As filed with the Securities and Exchange Commission on December ___, 2002
Registration No. 333-97255
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2/A
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 Industrial (I.R.S. Employer
of incorporation Classification Identification No.)
or organization) Code Number)
105 North Falkenburg Road, Suite B
Tampa, FL 33619
Phone: (813) 662-0074
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Donald E. Quarterman, Jr., President
c/o Resolve Staffing, Inc.
105 North Falkenburg Road, Suite B
Tampa, FL 33619
Phone: (813) 662-0074
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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
310 East Harrison, Tampa, Fl 33602
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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) 1,962,681 $0.50 $ 981,341.00 $ 93.10
Common Stock (3) 1,694,079 0.25 423,519.75 31.21
TOTAL 3,656,760 $ 1,404,860.75 $ 124.31
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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) Shares offered by affiliate selling security holders at a fixed price
of $.50 per share. Of these shares, 1,158,600 may be acquired by such
selling security holders for $.15 per share upon the exercise of
outstanding warrants.
(3) Shares offered by non-affiliate selling security holders, initially at
a fixed price of $.25 and, if an when a market develops for shares, at
prevailing market prices. Of these shares, 512,000 shares may be
acquired by such selling security holders for $.15 per share upon the
exercise of outstanding warrants and 111,500 shares may be acquired
upon the conversion of outstanding convertible debentures.
(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 DECEMBER ___, 2002
P R O S P E C T U S
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3,656,760 Shares
Resolve Staffing, Inc.
Common Stock
-----------------
This prospectus relates to the offer and sale from time to time of up
to 3,656,760 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. There are 4,256,600 shares issuable by us upon the exercise of
outstanding warrants and 111,500 shares issuable by us upon the conversion of
outstanding convertible debt securities. All of the shares issuable upon
conversion of the debentures and 1,750,000 of the shares issuable upon the
exercise of the warrants may be offered by selling security holders by means of
this prospectus.
The non-affiliated holders may offer a total of 1,582,579 shares, of
which 591,400 shares may be acquired by them upon the exercise of outstanding
warrants and 111,500 shares may be acquired by them upon the conversion of
outstanding convertible debentures. Cristino Perez, William A. Brown Family
Trust, and Global Partners, LLC, who are the affiliated holders, may offer up to
1,962,681 shares, of which 1,158,600 shares may be obtained upon the exercise of
warrants. Initially, all non-affiliated selling security holders may resell
shares of common stock at $.25 per share. If shares of common stock are quoted
on the Over-the-Counter, Electronic Bulletin Board (the "Bulletin Board"), the
proposed Bulletin Board Exchange ("BBX"), the "Pink Sheets" or other market,
holders who are not affiliated with our Company may resell common stock in any
market in which the shares are trading at the prevailing market price or in
negotiated transactions. The remaining 1,962,681 shares may be offered from time
to time by the above named affiliates of our company who are "underwriters" of
this offering, at $.50 per share. These prices were arbitrarily determined and
bear no relationship to the book value, market value or any other recognized
criteria for valuing shares. There is no market for the shares of our common
stock and no such market may ever develop.
Our executive offices are located at 105 North Falkenburg Road, Suite
B, Tampa, Florida 33619, and our telephone number is (813) 662-0074.
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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.
-----------------
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 December ___, 2002.
TABLE OF CONTENTS
Page
About Resolve Staffing, Inc ...........................................
Special Note Regarding Forward Looking Statements......................
Special Note Regarding Recent Changes in the Common Stock..............
Risk Factors .........................................................
Use of Proceeds .......................................................
Market for the Registrant's Common Stock and Related
Shareholder Matters..................................................
Management's Discussion and Analysis or Plan of Operation..............
Business...............................................................
Management.............................................................
Summary Compensation Table.............................................
Security Ownership of Certain Beneficial Owners and Management.........
Certain Relationships and Related Transactions.........................
Selling Security Holders ..............................................
Plan of Distribution
Description of Securities..............................................
Legal Matters .........................................................
Experts ...............................................................
Available Information .................................................
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.
Until (insert date 90 days after the effective date), all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
2
Prospectus Summary
You should read this summary together with the other information
contained in other parts of this prospectus. Because it is a summary, it does
not contain all of the information that you should consider before buying our
common stock.
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.
About the Offering
There were 4,821,069 shares of our common stock outstanding on December
4, 2002. The shares to be offered include shares which may be obtained by the
selling security holders upon the exercise of outstanding warrants or the
conversion of outstanding convertible debt. If all such securities are issued by
us there would be 9,189,169 shares outstanding, assuming no other issuances by
us. This offering is made by selling security holders only, who are not
obligated to make any sales. Sales by selling security holders that are
affiliates of the company may be made at $.50 per share. The other selling
security holders will initially offer shares for $.25 per share until our shares
are quoted on the Bulletin Board, BBX or some other quotation medium and
thereafter at prevailing market prices or privately negotiated prices. We will
not receive any proceeds from the sale of shares by selling security holders and
will pay all of the expenses of this offering, estimated to be $40,000.
Summary Financial Data
Because the following is a summary, it does not contain all of the
financial information that may be important to you. You should also read
carefully all the information contained in this prospectus, including the
financial statements and their explanatory notes.
3
SELECTED FINANCIAL DATA
Nine Months Ended Year Ended Year Ended
September 30, 2002 December 31, 2001 December 31, 2000
Income Statement: Percent Percent Percent
2002 of sales 2001 of sales 2000 of sales
------------- ------------ -------------- ---------- ------------- ----------
Revenues $ 303,531 100% $ 471,821 100% $556,267 100%
Direct Cost of Revenues $ 211,526 72% $ 359,742 76% $351,263 63%
Gross Profit $ 92,005 28% $ 112,079 24% $205,004 37%
Operating Expenses $ 340,096 144% $ 380,329 81% $304,066 55%
Loss before income taxes $ (248,091) (114%) $(268,250) (57%) $(99,062) (18%)
Other income $ (9,921) (4%) $ (21,272) (4%) $ (45) (0%)
Net loss $ (258,012) (118%) $(289,522) (61%) $(99,107) (18%)
Net loss per share - basic $ (.13) $ (3.47) $ (2.65)
Net loss per share - fully diluted $ (.04) $ (.05) $ (.02)
Balance Sheet: September 30, 2002 December 31, 2001 December 31, 2000
Current assets $ 156,121 $ 57,853 $ 80,364
Current liabilities $ 120,179 $ 59,961 $ 93,627
Working capital $ 35,942 $ (2,108) $(13,263)
Property & equipment $ 18,700 $ 20,180 $ 8,007
Total assets $ 174,488 $ 78,033 $ 88,371
Stockholders' equity $ 54,309 $ 18,072 $ (5,256)
4
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 and may not be able to address the
uncertainties, expenses and difficulties encountered by companies in their early
stages of development
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, we may sustain
unanticipated losses.
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 nine months ended September 30, , 2002 was $
258,012 and as of September 30, 2002, had an accumulated deficit of $ 665,414 .
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 risk losing employees,
customers and workers' compensation coverage
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, we will lose
employees, customers, and may be unable to pay payroll-related premiums.
We are subject to government regulations and any change in these regulations, or
the possible retroactive application of these regulations could result in
additional tax liability
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
5
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 result in additional tax liability. 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, if increased, and we are unable
to pass these costs on to our customers, will increase our cost ob doing
business
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 or we may lose
customers if we do. 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 because we cannot
control the work environment
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 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 do not attract temporary workers to fill the jobs we offer we will lose
customers
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
6
personnel to satisfy the needs of our customers. Also, we may face increased
competitive pricing pressures during these periods of low unemployment rates.
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. We estimate that $125,000 will be required to fund current operations and
that an additional $750,000 will be necessary to support acquisitions. 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. We plan to seek
lines of credit secured by our accounts receivable. 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 including
the inability to successfully integrate and manage acquired businesses
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.
Our plan to make acquisitions may divert management's attention from day-to-day
business operations
If we are able to identify acquisition candidates, management's time
and attention will be diverted from such activities as sales, marketing and
tailoring staffing solutions to meet customer's needs. If management is not able
to address these day-to-day operational task, we may lose customers or fail to
increase revenue.
Acquisition activities may cause us to lose key personnel
We cannot predict the effect of potential acquisitions on the morale
and effectiveness of key personnel. Conflicts between our existing key personnel
and personnel of an acquired company may cause us to lose key personnel.
