As filed with the Securities and Exchange Commission on February 3, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
INFE-HUMAN RESOURCES, INC.
(Name of small business issuer in its charter)
Nevada
(State or jurisdiction of incorporation or organization)
8714
(Primary Standard Industrial Classification Code Number)
54-2013455
(I.R.S. Employer Identification No.)
67 Wall Street, 22nd Floor, New York, New York, 10005-3198
(212) 859-3466
(Address and telephone number of principal
executive offices and principal place of business)
Arthur Viola
67 Wall Street
22nd Floor
New York, NY 10005-3198
(248) 489-1961
(Name, address and telephone number of agent for service)
Copies to:
Laura Anthony, Esq.
Legal & Compliance, LLC
330 Clematis Street
West Palm Beach, Florida 33401
(516) 514-0936
Approximate Date of Commencement of Proposed Sale To The Public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [ ]
If this form is filed to register additional securities for an offering pursuant
to 462(b) 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(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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
<table>
<s> <c> <c>
- ------------------------------------------------------------------------------------------------------------
Title of each Amount to be registered Proposed Proposed Maximum Amount of
class of securities maximum offering aggregate registration fee
to be price per Share (1) offering price (1)
registered
- ------------------- -------------------------- -------------------- -------------------- -----------------
Common Stock, underlying
conversion of 8% callable
secured convertible notes 12,500,000 0.60 $7,500,000 $ 802.50
Common Stock underlying
exercise of stock
purchase warrants 1,600,000 $1.50 $2,400,000 $ 256.80
- -----------------------------------------------------------------------------------------------------------------
TOTAL 14,100,000 $9,900,000 $1,059.30
- -----------------------------------------------------------------------------------------------------------------
(1) The proposed maximum offering price is estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c) and 457(g) of the
Securities Act of 1933, as amended. The price per share is based on the price of
the common stock on the Over-The-Counter Bulletin Board on January 31, 2006.
</table>
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 Section 8(a), may
determine.
- -------------------------------------------------------------------------------
<page>2
Subject to completion, dated February 3, 2006
PROSPECTUS
INFE-HUMAN RESOURCES, INC.
67 Wall Street, 22nd Floor
New York, NY 10005-3198
(212) 859-3466
14,100,000 Shares of Common Stock
We are registering up to 14,100,000 shares for sale on behalf of the existing
note holders upon conversion of their 8% Callable Secured Convertible Notes (the
"Notes") and up to 1,200,000 shares for sale on behalf of existing warrant
holders upon the exercise of their Stock Purchase Warrants (the "Warrants"). We
will not receive any proceeds from this offering. We may receive proceeds from
the exercise price of the Warrants if they are exercised by the selling security
holders. All costs associated with this registration will be borne by Infe-Human
Resources, Inc.
The shares of common stock being offered in this prospectus may be sold at fixed
prices, prevailing market prices determined at the time of sale, varying prices
determined at the time of sale or at negotiated prices. The shares of our common
stock covered by this prospectus may be issued from time to time pursuant to
various agreements between the selling shareholders and us. We will receive
proceeds upon the exercise of the Warrants, but we will not receive any of the
proceeds from the resale of shares by the selling stockholders.
Our common stock is traded on the OTC Bulletin Board under the symbol "IFHR.OB."
The average of the high and low trading price of our common stock on January 31,
2006 was $0.57.
We will not receive any of the proceeds from the sale of these shares by the
selling stockholders. However, we will receive proceeds from the exercise of the
Warrants if they are exercised by the selling stockholders. See "Use of
Proceeds."
Pursuant to registration rights granted by us to the selling stockholders, we
are obligated to register the shares held by the selling stockholders. We will
bear all costs relating to the registration of our common stock, other than any
selling stockholder's legal or accounting costs or commissions.
<page>3
The information in this prospectus is not complete and may be changed. These
securities may not be sold (except pursuant to a transaction exempt from the
registration requirements of the Securities Act) until the Registration
Statement filed with the Securities and Exchange Commission ("SEC") is declared
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 where the offer or
sale is not permitted.
Investing in our common stock involves a high degree of risk. You should read
this entire prospectus carefully, including the section entitled "Risk Factors"
beginning on page 6 which describes certain material risk factors you should
consider before investing.
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 date of this prospectus is February 3, 2006
You should rely only on the information contained in this prospectus. We have
not, and the Selling Stockholders have not, authorized anyone to provide you
with different information. If anyone provides you with different information,
you should not rely on it. We are not, and the Selling Stockholders are not,
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information contained in this
prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY..........................................................5
RISK FACTORS................................................................6
FORWARD-LOOKING STATEMENTS.................................................11
USE OF PROCEEDS............................................................12
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..................13
THE BUSINESS...............................................................15
<page>4
MANAGEMENT.................................................................19
DESCRIPTION OF THE PRIVATE PLACEMENT.......................................22
SELLING STOCKHOLDERS.......................................................22
DESCRIPTION OF SECURITIES..................................................24
PLAN OF DISTRIBUTION.......................................................27
SHARES ELIGIBLE FOR FUTURE SALE............................................29
WHERE YOU CAN FIND MORE INFORMATION........................................30
LEGAL MATTERS..............................................................30
EXPERTS....................................................................30
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES.................................................30
FINANCIAL STATEMENTS.......................................................F-1
INFORMATION NOT REQUIRED IN PROSPECTUS.....................................31
SIGNATURES.................................................................35
=============================================================================
PROSPECTUS SUMMARY
UNLESS OTHERWISE INDICATED, ALL REFERENCES TO "WE", "US", "OUR" AND SIMILAR
TERMS, AS WELL AS REFERENCES TO THE "REGISTRANT" OR THE "COMPANY" IN THIS
PROSPECTUS, REFER TO INFE-HUMAN RESOURCES, INC., A NEVADA CORPORATION AND NOT TO
THE SELLING STOCKHOLDERS.
