e., such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company. Advances for such indemnification may be made pending such
determination. Such determination shall be made by a majority vote of a quorum
consisting of disinterested directors, or by independent legal counsel or by the
stockholders. In addition, the Certificate of Incorporation provides for the
elimination, to the extent permitted by Nevada law, of personal liability of
directors to the Company and its stockholders for monetary damages for breach of
fiduciary duty as directors.
The Company has also agreed to indemnify each director and executive
officer pursuant to an Indemnification Agreement with each such director and
executive officer from and against any and all expenses, losses, claims, damages
and liability incurred by such director or executive officer for or as a result
of action taken or not taken while such director or executive officer was acting
in his capacity as a director, officer, employee or agent of the Company. The
obligations of the Company for indemnification is limited to the extent provided
in the Nevada Corporation Act and is also limited in situations where, among
others, the indemnitee is deliberately dishonest, gains any profit or advantage
to which he is not legally entitled or is otherwise indemnified.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses payable by the
Company in connection with the sale and distribution of the securities being
registered.
SEC Registration Fee........................ $ 74.55
Printing and Duplicating Expenses........... $ 5,000.00
Legal Fees and Expenses..................... $ 24,000.00
Accounting Fees and Expenses................ $ 5,000.00
Transfer Agent and Registrar Fees........... $ 2,500.00
Miscellaneous............................... $ 3,425.45
-----------
Total.............................. $ 40,000.00*
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*Estimated
33
Item 26. Recent Sales of Unregistered Securities
Please see pages 10 to 11 of the Prospectus under the caption "Recent
Sales of Unregistered Securities."
Item 27. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Exhibits
2.1 Stock Purchase Agreement between M. Richard Cutler, Vi Bui and
Premier Ventures, Inc. dated as of September 24, 2001 (1)
2.2 Stock Purchase Agreement between Premier Ventures, Inc. and
Work Holdings, LLC dated as of September 27, 2001 (1)
2.3 Securities Exchange Agreement dated November 23, 2001 between
Columbialum, Ltd. and the shareholders of Integra Staffing,
Inc. (2)
3.1 Articles of Incorporation of the Company (3)
3.2 Bylaws of the Company (3)
3.3 Amendment to Articles of Incorporation dated January 15, 2002,
filed January 22, 2002 (4)
3.4 Amendment to Articles of Incorporation filed May 29, 2002
4.1 Form of 5% Convertible Subordinated Debenture due December 31,
2002 (5)
4.2 Form of 6% Convertible Subordinated Debenture due June 30,
2003 (5)
4.3 Form of 18% Convertible Note due October 1, 2002 (5)
4.4 Form of $.15 warrant expiring June 30, 2007
5 Opinion of Sommer & Schneider LLP as to the validity of the
securities registered hereunder (by amendment)
10.1 Lease dated August 23, 1999 between Fletcher Associates, Inc.
and Integra Staffing, Inc. (5)
10.2 Consulting Agreement dated October 1, 2001 between the Company
and Apogee Business Consultants, Inc. (5)
10.3 The Company's 2001 Equity Incentive Plan (5)
10.4 Amendment to the 2001 Equity Incentive Plan
10.5 Form of Registration Rights Agreement
34
10.6 Lease dated June 19, 2002 between the Company and Tampa
Associates
11 Statement re computation of per share earnings: See Notes to
Consolidated Financial Statements
13 None
16.1 Letter dated March 5, 2002, from Haskell & White LLP,
Certified Public Accountants to the Registrant regarding
change of certifying accountant. (4)
16.2 Letter dated March 5, 2002, from Haskell & White LLP,
Certified Public Accountants regarding agreement with comments
in Form 8-K (4)
21 List of Subsidiaries - Integra Staffing, Inc. (Florida) 100%
23.1 Consent of Sommer & Schneider LLP (to be included as part of
Exhibit 5)
23.2 Consent of independent Certified Public Accountant
24 Power of Attorney (included in the signature page)
25 None
26 None
- -----
(1) Incorporated by reference to the exhibits filed with the Company's Current
Report on Form 8-K dated September 27, 2001.
(2) Incorporated by reference to the exhibits filed with the Company's Current
Report on Form 8-K dated December 12, 2001.
(3) Incorporated by reference to the exhibits filed with the corresponding
exhibits numbers filed with the Company's Form 10-SB Registration Statement
field February 14, 2000.
(4) Incorporated by reference to the exhibits filed with the Company's Current
Report on Form 8-K dated March 1, 2002.
(5) Incorporated by reference to the exhibits filed with the Company's Report
on Form 10-KSB for year ended December 31, 2001.
35
Item 28. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer 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.
(5) In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling person
in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida, on July 26, 2002.
RESOLVE STAFFING, INC.
By: /s/ R. Gale Porter
-------------------------------------
R. Gale Porter
President, Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints R. Gale Porter, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
from such person and in each person's name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement or any Registration Statement relating to this
Registration Statement under Rule 462 and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 26, 2002.
Signatures Date
/s/ R. Gale Porter July 26, 2002
- -----------------------------------------------------
R. Gale Porter, President, Chief Operating
Officer and Director (Principal Executive Officer)
/s/ Cristino L. Perez July 26, 2002
- -----------------------------------------------------
Cristino L. Perez, Treasurer, Secretary,
Chief Financial Officer and Director
37