Perceived changes in opportunities for career advancement because of the
acquisition of a company with more experienced personnel may lose key personnel
as well. If such persons leave and had well developed working relationships with
certain customers, we may lose some customers.
Acquisition activities may cause us to lose existing customers because of
conflicts or service problems
The clients of companies we may acquire may be in the same or similar
businesses with our existing clients. Although we do not enter into agreements
to restrict the type of business which we service, providing staff services to
existing clients' direct competition may cause such existing clients to look
elsewhere for staffing services.
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. Even 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 will 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.
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:
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.
8
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 cause the price of our stock to
drop
As of December 4, 2002, we had 4,821,069 shares of common stock issued
and outstanding. We also had convertible debentures and warrants outstanding
that may be exercised or converted into 4,368,100 shares of common stock. All
3,656,760 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 cause the market price of our common
stock to drop. 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.
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.
9
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. We issued 1,000,000 units for cash,
2,500,000 units in exchange for the notes and 1,500,000 units in exchange for
relief of the debt. The securities were offered by our directors and no
commissions were paid. Only 1,750,000 of the 5,000,000 shares which may be
issued upon the exercise of the warrants and 990,500 shares issued as part of
the units may be sold using this prospectus.
Shares Eligible for Future Sale
We cannot predict the effect, if any, that market sales of shares of
our common stock or the availability of shares of our common stock for sale will
have on the market price of our common stock prevailing from time to time. Sales
of substantial amounts of our common stock, including shares issued upon
exercise of outstanding warrants or upon the conversion of outstanding
convertible securities, in the public market after this offering could adversely
affect market prices prevailing from time to time and could impair our ability
to raise capital through the sale of our equity securities.
All of the shares sold in this offering will be freely tradable, except
that any shares acquired by our affiliates, as that term in is defined in Rule
144 under the Securities Act, may only be sold in compliance with the
limitations described below. Any of our affiliates that are selling security
holders may not acquire shares sold in this offering until their distribution is
completed. Based on shares outstanding as of September 30, 2002, the remaining
3,025,809 shares of common stock will be deemed restricted securities as defined
under Rule 144. Restricted shares may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144
or 144(k) promulgated under the Securities Act, which rules are summarized
below. Subject to the provisions of Rules 144 and 144(k), additional shares will
be available for sale in the public market as follows:
Number of Shares Date
---------------- ----
27,559 September 27, 2003
10,250 December 12, 2002
2,988,000 June 24, 2004
In addition, up to 3,250,000 shares of our common stock are issuable
upon exercise of warrants and all 111,500 shares are issuable upon conversion of
convertible securities, which have not been included in this registration. These
shares would be tradeable in the public market one year after the date of
exercise in the case of the warrants and one year after the date the convertible
securities were issued, assuming compliance with the other provisions of Rule
144.
10
Rule 144. In general, under Rule 144 as currently in effect, a person,
or group of persons whose shares are required to be aggregated, who has
beneficially owned shares that are restricted securities as defined in Rule 144
for at least one year is entitled to sell, within any three-month period
commencing 90 days after the date of this prospectus, a number of shares that
does not exceed:
o 1% of the then outstanding shares of our common stock, which
will be approximately 48,200 shares prior to this offering and
99,300 assuming all of the outstanding warrants and
convertible securities were executed.
In addition, a person who is not deemed to have been an affiliate at
any time during the three months preceding a sale and who has beneficially owned
the shares proposed to be sold for at least two years would be entitled to sell
these shares under Rule 144(k) without regard to the requirements described
above. To the extent that shares were acquired from one of our affiliates, a
person's holding period for the purpose of effecting a sale under Rule 144 would
commence on the date of transfer from the affiliate.
Stock Options. As of September 30, 2002 there were no options to
purchase our common stock outstanding under our 2002 Equity Incentive Plan. We
intend to file a registration statement on Form S-8 under the Securities Act to
register all 3,000,000 shares of our common stock subject to the Plan, all
shares of our common stock issued upon exercise of stock options and all shares
of our common stock issuable under our stock option plans. Accordingly, shares
of our common stock issued under these plans will be eligible for sale in the
public markets, subject to vesting restrictions and the lock-up agreements
described above.
Registration Rights
Demand Registration Rights. The holders of 2,618,100 warrants, are
entitled to request us to register their shares of common stock and common stock
issuable upon the exercise of the warrants or conversion of the debentures under
the Securities Act. Under the terms of a Registration Rights Agreement entered
into between us and these holders, the holders of registrable securities
constituting at least 51% of the total shares of registrable securities may
request that we register all or any portion of the shares held by such
requesting holder or holders. In such an event, all remaining holders of these
rights (excluding holders of shares not previously converted from preferred
stock) are entitled to notice of the registration and have the right to request
us, subject to limitations that the underwriters may impose on the number of
shares included in the registration, to include their registrable shares in the
registration as well. We are obligated to register such shares up to a maximum
of one time under this agreement.
To the extent that the managing underwriter is of the opinion that the
inclusion of all of the shares requested to be registered under this demand
right would adversely affect the marketing of such shares, after any shares to
be sold by us have been excluded, shares to be sold by the holders of the
registrable securities will be reduced pro rata based on their ownership of such
registrable securities.
Piggyback Registration Rights. The holders of registrable securities
have also been provided piggyback registration rights which apply when we
register shares (but not when registration occurs pursuant to a Form S-4, S-8 or
other form not available for registering restricted stock for sale to the
public).
Lock-up. This registration rights agreement also provides that if
requested in writing by the underwriter for the underwritten public offering of
our securities, each holder of restricted stock (as defined in the agreement)
who is a party to the agreement shall agree not to publicly sell any shares of
restricted stock or other shares of common stock without the consent of the
underwriters for a period of not more than 180 days following the effective
date; provided all of the selling stockholders in the offering and our directors
and officers have agreed to be similarly bound. In an amendment to the
registration rights agreement, each stockholder will agree to refrain from
requesting the registration of their shares of stock prior to the expiration of
the 180-day period following the consummation of this offering.
11
Termination. The rights of the holders of registrable shares terminate
upon the earlier of seven years or when the shares may be sold without
limitation under Rule 144.
Expenses. We will pay all expenses incurred by us in connection with
the registration of securities, except for underwriting discounts and selling
commissions applicable to the sale of registrable securities, which will be paid
by the sellers of registrable securities participating in the registration.
Other. All registration rights of any of our stockholders have either
been waived or complied with in connection with this offering.
12
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.
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.
o In April 2002 we secured a short term loan from an unrelated
individual in the amount of $40,000 with interest at the rate
of 12% per annum, secured by our accounts receivables.
Although we have incurred net losses from operations in each quarter
since inception, and our net loss for the nine months ended September 30, 2002
was $ 258,012 and as of September 30, 2002, had an accumulated deficit of $
665,414. Although we expect to continue to incur losses for the foreseeable
future, we have seen a decline in the rate of loss being incurred. Also we have
seen an increased in our revenues and business activity in recent months. We
anticipate this trend to continue for the next 12 months. 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, both of which will be
funded from operations and short term loans from major shareholders. 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.
13
As of September 30, 2002 , we had a working capital of $35,942 . As of
that date we had a liability to note holders and for short term advances in the
amount of $85,027 , including insurance financing of $21,766 . During the next
twelve months, we plan to satisfy our cash requirements through additional
equity financing and sales of our services. There is no assurance that we will
be successful in this regard. 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.
Revenues have been slower to materialize than previously anticipated.
Management believes that revenues will increase significantly during the next
twelve months. At our current level of operations, we would require a minimum of
$125,000 to satisfy the Company's basic cash needs for the next 12 months.
As of September 30, 2002, we had approximately $13,400 in cash with
which to satisfy our future cash requirements. Additionally, we anticipate a
refund of workers insurance paid of $60,000 (approximately $53,700 as of
November 30, 2002) at the termination of the policy currently in force.
Management anticipates meeting its cash needs from increased operations and from
short-term private financing from its officers, directors, shareholders, and
others. Our revenues have increased from approximately $10,000 per week in
September 2002 to $16,000 per week currently, and anticipate further increase in
months to come, and anticipate we will become profitable within the next six
months. We have also secured additional loans from major shareholders of
approximately $40,000. Therefore we believe our cash needs are met for the next
12 months.
Additionally, we would require approximately $750,000 during the next
12 months to implement our expansion and development plans. If we are unable to
obtain this additional financing, we may be forced to curtain or discontinue our
present expansion and development plans.