THIS PROSPECTUS IS A PART OF A REGISTRATION STATEMENT THAT WE HAVE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION USING A "SHELF REGISTRATION" PROCESS. YOU
SHOULD READ THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT, AS WELL
AS ANY POST-EFFECTIVE AMENDMENTS TO THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS IS A PART, TOGETHER WITH THE ADDITIONAL INFORMATION DESCRIBED UNDER
"AVAILABLE INFORMATION" BEFORE YOU MAKE ANY INVESTMENT DECISION.
THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD
CONSIDER BEFORE INVESTING IN THESE SECURITIES. BEFORE MAKING AN INVESTMENT
DECISION, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK
FACTORS" SECTION, THE FINANCIAL STATEMENTS AND THE NOTES TO THE FINANCIAL
STATEMENTS. SOME OF THE STATEMENTS MADE IN THIS PROSPECTUS DISCUSS FUTURE EVENTS
AND DEVELOPMENTS, INCLUDING OUR FUTURE BUSINESS STRATEGY AND OUR ABILITY TO
GENERATE REVENUE, INCOME AND CASH FLOW. THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CONTEMPLATED IN THESE FORWARD-LOOKING STATEMENTS. SEE "FORWARD
LOOKING STATEMENTS."
<page>5
Company Overview
INFe-Human Resources, Inc.'s main operations include the provision of human
resource consulting services to companies. In addition, the Company, through its
wholly owned subsidiary, Infe-Human Resources of New York, Inc. provides
staffing services to companies. The staffing services include both temporary and
permanent placement for both professional and non professional employment. The
company also operates a payroll services bureau within its corporate financial
consulting and merchant banking divisions. The corporate financial consulting
division provides advisory services to payroll client and non-client companies.
The merchant banking division has an in-house equity funding program in which it
finances the growth of client and payroll service companies, as well as
purchases equity in small public companies. The company is based in New York
City.
RISK FACTORS
An investment in the Common Stock of the Company is highly speculative, involves
a high degree of risk and should be considered only by those persons who are
able to afford a loss of their entire investment. In evaluating the Company and
its business, prospective investors should carefully consider the following risk
factors in addition to the other information included in this Registration
Statement.
The following risk factors should be considered carefully in addition to the
other information contained in this prospectus:
Risks Related to our Business
WE ARE RECENTLY EMERGED FROM THE DEVELOPMENT STAGE COMPANY AND HAVE LIMITED
OPERATING HISTORY AND REVENUES.
We were organized in March 2000 and have a very limited operating history upon
which an evaluation of our future performance and prospects can be made. Our
prospects must be considered in light of the risks, expenses, delays, problems
and difficulties frequently encountered in the establishment of a new business
in an emerging and evolving industry. As such, we face risks and uncertainties
relating to our ability to successfully implement our business plan.
<page>6
WE HAVE HISTORICALLY INCURRED LOSSES AND LOSSES MAY CONTINUE IN THE FUTURE
Since inception, the Company has generated an accumulated deficit of $520,650 at
November 30. 2005. Inasmuch as we will continue to have operating expenses and
will be required to make significant up-front expenditures in connection with
the proposed development of our business, we may continue to incur losses for at
least the next 12 months and until such time, if ever, as we are able to
generate sufficient revenues to finance its operations and the costs of
continuing expansion. There can be no assurance that we will be able to
generate significant revenues or achieve profitable operations.
There is doubt about our ability to continue as a going concern due to recurring
losses and working capital shortages, which means that we may not be able to
continue operations unless we obtain additional funding.
The financial statements and report of our independent registered public
accountants for the fiscal years ended November 30, 2005 and November 30, 2004,
as included in this Prospectus, includ an explanatory paragraph indicating that
there is substantial doubt about our ability to continue as a going concern due
to recurring losses and working capital shortages. Our ability to continue as a
going concern will be determined by our ability to obtain additional funding and
to develop steady revneues. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS, OUR BUSINESS
OPERATIONS WILL BE CURTAILED.
Our business has relied almost entirely on external financing to fund our
operations. Such financing has historically come from a combination of
borrowings from, and sale of common stock to, third parties. We will need to
raise additional capital to fund our anticipated operating expenses and future
expansion. Among other things, external financing will be required to cover our
operating costs. The sale of our common stock to raise capital may cause
dilution to our existing shareholders. Our inability to obtain adequate
financing will result in the need to curtail business operations. Any of these
events would be materially harmful to our business and may result in a lower
stock price.
OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE
SIGNIFICANTLY.
Prior to this offering, there has been a limited public market for our common
stock, and an active trading market for our common stock may not develop. As a
result, this could reduce our shareholders' ability to sell our common stock in
short time periods, or possibly at all. Our common stock has experienced, and is
likely to experience in the future, significant price and volume fluctuations
which could reduce the market price of our common stock without regard to our
operating performance. In addition, we believe that factors such as quarterly
fluctuations in our financial results and changes in the overall economy or the
condition of the financial markets could cause the price of our common stock to
fluctuate substantially.
<page>7
OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO RESELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.
Our common stock is deemed to be "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks are
stocks:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ
listed stock must have a price of not less than $5.00 per share); or
o In issuers with net tangible assets less than $2.0 million (if the issuer has
been in continuous operation for at least three years) or $5.0 million (if in
continuous operation for less than three years), or with average revenues of
less than $6.0 million for the last three years.
Broker-dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker-dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor. These requirements may
reduce the potential market for our common stock by reducing the number of
potential investors. This may make it more difficult for investors in our common
stock to sell shares to third parties or to otherwise dispose of them. This
could cause our stock price to decline.
FAILURE TO RETAIN OR ATTRACT KEY PERSONNEL WILL HAVE A MATERIAL NEGATIVE IMPACT
ON THE SALES, DEVELOPMENT AND ENHANCEMENT OF OUR PRODUCTS.
Our future success depends, in significant part, on the continued services of
Arthur Viola (our Chairman and Chief Executive Officer). We may not able to find
an appropriate replacement for any of our key personnel. Any loss or
interruption of our key personnel's services could have a material negative
impact on our ability to develop our business plan.
<page>8
OUR DIRECTORS ARE NOT PERSONALLY LIABLE AND ARE INDEMNIFIED FOR BREACH OF
FIDUCIARY DUTIES.
Our Certificate of Incorporation provides, as permitted by the Nevada Corporate
Law, and with certain exceptions, that our directors shall not be personally
liable to us or our stockholders for monetary damages for breach of fiduciary
duty as a director. These provisions may discourage our stockholders from
bringing suit against a director for breach of fiduciary duty and may reduce the
likelihood of derivative litigation brought by stockholders against a director.
WE HAVE NOT PAID DIVIDENDS TO OUR STOCKHOLDERS.
We have never paid, nor do we anticipate paying, any cash dividends on our
common stock. Future debt, equity instruments or securities may impose
additional restrictions on our ability to pay cash dividends.
IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE
ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS. AS A RESULT, CURRENT AND
POTENTIAL STOCKHOLDERS COULD LOSE CONFIDENCE IN OUR FINANCIAL REPORTING, WHICH
COULD HARM OUR BUSINESS AND THE TRADING PRICE OF OUR COMMON STOCK.
Effective internal controls are necessary for us to provide reliable financial
reports. We have in the past discovered, and may in the future discover, areas
of our internal controls that need improvement. In addition, Section 404 of the
Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal
controls over financial reporting and have our independent auditors annually
attest to our evaluation, as well as issue their own opinion on our internal
controls over financial reporting
We are preparing for compliance with Section 404 by strengthening, assessing and
testing our system of internal controls to provide the basis for our report. The
process of strengthening our internal controls and complying with Section 404 is
expensive and time consuming, and requires significant management attention. We
cannot be certain that these measures will ensure that we will maintain adequate
controls over our financial processes and reporting in the future. Furthermore,
as we rapidly grow our business, our internal controls will become more complex
and will require significantly more resources to ensure our internal controls
overall remain effective. Failure to implement required new or improved
controls, or difficulties encountered in their implementation, could harm our
operating results or cause us to fail to meet our reporting obligations. If we
or our auditors discover a material weakness, the disclosure of that fact, even
if quickly remedied, could reduce the market's confidence in our financial
statements and harm our stock price.
<page>9
COMPETITION.
The market for our products and services is highly competitive and subject to
rapid change. There are many companies that act in the staffing industry, as
PEOs and payroll services,and provide additional financial service options. Many
are well financed and have strong brand awareness. We believe that our ability
to compete depends on many factors both within and beyond our control, including
the success of our marketing and sales efforts and the price and reliability of
our products and services developed and the timing and market acceptance of our
products and services being developed. Many of our potential competitors have
substantially greater financial, technical and marketing resources than us.
Increased competition could materially and adversely affect the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will be able to compete successfully.
Price competition in the staffing industry continues to be intense and pricing
pressures from both competitors and customers may result in reduced sales and
margins to the Company.
The temporary staffing industry is highly competitive with limited barriers to
entry and continues to undergo consolidation. The Company expects the level of
competition to remain high in the future, and competitive pricing pressures will
make it difficult for the Company to raise its prices even though its costs may
have increased, and may have an adverse effect on the Company's market share and
operating margins. Other competitors have greater marketing, financial and other
resources than the Company that, among other things, could enable them to
attempt to maintain or increase their market share by reducing prices.
Furthermore, there has been an increase in the number of customers consolidating
their staffing services purchases with a single provider or with a small number
of providers.
Any significant recurrent economic downturn could result in the Company's
customers using fewer temporary employees, which could materially adversely
affect the Company.
Demand for the Company's staffing services is significantly affected by the
general level of economic activity and unemployment in the United States and the
New York, New Jersey and Connecticut area in which the Company operates.