Previously, we applied for and were tentatively approved for $5 million
line of credit from a private financial institution, secured by accounts
receivable of target acquisitions as well as our current accounts receivable,
and guaranteed by the officers and directors at that time.
Management has not sought or obtained any other additional equity or
debt financing as of the date of this report, we plan to obtain a credit line
similar to the one described above, which would be adequate to fund our
expansion and much of our planned development efforts. In the event that we are
unable to obtain further debt or equity financing, we may not be able to
continue operations as currently conducted, expand our present operations, or
achieve successful acquisitions of other enterprises.
At November 30, 2002, we had no material commitments for capital
expenditures.
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.
14
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.
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 or revenues and had
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 September 11, 2001 disaster.
The revenues for the year ended December 31, 2001 was generated
entirely from providing workers to our customers. The revenues for the year
ended December 31, 2000 is composed of $492,940 or 89% from providing workers to
our customers, and $63,327 or 11% from fee-for-services.
For the years December 31, 2001 and 2000 the major categories of
expenses, as a percent of revenue were as follows:
15
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%
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 expired 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 nine months ended September 30, 2002 and 2001
Revenues for the nine months ended September 30, 2002 compared to 2001
decreased from $420,961 to $303,531 or a 28% 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 $313,653 to
$211,526 reflecting a commensurate decrease in relative costs of providing
services to our customers. The major components of costs of revenues decreased
as follows: labor, $276,742 to $185,723, workers compensation insurance
increased from $4,915 to $7,431, and payroll taxes and benefits decreased from
$30,656 to $18,341.
16
For this period salaries increased from $142,568 to $153,204,
consisting of decrease in wages of $5,964, and an increase in officer salaries
of $16,600. The September 30, 2002 salaries include $66,600 in donated services
by our CFO and former CEO.
During this period, legal and professional expenses increased from
$5,497 to $108,321, reflecting substantially higher legal expenses incurred to
discharge Company's legal obligations under the Securities Exchange Act of 1934,
and the filing its registration statement under the Securities Act of 1933,
including mailings to shareholders, quarterly and annual reports, and the cost
of auditing the Company's financial statements for 2001. The September 30, 2002
amount also includes $45,350 in consulting fees paid to an unrelated party.
Additionally, for the same periods, public company expense increased
from $0 to $3,929 reflecting filing fees and expenses in connection with the
Company's filing of compliance reports with the Securities and Exchange
Commission. Rent decreased from $19,353 to $16,351 reflecting lower rent expense
and no extra charges for common area expenses during the period. Taxes &
Licenses decreased from $12,949 to $9,384 reflecting the lower level of salaries
for the respective periods.
Major components of other expenses decreased: Penalties decreased by
$20,904 reflecting better cash management and better funding. Advertising
decreased from $14,587 to $7,929, reflecting a cost reduction program and a more
targeted advertising program, as well as a lower level of operations. Printing
expense increased from $2,079 to $4,640 reflecting additional costs associated
with the change in corporate name and the change in location of our operating
premises.
Comparison of operations for the three months ended September 30, 2002 and 2001
Revenues for the three months ended September 30, 2002 compared to 2001
increased from $97,970 to $118,427 or a 21% increase reflecting a current
increase in operations compared to slower operations prior to September 11,
2001. There was a downturn in the industry and in the economy, subsequent to the
September 11, 2001 disaster.
During the same periods cost of revenues increased from $72,585 to
$79,002 reflecting a commensurate increase in relative costs of providing
services to our customers. The major components of costs of revenues increased
as follows: labor decreased from $63,621 to $68,893; workers compensation
insurance decreased $6,913 to $6,511, and payroll taxes and benefits decreased
from $1,779 to $3,598.
For this period salaries increased from $45,226 to $48,764. The
September 30, 2002 amount included $23,400 in services donated by our CFO and
former CEO. Other salaries actually decreased by $19,861 reflecting a decreased
in office personnel.
During the same period, legal and professional expenses increased by
$5,042, reflecting substantially higher legal expenses incurred in connection
with the normal operation of the enterprise.
Major changes in other expenses are as follows: Advertising increased
by $1,195 reflecting an increase in the Company's advertising program and a more
targeted advertising program. Penalties decreased by $1,266 resulting from
better cash management. Office expenses and printing expenses, increased by
$2,359 and $1,125 respectively, reflecting an increased in business activity.
INFLATION
Management believes that inflation has not had a material effect on our
results of operations.
17
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, Work Holdings LLC, 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"). Work Holdings LLC was a parent of Resolve prior to the
acquisition of Integra. As a result of the issuance of 50,000 shares to the
former shareholders of Integra in the acquisition, Work Holdings LLC's ownership
was reduced to 39% and was further reduced to 9.8% as a result of the conversion
of outstanding convertible debentures. We acquired Integra in December 2001 and
its staffing business is the core of our business at the present time.
Integra was organized on August 16, 1999 in the State of Florida, and
as of September 30, 2002, was providing approximately 42 flexible staffing
personnel monthly in the Tampa, Florida area. We acquired all of the outstanding
capital stock of Integra on December 12, 2001 in exchange for 50,000 shares of
our common stock. At the time of the exchange, the 50,000 shares represented 60%
of our outstanding common stock. The shareholders of Integra were two trusts in
which Frank Harman was the grantee and beneficiary and Cristino L. Perez, our
CFO, was trustee, R. Gale Porter and his wife, Jerry G. Porter and the William
A. Brown Family Trust.
On September 24, 2001, Premier Ventures Inc. acquired 32,466 shares of
Resolve from M. Richard Cutler and Vi Bui. On September 27, 2001 Work Holdings
LLC acquired the 32,466 shares from Premier Ventures for $100,000 At the time of
the transfer, such shares represented 97.4% of our outstanding stock. We have
come to understand that the transaction was structured by Premier as a two step
transaction to provide Premier with $75,000 profit on a riskless basis. There
are no relationships or associations between Premier, its officers, directors
and affiliates and Resolve, Work Holdings LLC or their respective officers,
directors and affiliates. The acquisition of 97.4% of our stock outstanding in
September 2001 (which shares now represent 0.6% of our outstanding stock) by
Work Holdings LLC was to obtain a reporting company shell with which to acquire
assets of a temporary workforce business. Work Holdings LLC is managed by Rene
Morissette, who has no family relationship to any of our officers and directors.
Work Holdings LLC is beneficially owned by Mr. Perez, our CFO (15.13%), (29.12%)
and Mr. Charles Lincoln, our former CEO (44.58%).
Acquisition Plan
We plan to grow our business through the acquisition of private
companies that complement each other and through increased marketing efforts. We
have had discussions with one staffing company and have signed a non-disclosure
agreement to facilitate the exchange of information. Thus far our preliminary
discussions have focused on a stock for stock exchange, but terms are not
definite. A material issuance of shares would have a negative effect on current
investors. None of our promoters, management, affiliates or associates have any
interest, direct or indirect, in the company we are having discussions with.
There is no present plan to engage in such an interested party transaction
because none of the persons enumerated above have any other business interest in
the staffing industry. We do not have any corporate policy that would prohibit
such a transaction, subject to the requirements and limitations of Delaware
corporate law regarding director obligations of fair dealing.
We intend to acquire private company in a combination of cash and
stock. Three major factors in being able to acquire private companies are (1)
workers compensation insurance coverage, (2) financing, and (3) an exit strategy
for owners of these private companies. We have secured or workers compensation
insurance with a major carrier with an excellent modification rate, and are
poised to add additional staffing employees cost effectively. Although, except
18
as described above, the Company has not actively attempted to attract or
negotiate with acquisition candidates, management believes they will be able to
secure temporary and permanent financing for the initial cash requirement of a
limited number of acquisitions. Management further believes that negotiations
with prospective target companies would be most effective once the Company's
stock has a public market, of which there is no assurance. Management believes
that many private company may be acquired using future payout and not require
significant current cash outlay. Any such acquisition may require the issuance
of large number of shares of common or preferred stock, which would have a
dilutive effect on current shareholders. However, management believes that such
acquisition would also have a positive effect on the Company's long-range
revenues and profits.
We have signed confidentiality agreements with two business brokers in
an effort to identify potential candidates for potential acquisition consistent
with our acquisition plan. So far they have not identified any such candidates.
We hope to complete the acquisition of at least one private company
within the next 12 months. This acquisition would be accomplished entirely by
the issuance of common or preferred stock. If cash was required for the
acquisition or to support the operations of the acquired company, funds would be
raised in a private equity financing or by securing a line of credit. We do not
have any commitments for either type of financing.
Expansion Plan
We also plan to grow our business through opening additional offices,
initially in local area, and subsequently expanding to mid-market areas of
Florida and then throughout the southeast United States. This plan would
increase the Company's business concentration in coverage areas. The basic
requirements for such expansion would be initial funding for premises,
personnel, etc. as well as the accounts receivables. This type of expansion
would be accomplished by direct investment and would not normally require
issuance of common or preferred stock. The Company has not yet begun this
expansion program. We anticipate that with in the next 12 months the Company
open two additional offices with in 10 miles of our present locations. The
funding of such officers would be accomplished through funds generated from
operations and private financing for such purpose.
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 September 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%.
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
19
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. Such analysis
includes reviewing work schedules and productivity data, in addition to
recruiting, interviewing, and qualifying candidates for available positions.
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.
The focus of our temporary staffing service is to provide short and
long term employees as well as temp to hire employees to financially secured
employers in the Tampa Bay area. The average employee will work a 40 hour work
week for a client and will work for an average of 2 employers per month. It is
estimated an employee will work an average of 14 days per month. Our service
specializes in clerical and light industrial staffing with the largest
percentage in the clerical field. Each applicant is thoroughly interviewed
tested and screened to meet the requirements of our customers. For long term and
temp to hire positions a large percentage of our customers will interview our
candidates and then select the one they believe to be best suited for the
position.
At this time we do not have any contractual agreements with our
customers for providing staffing.
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.
20
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.
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
We compete with many small providers in addition to several large
public companies, including Ablest, Inc., Spherion, Adecco, S.A., Kelly
Services, Inc., Manpower, Inc., and others. 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
21
retroactive application by the IRS of an adverse conclusion could have a
material adverse effect on our financial position, results of operations and
liquidity.
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 September 30, 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. Of the five employees, two of whom are
officers are full time. Twelve of our part-time employees work 30 hours or more
per week. 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
22
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.
We have no definitive agreements or understandings with respect to any
acquisitions, but have signed a non-disclosure agreement with one company, which
is not affiliated with any member of our management or affiliates.
Property
Our executive offices consisting of 2,000 square feet of office space
at a facility were provided by R. Gale Porter, our former President, Chief
Operating Officer and a director, without rent until such time as we raise
sufficient funds for an adequate level of operations. Mr. R. Gale Porter, the
Company's president, resigned effective October 23, 2002 and the arrangement for
the use of executive offices at no cost to the Company was terminated. The
Company's operations were consolidated at the new leased operating premises.
Effective July 8, 2002, we leased 1,056 square feet office space,
housing our operating offices, pursuant to a three-year lease with an unrelated
landlord, expiring June 30, 2005.
Previously we occupied a 1,540 square feet office space, housing our
operating offices, pursuant to a three-year lease expiring October 31, 2003. The
space was leased to another tenant, therefore, we were relieved of any liability
on the lease after August 31, 2002.
Our operating offices are adequate for our present level of operations.
In the future we will need additional facilities in which to centralize our
accounting, training, human resource, risk management and executive work
activities. We anticipate these We will require larger scale data processing and
network communication capabilities, which will be needed 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.
Legal Proceedings
We are not the subject of any legal proceeding. Our business, however,
may be subject to routine legal proceedings from time to time in the ordinary
course of our business.
Consulting Agreement
On October 1, 2001 we entered into a consulting agreement with Apogee
Business Consultants, LLC, an unrelated entity, though March 31, 2002. The
agreement was subsequently extended informally through June 30, 2002 on the same
terms as the original agreement. The agreement expired and has not been renewed.
Under the terms of the agreement, Apogee Business Consultants provided
services to the Company including, assistance with our merger with Integra
Staffing, Inc., assistance with the preparation and filing appropriate filings
with the Commission, obtaining our CUSIP number, coordinate with our transfer
agent for the issuance of our common stock, and other services.
As compensation for services provided by Apogee Business Consultants,
we agreed to pay $7,500 per month plus 100,000 (3,333 after the one-for-thirty
stock split) shares of our common stock and to provide registration rights on
such shares on any registration statement filed by the Company. We also agreed
to sell Apogee 200,000 (6,667 after the one-for-thirty stock split) of our
common stock at approximately $0.001 per share.
23
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
---- --- --------
Donald E. Quarterman, Jr. 33 President, COO and Director
William A. Brown 45 Executive Vice-President and Director
Cristino L. Perez 58 CFO, Secretary, Treasurer, and Director
Mr. Quarterman joined Resolve as President, COO and Director December
2, 2002. Mr. Quarterman brings over 7 years of staffing industry experience in
venture capital, mergers and acquisitions, and strategic consulting to Resolve.
Prior to joining Resolve, Mr. Quarterman was Managing Partner and co-founder of
Pinnacle Corporate Services, LLC, a business consulting firm specializing in
working with small and micro-cap publicly traded companies. From 1997 to 2000,
Mr. Quarterman was Director of Operations for Catalyst Ventures, an Investment
Banking firm located in Tampa, Florida. From 1993 to 1997, Mr. Quarterman was a
Vice President at Geneva Corporate Finance, one of the largest middle-market
merger and acquisition firms in the United States. Mr. Quarterman earned an MBA,
with a concentration in Finance and Entrepreneurship, from the University of
South Florida.
Mr. Brown joined Resolve Staffing, Inc as a director on December 2,
2002. Mr. Brown has been in the staffing industry for the last 2 years. Mr.
Brown is founder and President of J. B. Carrie Properties, Inc., a real estate
management and development company which was organized in 1988. Mr. Brown is
also involved in the senior assisted living business managing 3 facilities in
the state of Florida. Mr. Brown graduated from Florida State University with a
degree in Sociology.
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.
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.
24
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 $100,000 in any of the applicable
years.
SUMMARY COMPENSATION TABLE
Other
Year Annual Restricted All Other
Ended Compen- Stock Options/ LTIP Compen-
Name and Principal Position Dec. 30 Salary Bonus sation Awards SARs Payouts sation
- --------------------------- ------- ------ ----- --------- ----------- ------- ------- ----------
M. Richard Cutler, 2001 -0- -0- -0- -0- -0- -0- -0-
President, Treasurer 2000 -0- -0- -0- -0- -0- -0- -0-
and Secretary (1) 1999 -0- -0- -0- -0- -0- -0- -0-
Rene Morissette, 2001 750 -0- -0- -0- -0- -0- -0-
President, Treasurer 2000 -0- -0- -0- -0- -0- -0- -0-
and Secretary (2) 1999 -0- -0- -0- -0- -0- -0- -0-
Charles Lincoln, 2001 -0- -0- -0- -0- -0- -0- -0-
Chairman and 2000 -0- -0- -0- -0- -0- -0- -0-
CEO (3) 1999 -0- -0- -0- -0- -0- -0- -0-
R. Gale Porter, 2001 -0- -0- -0- -0- -0- -0- -0-
President and COO (4) 2000 -0- -0- -0- -0- -0- -0- -0-
Donald E. Quarterman, Jr., 2001 -0- -0- -0- -0- -0- -0- -0-
President and COO (5) 2000 -0- -0- -0- -0- -0- -0- -0-
- -----------
(1) Appointed April 9, 1998; resigned September 27, 2001.
(2) Appointed September 26, 2001; resigned January 11, 2002.
(3) Appointed December 12, 2001; resigned March 18, 2002.
(4) Appointed March 18, 2002; resigned October 23, 2002
(5) Assumed the duties of Chief Executive on December 4, 2002.
25
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
Number of Securities Percent of Total
Underlying Options/SAR's
Options/SAR's Granted to Employees Exercise of
Name Granted (#) in Fiscal Year Base Price ($/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
Donald E. Quarterman, Jr. 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
Donald E. Quarterman, Jr. 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 November 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
26
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.
Beneficial Ownership
--------------------
Name of Beneficial Owner Shares Percentage
- ------------------------ ------ ----------
Charles Lincoln (1) 93,852 1.76%
R. Gale Porter (2) 300,000 6.22%
Cristino L. Perez (3) 1,981,812 33.80%
Donald E. Quarterman, Jr. (4) -0- -0-
William A. Brown Family Trust (5) 4,875,436 67.43%
Venancio Pardo (6) 309,028 6.33%
All Officers and Directors as a
group (2 persons) (7) 1,981,812 33.80%
- -----------------
(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 Work Holdings, LLC, a limited
liability corporation.