Frequently, customers use temporary staffing services to manage personnel costs
and staffing needs. When economic activity increases, t emporary employees are
often added before full-time employees are hired. However, as economic activity
slows, many customers reduce their utilization of temporary employees before
releasing regular full-time employees. Typically, the Company may experience
less demand for its services and more competitive pricing pressure during
periods of economic downturn. A recurrent recession or a significant lag in
economic recovery would likely have a material adverse effect on the Company's
business, results of operations, cash flows or financial position.
<page>10
Risks Related to this Offering
FUTURE SALES BY OUR STOCKHOLDERS MAY HAVE THE AFFECT OF LOWERING OUR STOCK
PRICE.
Sales of our common stock in the public market following this offering could
lower the market price of our common stock. Sales may also make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time and price that our management deems acceptable or at all.
THE SELLING STOCKHOLDERS INTEND TO SELL THEIR SHARES OF COMMON STOCK IN THE
MARKET, WHICH SALES MAY CAUSE OUR STOCK PRICE TO DECLINE.
The Selling Stockholders intend to sell in the public market the shares of
common stock being registered in this offering. The average of the high and low
trading price of our common stock on January 31, 2006 was $0.57. To the extent
the Selling Stockholders acquired their shares or warrants at prices less than
the current trading price of our common stock, they may have an incentive to
immediately resell such shares in the market which may, in turn, cause the
trading price of our common stock to decline. Significant downward pressure on
our stock price caused by the sale of stock registered in this offering could
encourage short sales by third parties that would place further downward
pressure on our stock price.
OUR COMMON STOCK HAS BEEN RELATIVELY THINLY TRADED AND WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET MAY DEVELOP.
Before this offering, our common stock has traded on the Over-the-Counter
Bulletin Board. Thinly traded common stock is typically significantly more
volatile than common stock trading in an active public market.
OUR PRINCIPAL STOCKHOLDERS HAVE SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS
THAT MAY NOT BE IN THE BEST INTEREST OF OTHER STOCKHOLDERS.
Our CEO and principal stockholder, Arthur Viola, controls approximately 66.68%
of our currently outstanding common stock. Accordingly, he may be able to exert
significant control over our management and affairs requiring stockholder
approval, including approval of significant corporate transactions. This
concentration of ownership may have the effect of delaying or preventing a
change in control and might adversely affect the market price of our common
stock. This concentration of ownership may not be in the best interests of all
our stockholders.
INVESTORS IN OUR SECURITIES MAY SUFFER DILUTION.
The issuance of shares of our common stock, or shares of our common stock
underlying warrants, options or preferred stock will dilute the equity interest
of existing stockholders who do not have anti-dilution rights and could have a
significant adverse effect on the market price of our common stock. The sale of
our common stock acquired at a discount could have a negative impact on the
market price of our common stock and could increase the volatility in the market
price of our common stock. In addition, we may seek additional financing which
may result in the issuance of additional shares of our common stock and/or
rights to acquire additional shares of our common stock. The issuance of our
common stock in connection with such financing may result in substantial
dilution to the existing holders of our common stock who do not have anti-
dilution rights. Those additional issuances of our common stock would result in
a reduction of an existing holder's percentage interest in our company.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements (as defined in Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"). To the extent that any statements made in this prospectus
contain information that is not historical, these statements are essentially
forward-looking. Forward-looking statements can be identified by the use of
words such as "expects", "plans", "will", "may", "anticipates", "believes",
"should", "intends", "estimates", and other words of similar meaning. Although
we believe that the expectations reflected in these forward-looking statements
are reasonable and achievable, these statements involve risks and uncertainties
and we cannot assure you that actual results will be consistent with these
forward-looking statements. Important factors that could cause our actual
results, performance or achievements to differ from these forward-looking
statements include the following:
<page>11
o the availability and adequacy of our cash flow to meet our requirements,
o economic, competitive, demographic, business and other conditions in our
markets,
o competition,
o changes in our business and growth strategy (including our acquisition
strategy) or development plans,
o the availability of additional capital to support acquisitions and
development, and
o other factors discussed under the section entitled "Risk Factors" or
elsewhere in this prospectus.
All forward-looking statements attributable to us are expressly qualified by
these and other factors. Information regarding market and industry statistics
contained in this prospectus is included based on information available to us
that we believe is accurate. It is generally based on academic and other
publications that are not produced for purposes of securities offerings or
economic analysis. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and the additional
uncertainties accompanying any estimates of future market size, revenue and
market acceptance of products and services. We do not undertake any obligation
to publicly update any forward-looking statements. As a result, you should not
place undue reliance on these forward-looking statements.
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of the
shares offered for sale by them under this prospectus. We will not receive any
proceeds from the resale of shares by the selling stockholders covered by this
prospectus. We will, however, receive proceeds from the exercise of warrants
outstanding. In that case, we could receive a maximum of $2,400,000, which would
be used for working capital and general corporate purposes.
<page>12
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock has been quoted on the OTC Bulletin Board since April 25, 2005
under the symbol "IFHR.OB". Prior to that date, there was no active market for
our common stock. Based upon information furnished by our transfer agent, as of
February 1, 2006, we had approximately 160 holders of record of our common
stock.