(2) Mr. R. Gale Porter was our Chief Operating Officer, President, and a
director of the Company until his resignation on October 23, 2002.
Includes 300,000 shares which he owns jointly with his spouse, and 3,079
shares corresponding to his interest in Work Holdings, LLC, a 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, 4,169 shares owned by Mr. Perez corresponding to his interest in
Work Holdings, LLC, a limited liability company, 125,000 shares
corresponding to Mr. Perez interest in Global Partners, LLC, a limited
liability company, and 125,000 shares issuable upon exercise of warrants
owned by Global Partners, LLC, , 890,218 shares owned by his spouse's
individual retirement account through the account's interest in Work
Holdings LLC and Global Partners LLC, two limited liability companies and
883,000 issuable upon the exercise of warrants owned by Global Partners
LLC.
(4) Donald E. Quarterman, Jr. was appointed Chief Operating Officer, President
and director on December 4, 2002.
(5) It includes 816,836 shares owned by the Trust controlled by William A.
Brown as Trustee, and 750,000 shares isssuable upon conversion of warrants
owned by the Trust. It also includes 1,517,300 shares and 1,517,300 shares
issuable upon exercise of warrants transferred to the Trust from the
William A. Brown Family Partnership, also controlled by William A. Brown,
as General Partner, 132,000 shares owned by Mr. Brown's individual
retirement account through the account's interest in Work Holdings, LLC, a
limited liability company and 142,000 shares issuable upon exercise of
warrants owed by Work Holdings, LLC.
(6) Includes 9,400 shares owned directly by him, 9,400 shares issuable upon
the conversion warrants, and 152,202 shares owned indirectly through
individual retirement account's interest in Work Holdings LLC and Global
Partners LLC, two limited liability companies, and 130,000 shares issuable
upon the exercise of warrants by Global Partners LLC.
(7) Includes 1,042,400 that may be obtained by officers and directors and
their related parties upon the conversion of outstanding warrants.
Mr. Porter's business address is 310 East Harrison, Tampa, Florida
33602. Mr. Perez' business address is c/o Resolve Staffing, Inc., 105 North
Falkenburg Road, Suite B, Tampa, Florida 33619. Mr. Pardo's business address is
5700 Memorial Highway, Tampa, Florida 33615. The address of the William A. Brown
Family Trust and William A. Brown Family Limited Partnership is 106 Stanley
Street, Tampa, Florida 33604.
27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our business activities were organized by Mr. R. Gale Porter, our
former president, Mr. Cristino Perez, our CFO, Mr. William A. Brown and Mr.
Venancio Pardo.
In December 2001, we acquired Integra Staffing through the issuance of
50,000 shares of our commons tock, 76% of which were issued to the organizers in
exchange for the outstanding shares of Integra as follows:
Name Number of Shares
---- ----------------
Cristino L. Perez 7,750
William A. Brown Family Trust 12,685
R. Gale Porter 17,500
The remaining 12,065 shares were issued to a non-affiliated minority
shareholder of Integra.
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. Of these 248,667 shares, 156,636 shares (63%) were
issued to our organizers as follows:
Name Number of Shares
---- ----------------
R. Gale Porter 53,065
William A. Brown Family Trust 54,151
Global Partners LLC for the benefit
of Venancio Pardo 22,202
For the benefit of Cristino Perez'
spouse 27,218
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 units 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.
The consideration we received from officers and directors for the
issuance of 917,400 was as follows:
28
Number of Consideration
Name Units Received
---- --------- --------------
Cristino L. Perez 34,400 $1,376
Global Partners LLC for the
benefit of Mr. Perez' spouse 883,000 The proportional share of
a cash payment of $18,288, the
cancellation of Notes of
$16,252 and $20,000 of debt on
total purchases of 1,363,500 units.
The consideration we received from our 10% or more shareholders for
4,325,600 units was as follows:
Number of Consideration
Name Units Received
---- --------- --------------
William A. Brown Family 1,517,300 Cancellation of $60,692
Limited Partnership of Notes
R. Gale Porter 1,493,400 Cancellation of
$19,736 of Notes and
$40,000 of debt
Venancio Pardo 9,400 $376.00
Global Partners LLC for the
benefit of:
Venancio Pardo 255,000 $ 3,420.20
Cristino L. Perez' spouse 883,000 $ 11,843.27
Fiero Partners 167,500 $ 777.93
Mr. Venancio Pardo's adult daughter, who shares her parents' residence,
purchased a 6% convertible debenture due June 30, 2003 from Resolve, which
entitles her to convert such debenture into 1,000 shares of Resolve's common
stock. In addition, she is the sole owner of ICBM Corporation and its subsidiary
1Mundo, Inc. ICBM Corporation and 1Mundo, Inc. each purchased a 6% convertible
debenture due June 30, 2003 from Resolve, which entitles them to convert such
debentures into 1,000 shares of Resolve's common stock.
From January 1, 2002 through September 30, 2002, Mr. R. Gale Porter and
Mr. Cristino L. Perez have provided services to our company in their capacity of
President and CFO respectively. The services provided by Mr. Porter, valued at
$34,200 were contributed to the Company. Of the services provided by Mr. Perez,
valued at $32,400, $2,000 was paid in cash, and the remaining $30,400 were
contributed to the Company. Mr. Perez has agreed to continue to provide services
to our company until such time as we are able to generate sufficient funds for
an adequate level of operations. Mr. Porter provided services to our company
until his resignation on October 23, 2002.
From September 27, 2001 until his resignation as president on October
23, 2002, Mr. R. Gale Porter has provided us with the use of executive offices
at no cost to us.
29
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.
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) 300,000 6.22% 300,000 0 0.00%
Cristino L. Perez (3) 79,425 1.64% 79,425 0 0.00%
William A. Brown Family Trust (4) 4,601,436 64.92% 799,836 3,801,600 53.63%
Nilda Hoornik (5) 2,776,420 51.46% 1,083,420 1,693,000 31.38%
C. Bruce Gordy (6) 119,906 2.46% 119,906 0 0.00%
Frank Hartman 81,654 1.68% 81,654 0 0.00%
Ronald E. Dowdy 119,906 2.46% 119,906 0 0.00%
Video Concepts Ltd., Inc. 59,954 1.24% 59,954 0 0.00%
Rene Morissette (7) 443,069 8.82% 415,510 27,559 0.55%
Charles & Lorraine Lincoln 81,567 1.69% 71,317 10,250 0.21%
Apogee Business Consultants, LLC 103,333 2.12% 103,333 0 0.00%
Arthur G. Knox 4,000 0.08% 4,000 0 0.00%
Brenda Holson 50,000 1.03% 50,000 0 0.00%
Susan Morisette. IRA 15,510 0.32% 15,510 0 0.00%
TBC Investments, Inc. 44,463 0.92 44,463 0 0.00%
R. J. Diamond Consulting, Inc. 44,463 0.92% 44,463 0 0.00%
Contracts Consultants
International, Inc. 44,463 0.92% 44,463 0 0.00%
Premier Ventures, Inc. 88,416 1.82% 88,416 0 0.00%
Venancio Pardo (8) 18,800 0.39% 18,800 0 0.00%
Stephanie Crumpler 784 * 784 0 0.00%
Jaime Ceniceros 17 * 17 0 0.00%
Cora Lo 17 * 17 0 0.00%
Sheri Skiba 17 * 17 0 0.00%
Susan Egbert 17 * 17 0 0.00%
Mike Cutler 17 * 17 0 0.00%
Frank Hartman, Custodian
for Ginifer Hartman 15 * 15 0 0.00%
30
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%
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 Edelman (9) 250 * 250 0 0.00%
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. Couvertie (9) 1,000 * 1,000 0 0.00%
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. Desrosiers (9) 2,000 * 2,000 0 0.00%
Wilfredo and/or
Maria del Carmen Alonso (9) 2,000 * 2,000 0 0.00%
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%
31
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 (5) (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%
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%
32
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. Trujillo, Jr and
Jayna J. Trujillo (9) 1,000 * 1,000 0 0.00%
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 1,750,000 shares of the 5,000,000 issuable
33
upon conversion of warrants at $.15 per share and includes 1.465,260
shares currently issued and outstanding. The remaining 3,250,000
underlying the warrants belonging to officers, directors and major
shareholders are not being registered at this time.
(2) Mr. R. Gale Porter served as the Company's Chief Operating Officer,
President, and is a director of the Company until his resignation on
October 23, 2002. The ownership consist of 300,000 shares which he owns
jointly with his spouse. This ownership does not include the underlying
interest in 3,079 shares owned by Work Holdings, LLC, a limited liability
corporation whose sole managing director is Rene Morissette, in which Mr.
Porter has a 1.35% interest. Mr. Porter disclaims beneficial interest of
the shares owned by Work Holdings, LLC in that he has neither voting nor
investment powers with respect to such shares. On November 22, 2002, Mr.
Porter sold 750,000 shares and 750,000 shares issuable upon conversion of
warrants in a private transaction to the William A. Family Trust. In
consideration of registration rights on the 300,000 shares by the Company,
Mr. Porter agreed to return 513,965 shares and 743,400 shares issuable
upon conversion of warrants to the Company for cancellation. Additionally,
Mr. Porter agreed to subject the 300,000 shares to a lock-up agreement,
whereby a maximum of 10,000 shares can be sold per month after 60 days
from the time the Company's shares first are listed on an exchange or on
an electronic medium that provides real-time trade reporting or 180 days
from the time the Registration Statement is declared effective .
(3) Cristino L. Perez is the Company's Chief Financial Officer, Secretary,
Treasurer, and is a director of the Company. Includes 45,025 shares which
he or his spouse own directly and jointly with his spouse and 34,400
shares issuable upon conversion of warrants to him. This ownership does
not include the underlying interest in 1,015,218 shares owned by Global
Partners, LLC, a limited liability corporation, and 1,008,000 shares
issuable upon conversion of warrants owned by this limited liability
corporation, whose sole managing director is Nilda Hoornik, Mr. Perez's
sister, and in which Mr. Perez' spouse has a 63.87% interest. Mr. Perez
and his spouse disclaims beneficial interest of the shares owned by Global
Partners, LLC in that neither he or his spouse has voting or investment
powers with respect to such shares. This ownership does not include the
underlying interest in 4,169 shares owned by Work Holdings, LLC, a limited
liability corporation whose sole managing director is Rene Morissette, in
which Mr. Perez has a 1.83% interest. Mr. Perez disclaims beneficial
interest of the shares owned by Work Holdings, LLC in that he has neither
voting nor investment powers with respect to such shares.
(4) William A. Brown Family Trust consists of 816,836 shares owned by the
trust controlled by William A. Brown as Trustee, and 750,000 shares
isssuable upon conversion of warrants owned by the Trust. It also includes
1,517,300 shares previously owned by the William A. Brown Family
Partnership, also controlled by William A. Brown, as General Partner, and
1,517,300 shares issuable upon conversion of warrants also previously
owned by the Partnership, which were transferred to the Trust. This
ownership does not include the underlying interest in 132,000 shares owned
by Work Holdings, LLC, a limited liability company whose sole managing
director is Rene Morissette, and 142,000 shares issuable upon conversion
of warrants owed by Work Holdings, LLC. Mr. Brown disclaims beneficial
interest of the shares owned by Work Holdings, LLC in that he has neither
voting nor investment powers with respect to such shares.
(5) Nilda Hoornik consisting of 1,412,920 shares owned by Global Partners,
LLC, a limited liability company in which she is the sole managing
director, and 1,363,500 shares issuable upon conversion of warrants owned
by this limited liability corporation. These shares are beneficially
owned, based on their interest in the corporation as follows: Elona
Perez's individual retirement account, 63.87%; Cristino L. Perez, 9.0%;
Venancio Pardo's individual retirement account, 10.16%; Fiero Partners,
12.06%; and others, 4.90%. Nilda Horrnik also owns 1,000 shares issuable
upon conversion of a debenture.
(6) C. Bruce Gordy consisting of 61,906 shares owned directly by him, and
58,000 shares issuable upon conversion of warrants also owned by him. This
ownership does not include the underlying interest in 58,000 shares owned
by Work Holdings, LLC, a limited liability company whose sole managing
director is Rene Morissette, and 58,000 shares issuable upon conversion of
warrants owed by Work Holdings, LLC. Mr. Gordy disclaims beneficial
interest of the shares owned by Work Holdings, LLC in that he has neither
voting nor investment powers with respect to such shares.
(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
227,559 shares owned by Work Holding, LLC, a limited liablility 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, 5.4%; R. Gale Porter, 1.35%; Venancio Pardo's individual
retirement account, 3.53%; Cristino L. Perez, 1.83%; , C Bruce Gordy,
25.49%; William A. Brown's individual retirement account, 58.01%, and
others 4.4%.
(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 152,202 shares owned by Global
Partners, LLC, a limited liability corporation whose sole managing
director is Nilda Hoornik, and 130,000 shares issuable upon conversion of
warrants owned by this limited liability corporation, in which Mr. Pardo
has a 10.16% interest. Mr. Pardo disclaims beneficial interest of the
shares owned by Global Partners, LLC in that he has neither voting nor
investment powers with respect to such shares. This ownership does not
include the underlying interest in 8,026 shares owned by Work Holdings,
LLC, a limited liability corporation whose sole managing director is Rene
Morissette, in which Mr. Pardo has a 3.53% interest. Mr. Pardo disclaims
beneficial interest of the shares owned by Work Holdings, LLC in that he
has neither voting nor investment powers with respect to such shares.
(9) Consists solely of shares issuable upon conversion of a debenture.
34
William A. Brown is the control person of the William A. Brown Family
Trust and the William A. Brown Family Partnership. Work Holdings LLC is
controlled by Rene Morissette, its sole managing director. Global Partners LLC
is controlled by Nilda Hoornik, its sole managing director. Ms. Hoornik is the
sister of Cris Perez, our CFO and a director.
Other control persons and their respective entities are as follows:
Walter G. Masky, President Video Concepts Limited, Inc,
Jerry Diamond, President Apogee Business Consultants, Inc.
Teresa Crowley, President TBC Investments, Inc.
Richard J. Diamond, President R. J. Diamond Consulting, Inc.
Terry M. Haynes, President Contracts Consultants
International, Inc.
Jerry Diamond, President Premier Ventures, Inc.
Hans C. Beyer, President Daedalus Consulting, Inc.
George Chaconas, Trustee George Chaconas Trust
Patricia Pardo, President ICBM Corporation and wholly owned
subsidiary 1Mundo, Inc.
Susan Morissette, General Partner Fiero Partners, a general
partnership
Jess G. Tucker is named as a selling security holder for up to 1,000
shares of Common Stock in this prospectus. He is associated with James I. Black
& Company, Lakeland, Florida, a broker-dealer and a member of the National
Association of Securities Dealers, Inc. James I. Black & Company will not be a
participant in the distribution of any of the securities.
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 "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
35
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.
The selling security holders may use brokers 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.
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, including Mr. Perez, Mr. Pardo, Mr. Porter (until his resignation on
October 23, 2002), Mr. Brown and the entities controlled by them. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the registrant under
these provisions, the registrant has been informed 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.
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.
36
Penny Stock Rules
Our common stock is subject to the "penny stock" rules that impose
additional sales practice requirements should because our shares presently do
not trade in any market and can be expected to trade below $5.00 per share. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of the common shares and must have
received the purchaser's written consent to the transaction prior to the
purchase. The "penny stock" rules also require the delivery, prior to the
transaction, of a risk disclosure document mandated by the Securities and
Exchange Commission relating to the penny stock market. The broker-dealer must
also disclose:
o the commission payable to both the broker-dealer and the
registered representative,
o current quotations for the securities, and
o if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market.
Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
These rules apply to sales by broker-dealers to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse), unless our common shares trade above $5.00 per share.
Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell shares of our common stock, and may affect the ability to sell the
shares in the secondary market as well as the price at which such sales can be
made. Also, some brokerage firms will decide not to effect transactions in
"penny stocks" and it is unlikely that any bank or financial institution will
accept "penny stock" as collateral.
Underwriter Status
The selling security holders and any broker-dealers or agents that are
involved in selling the shares may be considered to be "underwriters" within the
meaning of the Securities Act for such sales. An underwriter is a person who has
purchased shares from an issuer with a view towards distributing the shares to
the public. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
considered to be underwriting commissions or discounts under the Securities Act.