The following table sets forth the high and low sales prices for our common
stock for the periods indicated as reported by the OTC Bulletin Board:
Fiscal Year 2005 High Low
- ---------------------------------------------------------
First Quarter $N/A $N/A
Second Quarter 0.50 0.01
Third Quarter 0.41 0.17
Fourth Quarter 0.80 0.44
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following management's discussion and analysis should be read in conjunction
with our financial statements and notes thereto appearing elsewhere in this
document.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED NOVEMBER 30, 2005 COMPARED TO FISCAL YEAR ENDED NOVEMBER 30,
2004
REVENUES
Revenues were $5893 for the fiscal year ended November 30, 2005, as compared to
$0 for the year ended November 30, 2004. This increase in revenue was due to
revenue from corporate financial consulting services.
COST OF REVENUES
Cost of revenues was $0 for the fiscal years ended November 30, 2005 and 2004.
<page>13
OPERATING EXPENSES
Operating expenses for the fiscal year ended November 30, 2005 were $532,707
compared to $20,500 for the fiscal year ended November 30, 2004. The increase in
operating expenses was primarily related to increased professional fees,
compensation as a result of expenses related to the private securities offering,
as well as investigating and considering business opportunities.
LOSS FROM OPERATIONS
Loss from operations for the fiscal year ended November 30, 2005 was $479,477
compared to $17,860 for the fiscal year ended November 30, 2004.
INTEREST EXPENSE
Interest expense was $0 and $0 for the fiscal years ended November 30, 2005 and
2004, respectively.
REALIZED GAIN ON SALE OF SECURITIES
The realized gain from the sale of marketable securities was $47,337 for the
fiscal year ended November 30, 2005 as compared to $2,640 for the fiscal year
ended November 30, 2004. The gain was the result of the Company's sale of
securities to meet operating expenses.
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK
Net loss applicable to Common Stock was ($479,477) for the fiscal year ended
November 30, 2005, compared to a loss of ($17,860) for the fiscal year ended
November 30, 2004. Net loss per common share was ($0.04) for the fiscal year
ended November 30, 2005 and $00 for the fiscal year ended November 30, 2004.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial statements are prepared on a going-concern basis, which
assumes that the Company will realize its assets and discharge its liabilities
in the normal course of business. However, the Company's cash flows for 2006 are
currently projected to be insufficient to finance projected operations, without
funding from other sources. These conditions raise substantial doubt as to the
ability of the Company to continue as a going concern.
Management's plans for this uncertainty includes increasing the revenue of the
company both internally and through acquisition, as well as by raising
additional capital from external sources. Management may also liquidate some of
the marketable securities that it owns. There can be no assurance that
management will be successful in these plans. Accordingly, the accompanying
financial statements do not include any adjustments that may arise from the
uncertainty surrounding the Company's ability to continue as a going concern.
<page>14
During the fiscal year ended November 30, 2005, the Company had net cash
increase of $1,189,694 from operations resulting from the proceeds of
convertible notes payable in the amount of $1,480,000, an officer loan of $8,600
and $20,000 from the sale of common stock in a private transaction and reduced
by ($33,018) as the net cash used in operating activities and ($285,888) as the
net cash used in investing activities, including financing costs associated with
the convertible notes payable. The reduction of net cash of in the amount of
$33,018 includes an adjustment to cash in the amount of $220,425 for stock
issued for services rendered and $245,000 for stock issued as compensation. Cash
used in investing activities amounted to ($285,888) for the fiscal year ended
November 30, 2005. The Company does not have any commitments for capital
expenditures or leasing commitments in the future, other than its month-to-month
lease of its office.
The Company received $1,508,600 from its financing activities for the fiscal
year ended November 30, 2005. As of November 30, 2005, the Company had
$1,189,694 in cash or cash equivalents and had marketable securities of $57,339.
THE BUSINESS
The Company recently emerged from development-stage. The Company provides
either directly or through its subsidiaries a variety of financial services,
including temporary and permanent staffing of both professional and non
professional employees, payroll and related human resource functions, for client
companies. The company, through its subsidiary, Daniels Corporate Advisory
Company, Inc., a Nevada corporation ("Daniels"), operates two divisions; the
corporate financial consulting division and the merchant banking division. The
Company, through its subsidiary Infe Human Resources of New York, Inc., a Nevada
corporation operates its staffing division.
The Corporate Financial Consulting Division will work with companies, including
payroll providers, seeking to create and/or acquire adjunct service businesses,
whose services will initially provide better lifestyles for its existing
workforce, and ultimately will be packaged, on an additional profit center
basis, for sale to other small companies for the retention of their employees.
Other financial assignments will be undertaken for clients, including financial
advisory services. The profits generated from all the Financial Consulting
Assignments will be available for venture investment, through the second
division, The Merchant Banking Division.
The Merchant Banking Division has an in-house equity funding program, whereby
Daniels intends to profit by helping finance the growth of client, payroll
service companies, as well as non-payroll services companies. This division will
also profit by the purchase of equity in attractive small public companies whose
growth strategies are in line with Daniels' philosophy- growth through leveraged
acquisition(s).
The Staffing Division services are focused primarily on placing temporary and
permanent light industrial and clerical/administrative staffing personnel and
providing temporary and permanent placement services of professionals such as
engineers and accountants. The Staffing Division currently operates in the tri-
state area including New York, New Jersey and Connecticut.