Because the selling security holders are deemed "underwriters" within
the meaning of Section 2(11) of the Securities Act, they will be subject to the
prospectus delivery requirements.
We are required to pay all fees and expenses incident to the
registration of the shares in this offering. However, we will not pay any
commissions or any other fees in connection with the resale of the common stock
in this offering. We have agreed to indemnify the selling security holders and
their officers, directors, employees and agents, and each person who controls
any selling security holder, in certain circumstances against liabilities,
including liabilities arising under the Securities Act. Each selling security
holder has agreed to indemnify us and our directors and officers in certain
circumstances against certain liabilities, including liabilities arising under
the Securities Act.
If the selling security holder notifies us that they have a material
arrangement with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling security holder and the broker-dealer.
37
DESCRIPTION OF SECURITIES
The following is a summary of our Articles of Incorporation, as
amended.
Common Stock
Our Articles of Incorporation authorizes the issuance of up to
50,000,000 shares of common stock and 10,000,000 shares of preferred 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.
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 4,256,600 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.
38
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.
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.
Indemnification
Our certificate of incorporation allows us to indemnify our officers
and directors to the maximum extent allowed under Nevada law. This includes
indemnification for liability which could arise under the Securities Act. We
have agreed to indemnify certain selling security holders against some
liabilities, as more fully set forth in registration rights agreements,
including liabilities under he Securities Act, and to contribute to payments
such selling security holders may be required to make.
Certain selling security holders have agreed to indemnify us, our
officers and directors against some liabilities, as more fully set forth in the
registration rights agreements, including liabilities under the Securities Act,
and to contribute to payment we and our controlling persons may be required to
make.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant under these provisions, the registrant has been informed 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.
39
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
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. 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.
40
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.
41
PAGE
Independent Auditor's Report F-1
Financial Statements -
Balance sheets as of September 30, 2002 (Unaudited) and
December 31, 2001 (consolidated) and 2000 F-2
Statements of operations for the years ended
December 31, 2001 (consolidated) and 2000 F-3
Statements of operations for the three and nine months
ended September 30, 2002 and 2001 (Unaudited) F-4
Statements of cash flows for the years ended December
31, 2001 (consolidated) and 2000 F-5
Statements of cash flows for the three and nine months
ended September 30, 2002 and 2001 (Unaudited) F-6
Statements of stockholders' equity for the nine months
ended September 30, 2002 (Unaudited), and for the
years ended December 31, 2001 (consolidated) and 2000 F-7
Notes to Financial Statements F-8
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)
September 30, (Consolidated)
ASSETS 2002 2001 2000
------------------- ------------------- -------------------
CURRENT ASSETS
Cash $ 13,442 $ 19,467 $ 19,697
Accounts receivable, net of allowance for
bad debts of $1,800 for 2001and 2000 52,865 30,069 58,051
Prepaid and other assets 89,814 8,317 2,616
---------------- --------------- ----------------
Total current assets 156,121 57,853 80,364
---------------- --------------- ----------------
PROPERTY AND EQUIPMENT
Property and equipment 28,382 28,382 11,736
Less: Accumulated depreciation 10,015 8,202 3,729
---------------- --------------- ----------------
Net property and equipment 18,367 20,180 8,007
---------------- --------------- ----------------
TOTAL ASSETS $ 174,488 $ 78,033 $ 88,371
================ =============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 19,508 $ 23,698 $ 6,530
Accrued payroll taxes 4,494 17,171 66,630
Insurance financing 21,766 - -
Accrued expenses 593 642 11,909
Notes payable 40,000 - -
Debentures payable 11,150 18,450 -
Customer deposits - - 8,558
Due to related parties 23,261 - -
---------------- --------------- ----------------
Total current liabilities 120,179 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) 534 8 4
Paid-in capital 719,189 425,467 107,496
Retained earnings (deficit) (665,414) (407,403) (112,756)
---------------- --------------- ----------------
Total stockholders' equity (deficit) 54,309 18,072 (5,256)
---------------- --------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 174,488 $ 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
(Consolidated)
2001 2000
-------------------- --------------------
SERVICE REVENUES $ 471,821 $ 556,267
DIRECT COST OF SERVICES 359,742 351,263
---------------- ----------------
GROSS MARGIN 112,079 205,004
OPERATING EXPENSES
Legal & professional fees 52,621 6,894
Advertising/Promotion 21,710 32,504
Salaries and benefits 197,304 187,715
Payroll taxes 7,808 8,435
Penalties 19,638 659
Rent & leases 22,626 19,727
Travel & entertainment 10,071 9,356
Administrative expenses 48,551 38,776
---------------- ----------------
Total operating expenses 380,329 304,066
---------------- ----------------
(LOSS) FROM OPERATIONS (268,250) (99,062)
OTHER INCOME (EXPENSES)
Interest and other income 326 181
Interest expense (21,598) (226)
---------------- ----------------
Net other income (expenses) (21,272) (45)
---------------- ----------------
NET INCOME (LOSS) $ (289,522) $ (99,107)
================ ================
LOSS PER SHARE
Basic $ (3.47) $ (2.65)
================ ================
Fully diluted $ (.05) $ (.02)
================ ================
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 83,333 37,443
================ ================
Fully diluted 5,438,166 5,392,276
================ ================
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 OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------------- ------------ ------------- -------------
SERVICE REVENUES $ 118,427 $ 97,970 $ 303,531 $ 420,961
DIRECT COST OF SERVICES 79,002 72,585 211,526 313,653
------------- ------------ ------------- -------------
GROSS MARGIN 39,425 25,385 92,005 107,308
OPERATING EXPENSES
Legal & professional fees 5,964 922 108,321 5,497
Advertising/Promotion 3,441 2,246 7,929 14,587
Salaries and benefits 48,765 45,226 153,204 142,568
Payroll taxes 2,521 3,691 9,384 12,949
Penalties - 1,266 - 20,904
Rent & leases - 7,033 16,351 19,353
Travel & entertainment 1,243 170 1,850 396
Administrative expenses 13,872 12,527 43,057 43,170
------------- ------------ ------------- -------------
Total operating expenses 75,806 73,081 340,096 259,423
------------- ------------ ------------- -------------
LOSS FROM OPERATIONS (36,381) (47,696) (248,091) (152,115)
OTHER INCOME (EXPENSES)
Interest and other income 476 - 716 58
Interest expense (3,139) (12,830) (10,637) (26,036)
------------- ------------ ------------- -------------
Net other income (expenses) (2,663) (12,830) (9,921) (25,978)
------------- ------------ ------------- -------------
NET INCOME (LOSS) $ (39,044) $ (60,526) $ (258,012) $ (178,093)
============= ============ ============= =============
LOSS PER SHARE
Basic $ (.01) $ (1.21) $ (.13) $ (3.56)
============= ============ ============= =============
Fully diluted $ (.00) $ (.01) $ (.04) $ (.03)
============= ============ ============= =============
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 5,335,034 50,000 2,028,254 50,000
============= ============ ============= =============
Fully diluted 10,446,534 5,161,500 7,139,754 5,161,500
============= ============ ============= =============
See accompanying notes to these financial statements.
F-4
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
STATEMENTS OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31, 2001 AND 2000
(Consolidated)
2001 2000
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (89,522) $ (99,107)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation 4,473 3,104
Allowance for bad debt - 1,800
Contribution of assets, interest and services (7,825) -
Conversion of equity to capital (5,125) -
Decrease (increase) in current assets:
Accounts receivable 27,982 (59,851)
Prepaid and other assets (5,701) (2,084)
Increase (decrease) in current liabilities:
Accounts payable 17,168 6,530
Payroll tax accruals (49,459) 65,988
Salary accrual (9,985) 9,885
Customer deposits (8,558) 8,558
Other current liabilities (1,282) (1,282)
-------------- --------------
Total adjustments (38,312) 32,648
-------------- --------------
Net cash (used) by operating activities (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 - (19,321)
Proceeds from receivable financing - -
Capital contribution - 32,500
-------------- --------------
Net cash provided by financing activities 336,425 88,171
-------------- --------------
NET INCREASE (DECREASE) IN CASH (230) 19,500
CASH, BEGINNING OF THE PERIOD 19,697 197
-------------- --------------
CASH, END OF THE PERIOD $ 19,467 $ 19,697
============== ==============
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.)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
-------------- ------------ ------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (39,045) $ (60,526) $ (258,012) $ (178,093)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation 333 792 1,813 2,256
Interest converted to capital stock - - 251 -
Contributed services 23,400 - 64,600 -
Decrease (increase) in current assets:
Accounts receivable 1,146 (8,750) (22,796) (2,680)
Prepaid and other assets 4,974 223 (81,497) 1,390
Increase (decrease) in current liabilities:
Accounts payable (19,065) (31,292) (4,190) 8,836
Accrued expenses (22) 6,050 (13,319) (39,414)
-------------- ------------ ------------- --------------
Total adjustments 10,766 (32,977) (55,138) (29,612)
-------------- ------------ ------------- --------------
Net cash (used) by operating activities (28,279) (93,503) (313,150) (207,705)
-------------- ------------ ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - 2,000 - (5,758)
-------------- ------------ ------------- --------------
Net cash (used) by investing activities - 2,000 - (5,758)
-------------- ------------ ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from insurance financing - - 93,061 -
Repayments of insurance financing (16,175) - (71,295) -
Loan from stockholder, net 19,267 (108,306) 183,263 -
Proceeds from sale of common stock - - 40,000 -
Proceeds from note payable - - 40,000 -
Capital contribution - 199,576 22,096 199,576
-------------- ------------ ------------- --------------
Net cash provided by financing activities 3,092 91,270 307,125 199,576
-------------- ------------ ------------- --------------
NET INCREASE (DECREASE) IN CASH (25,187) (233) (6,025) (13,887)
CASH, BEGINNING OF THE PERIOD 38,629 6,043 19,467 19,697
-------------- ------------ ------------- --------------
CASH, END OF THE PERIOD $ 13,442 $ 5,810 $ 13,442 $ 5,810
============== ============ ============= ==============
See accompanying notes to these financial statements.
F-6
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000, AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED)
(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 - 100 - 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 335,034 33 474,889 (514,091) (39,169)
(Unaudited)
Donated services - - 21,400 - 21,400
Issuance of common stock for
cash, notes and debt 5,000,000 500 199,500 - 200,000
Net loss for the period - - - (112,279) (112,279)
Balance, June 30, 2002
(Unaudited) 5,335,034 533 695,789 (626,370) 69,953
Donated services - - 23,400 - 23,400
Net loss for the period - - - (39,044) (39,044)
--------- --------- ------------ ------------ -------------
Balance, September 30, 2002 5,335,034 $ 533 $ 719,189 $ (665,014) $ 53,309
========= ========= ============ ============ =============
Read independent auditor's report. The accompanying notes are an integral part of these financial statements.
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
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-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)
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.
Accounts Receivable
Resolve's trade accounts receivable result from the sale of its services in West
Central Florida, and consist primarily of private companies. Resolve uses the
allowance method to account for uncollectible accounts.
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.
Read independent auditor's report
F-9
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
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.
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.
Read independent auditor's report.
F-10
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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.
Read independent auditor's report.
F-11
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE C - CONVERTIBLE DEBENTURES PAYABLE (Continued)
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.
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 periods, 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, and 5,000,000 reserved for the conversion of
warrants.
Read independent auditor's report.
F-12
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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.
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. Mr. Gale Porter, the president of Resolve provides executive
office space to the company, at no cost, 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.
Read independent auditor's report.
F-13
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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.
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 - PREPAID EXPENSES & OTHER ASSETS (Unaudited)
At September 30, 2002, the components of Prepaid Expenses & Other Assets are
summarized as follows:
Amount
-------------
Prepaid insurance $ 84,799
Prepaid interest 500
Trademark 2,325
Deposits 2,190
-------------
Total $ 89,814
=============
Resolve financed its insurance premiums, including its workers compensation
insurance and is presently committed to pay $8,088 per month through November
2002. The Company estimated its future payroll on the assumption that certain
growth and/or an acquisition would be consummated during the year, neither of
which has occurred. The prepaid insurance consist of the unamortized portion of
its insurance premiums as well the overpayment on its workers compensation
premiums, which the Company expects to receive in March 2003, the termination
the policy period.
Read independent auditor's report.
F-14
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE N - RELATED PARTIES TRANSACTIONS (Unaudited)
During the three months ended September 30, 2002, Resolve borrowed $3,287 from
its former president, R. Gale Porter, and $15,980 from other shareholders. The
debts are not evidenced by promissory note, and no interest is being paid by the
Company. The full amount of the notes remain outstanding at September 30, 2002.
During the three months and nine months ended September 30, 2002, the President
and Chief Financial Officer provided services to Resolve valued at $23,400 and
$64,600, which were donated to the Company.
NOTE O - COMMITMENTS (Unaudited)
On June 14, 2002, Resolve entered into a lease agreement, effective July 8,
2002, for approximately 1,056 square feet of office space, housing its operating
offices. The lease term is for 3 years, expiring June 30, 2005 at $1,106 per
month, plus applicable Florida sales taxes. Resolve has an option to renew the
lease for two successive terms under the same terms and conditions as the
original lease. The former premises housing the operating offices were lease to
another tenants, therefore, Resolve was relieved of any liability on the
remainder of the lease after August 31, 2002.
Resolve previously occupied a 1,540 square feet office space, housing its
operating offices, pursuant to a three-year lease expiring October 30, 2002. The
space has been leased to another tenant, therefore, Resolve was relieved of any
liability on the remainder of the lease after August 31, 2002.
As a result of Mr. R. Gale Porter, the Company's president, the arrangement for
the use of executive offices at no cost to the Company was terminated. The
Company's operations were consolidated at the new leased premises.
The future maturities of minimum lease payments under this lease are as follows:
Year ended December 31, Amount
----------------
2002 $ 6,636
2003 13,272
Thereafter 19,908
-------------
Total $ 39,816
=============
NOTE P - AMENDMENT OF ARTICLES OF INCORPORATION AND STOCK INCENTIVE PLAN
(Unaudited)
On May 28, 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 for all periods presented.
Read independent auditor's report.
F-15
RESOLVE STAFFING, INC.
(Formerly Columbialum Staffing, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE Q - SALE OF SECURITIES (Unaudited)
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.
In summary, 1,000,000 units were issued for $40,000 in cash, 2,500,000 units
were issued in exchange for the cancellation of $100,000 debt evidenced by 18%
promissory notes and, 1,500,000 units were issued in exchange for the
satisfaction of other outstanding debt of $60,000.
NOTE R - SUBSEQUENT EVENTS (Unaudited)
On July 27, 2002, Resolve filed a registration statement on Form SB-2 with the
Securities and Exchange Commission under the Securities Act of 1933, whereby
3,399,225 shares of its common are being registered and offered (including
111,500 shares underlying convertible debentures and 5,000,000 shares underlying
the warrants). The Company is in the process of revising the registration
statement, including the number of shares and warrants being registered.
Resignation of the President
Effective October 23, 2002, Mr. R. Gale Porter resigned as president of the
Company. On December 2, 2002, Donald E. Quarterman, Jr., was appointed President
and a director and William A. Brown was appointed Vice President and a director.
Read independent auditor's report.
F-16
================================================================================
3,656,760 Shares
Resolved Staffing, Inc.
Common Stock
------------------------
P R O S P E C T U S
December _________, 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*
- -------
*Estimated
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 (6)
10.5 Form of Registration Rights Agreement (6)
10.6 Lease dated June 19, 2002 between the Company and Tampa
Associates (6)
10.7 Lock-up and Registration Agreement with R. Gale Porter, dated
November 22, 2002
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.
(6) File with the initial finling of the Registration Statement on Form
SB-2 on July 29, 2002.
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
(Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement); 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.
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 December 20, 2002.
RESOLVE STAFFING, INC.
By: /s/ Donald E. Quarterman, Jr.
-----------------------------------
Donald E. Quarterman, Jr.
President, Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald E. Quarterman, Jr., 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 December 20, 2002.
Signatures Date
- ---------- ----
/s/ Donald E. Quarterman, Jr. December 20, 2002
- -----------------------------------------------------
Donald E. Quarterman, Jr., President, Chief Operating
Officer and Director (Principal Executive Officer)
/s/ Cristino L. Perez December 20, 2002
- -----------------------------------------------------
Cristino L. Perez, Treasurer, Secretary,
Chief Financial Officer and Director (Principal
Financial and Accounting Officer)
/s/ William A. Brown December 20, 2002
- -----------------------------------------------------
William A. Brown, Director