The Company currently operates in a single dominant operating segment, as that
term is defined in Statements on Financial Accounting Standards (SFAS) No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE.
<page>15
The Company's sales in 2005 were in the northeast including New York, New Jersey
and Connecticut. The Company did not have sales in 2004.
In order to help implement the Company's business plan by adding management and
financial resources, the Company acquired Daniels in October 2003, a corporation
focused on the payroll services market. Daniels also provides certain financial
services to that same client company such as financial consulting, strategic
business and/or investment advice. Daniels' Chairman and CEO, Arthur Viola, who
became the Company's President and CEO in late 2002, brings significant
corporate experience in building companies to the Company.
Recent Acquisitions
In order to help implement the Company's business plan by adding staffing
services, on December 20, 2005, the Company, on behalf of its newly formed
wholly- owned subsidiary, Infe-Human Resources of New York, Inc., (the "Buyer"),
in an agreement which included Monarch Human Resources, Inc. ("Target"), and
John Scrudato and Gregg Oliver, as the shareholders of the Target (the
"Shareholders") completed the acquisition by the Buyer of 80% of the outstanding
shares of Target pursuant to a Stock Purchase Agreement, the material terms of
which are described in Item 1.01 of Form 8-K filed on December 22, 2005 with the
Securities and Exchange Commission.
Business Strategy
The Company intends to look at potential acquisitions in complementary areas of
corporate financial services and staffing services and grow through internal
sales and development initiatives as well. Due to the Company's physical
presence in New York, the Company expects that its business will initially be
focused on the "Northeast Corridor" from Boston to Washington plus the fast-
growing Florida market. Management believes that Florida is fast-growing due to
its (i) above-average population growth; (ii) a low-tax regulatory climate;
(iii) a favorable climate for small businesses including such things as State
funded business incubators; and (iv) a diverse population, all of which lead, in
management's view, to greater small business formation and correspondingly
greater potential demand for the Company's services.
The Company has earmarked ideal locations for its services and started its
market penetration in New York - through its 67 Wall Street, NY Location and
also markets its business services and consulting services in Greenwich
Connecticut, Southern New Jersey and Western Pennsylvania.
<page>16
As an additional means to potentially increase the size and scale of the
Company, we are also reviewing potential acquisitions of small and medium sized
payroll processing companies as well as companies that can provide "add-on"
services, including investment services to the client company and its employees.
Due to the numerous uncertainties associated with acquiring a company, the
Company does not have a definitive timetable on making its next acquisition.
However, the Company believes that making acquisitions can be an important
method to grow the Company as a complement to growing the Company internally.
Products and Services
The Corporate Financial Consulting Division of the Company intends to advise
payroll clients as well as non- payroll client companies. This division will
work with companies seeking to create and/or acquire adjunct service businesses,
whose services will initially provide better lifestyles for its existing
workforce, and ultimately will be packaged, on an additional profit center
basis, for sale to other small companies for the retention of their employees.
Other financial assignments will be undertaken for clients, including investment
banking services. The profits generated from all the Financial Consulting
Assignments will be available for venture investment, through the second
division - The Merchant Banking Division.
The Merchant Banking Division offers an in-house equity funding program, whereby
Daniels will profit by helping finance the growth of client, payroll service
companies, as well as non-payroll services companies. This division will also
profit by the purchase of equity in attractive small public companies whose
growth strategies are in line with Daniels' philosophy- growth through leveraged
acquisition(s). In addition, this Division offers corporate financial consulting
services.
The Staffing Division is focused primarily on placing temporary and permanent
light industrial and clerical/administrative staffing personnel and providing
temporary and permanent placement servicesof professionals such as engineers and
accountants.
Sales and Marketing
The Company intends to provide to its customers payroll and other services
including venture capital management, and business development/financial
advisory services. The Company may also acquire debt or equity securities in its
clients in connection with its business development and venture capital
management services. Such transactions would occur if the Company determined
that acquiring a debt or equity security in its client would enhance the
Company's relationship with its client and would likely generate a positive
economic return to the Company. The Company markets its services both directly
through referrals and indirectly through accounting firms. We also intend to do
joint marketing with our clients by providing venture capital management and
working partner development (Merchant Banking) in exchange for the client
providing its network of corporate relationships to us for payroll and ancillary
services. Our plan is that by providing several important financial services
for clients, we intend to develop valuable long-term relationships which would
yield consistent revenue.
<page>17
In the staffing industry the Company intends to market its services through
referrals and indirectly through hospitals, medical centers and a concentration
in the medical industry. The Company intends to capitalize upon its recent
acquisition of Monarch Human Resources by ensuring continued high level service
to its current client base, while offering new and valuable services to the
existing client base both through expansion in the Staffing industry and through
offering services available from its Corporate Financial and Merchant Banking
divisons. The Company intends to grow its staffing business through future
acquisitions of existing staffing company's with a concentration on high margin
sectors such as the medical industry. In addition, the Company will grow its
existing business through word of mouth and the hiring of a sales team.
Principal Executive Offices
The Company's operational headquarters is located in an office service complex
located on the 22nd floor of 67 Wall Street, New York, New York 10005-3198. The
Company's lease is a month-to-month lease with no expiration date. The Company
believes that its existing facilities are adequate for its needs for the
foreseeable future and that if additional space is needed, it would be available
on favorable terms at the same location.
The Offering
The Common Stock offered by the Selling Stockholders consists of 14,100,000
shares, including (i) 12,500,000 shares issuable upon the conversion of the
Callable Secured Convertible Notes (the "Notes") and (ii) 1,600,000 shares
issuable upon the exercise of Stock Purchase Warrants (the "Warrants") with an
exercise price of $1.50 per share.
Use of Proceeds
We will not receive any proceeds from the sale of shares in this offering by the
selling stockholders. However, we will receive proceeds from the exercise of the
warrants if they are exercised by the selling stockholders, which proceeds we
intend to use for working capital and general corporate purposes.
Employees
As of December 29, 2005, the Company had no employees. However, the Monarch
Human Resources, Inc., which the Company recently acquired a controlling
interest in through its newly formed subsidiary, Infe Human Resources of New
York, Inc. has 87 full-time and 0 part-time employees. We enjoy good employee
relations. None of our employees are members of any labor union and we are not a
party to any collective bargaining agreement.
Facilities
Our operational headquarters are located in an office service complex located on
the 22nd floor of 67 Wall Street, New York, New York 10005-3198. We lease the
premises month-to-month. We believe that are existing facilities are adequate
for our needs for the foreseeable future and that if additional space is needed,
it would be available on favorable terms at the same location
Litigation
We are not a party to any pending or threatened litigation.
<page>18
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth information as of February 1, 2006 regarding the
members of our board of directors and our executive officers. All directors
hold office until the next annual meeting of shareholders and the election and
qualification of their successors. Officers are elected annually by the board of
directors and serve at the discretion of the board.
Name Age Position Since
- ---- --- -------- -----
Arthur Viola 50 CEO; President September 2002
and Director
Arthur Viola, age 50. Mr. Viola has been Chairman, President, CEO and a
Director of the company since September 2002. In 1981, Mr. Viola founded the
Viola Group, Inc., a New York based public company which acquired and managed
private companies. From 1990 to the present, Mr. Viola has served as senior
partner of Daniels Corporate Advisory Co., a New York based private company
which invests in and helps grow small public companies. Previously, Mr. Viola
was involved with mergers and acquisitions with Bank of America, Gulf & Western
and Crane Co., and was an account manager for Citibank, N.A. Mr. Viola earned a
B.A. From Iona College, an MBA from Pace University and has done advanced work
in corporate mergers & acquisitions and real estate development at New York
University.
The board is divided into three classes, with the term of office of one Class
expiring each year. We currently have one director with no directors in Class I,
no directors in Class II and one director in class iii. The term of office of
director Arthur Viola expires at the 2006 annual meeting.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own 10% or more of our common stock, to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and greater than 10% stockholders are required to furnish us with copies of all
Section 16(a) forms they file.
<page>19
Executive compensation
(A) compensation.
The following table sets forth compensation awarded to, earned by or paid to the
company's chief executive officer and the four other most highly compensated
executive officers with compensation in excess of $100,000 for the years ended
november 30, 2005 and 2004 and 2003 (collectively, the "named executive
officers").
<table>
<s> <c> <c>
Annual Compensation Long Term Compensation
----------------------------- --------------------------------
Restricted Securities All
Stock Underlying other
Name and Principal Position Fiscal Year Salary Bonus Awards Options/Warrants compensation
($) ($) ($) ($)
- --------------------------------------------------------------------------------------------------------
Arthur Viola 2005 0 0 $245,000 0 0
2004
2003
- ---------------------------------------------------------------------------------------------------------
Options Granted During 2005
- ----------------------------------------------------------------------------
Name Number of % of Total
Securities Options/SARs
Underlying Granted to
Options Employees in Exercise or
Granted Fiscal Year Base Price Expiration
($/Sh) Date
- ------------------ -------------- --------------- ---------- ------------
N/A
EMPLOYMENT CONTRACTS
We do not have an employment contract with any executive officers. Any
obligation to provide any compensation to any executive officer in the event of
his resignation, retirement or termination, or a change in control of the
Company, or a change in any Named Executive Officers' responsibilities following
a change in control would be negotiated at the time of the event.
<page>20
We may in the future create retirement, pension, profit sharing and medical
reimbursement plans covering our Executive Officers and Directors.
Directors Compensation
The Company's directors did not receive any compensation for services rendered
as a director during fiscal 2005.
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth as of February 1, 2006, the number of outstanding
common shares of the Company beneficially owned by (i) each person known to
Infe to beneficially own more than 5% of its outstanding common shares, (ii)
each director, (iii) each nominee for director, (iv) each executive officer
listed in the Summary Compensation Table, and (iv) all executive officers and
directors as a group.
Name and Shares of Common Stock Approximate
Address of Beneficial Owner Beneficially Owned (2) Percent of Class
- --------------------------- ------------------------- ----------------
Arthur Viola(1)
67 Wall Street, 22nd Floor
New York, NY 10006 8,780,640 66.68 %
Officers and directors
as a group (1 person)
- ----------------------------------------------------------------------------
(1) An officer and director
(2) Does not include common shares underlying options and warrants
</table>
There are no family relationships among our directors and executive officers.
No director or executive officer has been a director or executive officer of
any business which has filed a bankruptcy petition or had a bankruptcy petition
filed against it. No director or executive officer has been convicted of a
criminal offense or is the subject of a pending criminal proceeding. No
director or executive officer has been the subject of any order, judgment or
decree of any court permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities. No director or officer has been found by a court to have
violated a federal or state securities or commodities law.
<page>21
None of our directors or executive officers or their respective immediate family
members or affiliates is indebted to us. As of the date of this prospectus,
there is no material proceeding to which any of our directors, executive
officers or affiliates is a party or has a material interest adverse to us.
DESCRIPTION OF THE PRIVATE PLACEMENT
On November 30, 2005, we entered into a Securities Purchase Agreement with
various investors pursuant to which they have the right to acquire 8% callable
secured convertible notes (the "Convertible Notes") in the aggregate principal
amount of $3,000,000, together with Stock Purchase Warrants (the "Warrants") to
acquire 1,200,000 shares of the Company's common stock. The Company issued
additional warrants to acquire 400,000 shares of the Company's common stock to
intermediaries in the transaction. The Convertible Notes
and the Warrants may be collectively referred to herein as the "Securities".
The Convertible Notes are convertible at anytime prior to payment into shares
of the Company's common stock at a rate based on the trading price of the
Company's common stock. The Warrants are exercisable into shares of common stock
at price of $1.50 per share. The conversion and exercise price of the Securities
are subject to adjustment upon the occurrence of certain events, including with
respect to stock splits or combinations
The Securities were not registered under applicable securities laws and were
sold in reliance on an exemption from such registration. Each of the investors
is an "accredited investor" and the Company believes that the issuance and sale
of the Convertible Notes qualified for an exemption from registration pursuant
to Section 4(2) of the Securities Act of 1933.
The Company is obligated within 30 days to register with the Securities and
Exchange Commission the Securities. Furthermore, the Securities are subject to
certain demand and piggy-back registration rights.
SELLING STOCKHOLDERS
The following table sets forth the shares beneficially owned, as of the date of
this prospectus, by the selling stockholders prior to the offering contemplated
by this prospectus, the number of shares each selling stockholder is offering
by this prospectus and the number of shares which each selling stockholder
would own beneficially if all such offered shares are sold. None of the selling
stockholders is known to us to be a registered broker-dealer or an affiliate of
a registered broker-dealer
<page>22
Each of the selling stockholders has acquired his, her or its shares solely for
investment and not with a view to or for resale or distribution of such
securities. Beneficial ownership is determined in accordance with SEC rules and
includes voting or investment power with respect to the securities.
<table>
<s> <c> <c>
- ----------------------------------------------------------------------------------------------
Name of Selling Stockholder Shares Beneficial Percentage Beneficial Precentage
of Common Ownership of Common Ownership of Common
Stock Before the Stock Owned After the Stock After
Included Offering** Before the Offering(4) Offering(4)
in Offering**
Prospectus
(1)
- -------------------------- ---------- ------------ ------------ ------------ -------------
AJW Offshore, Ltd(3) 7,614,000 590,667 (2) 4.99% -- --
AJW Partners, LLC(3) 1,677,900 590,667 (2) 4.99% -- --
AJW Qualified Partners, LLC(3) 4,596,600 590,667 (2) 4.99% -- --
New Millennium Capital
Partners II, LLC,(3) 211,500 590,667 (2) 4.99% -- --
- -------------------------------------------------------------------------------------------------
** These columns represent the aggregate maximum number and percentage of shares
that the selling stockholders can own at one time (and therefore, offer for
resale at any one time) due to their 4.99% limitation.
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 stockholders has sole or shared voting power or investment power and
also any shares, which the selling stockholders has the right to acquire within
60 days. The actual number of shares of common stock issuable upon the
conversion of the secured convertible notes is subject to adjustment depending
on, among other factors, the future market price of the common stock, and could
be materially less or more than the number estimated in the table.
(1) Includes a good faith estimate of the shares issuable upon conversion of the
secured convertible notes and exercise of warrants, based on current market
prices. Because the number of shares of common stock issuable upon conversion of
the secured convertible notes is dependent in part upon the market price of the
common stock prior to a conversion, the actual number of shares of common stock
that will be issued upon conversion will fluctuate daily and cannot be
determined at this time. Under the terms of the secured convertible notes, if
the secured convertible notes had actually been converted on February 1, 2006,
the conversion price would have been approximately $0.275.
<page>23
(2) The actual number of shares of common stock offered in this prospectus, and
included in the registration statement of which this prospectus is a part,
includes such additional number of shares of common stock as may be issued or
issuable upon conversion of the secured convertible notes and exercise of the
related warrants by reason of any stock split, stock dividend or similar
transaction involving the common stock, in accordance with Rule 416 under the
Securities Act of 1933. However the selling stockholders have contractually
agreed to restrict their ability to convert their secured convertible notes or
exercise their warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such conversion or exercise does not exceed 4.99% of the then
issued and outstanding shares of common stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly, the number of shares of common
stock set forth in the table for the selling stockholders exceeds the number of
shares of common stock that the selling stockholders could own beneficially at
any given time through their ownership of the secured convertible notes and the
warrants. In that regard, the beneficial ownership of the common stock by the
selling stockholder set forth in the table is not determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
(3) The selling stockholders are affiliates of each other because they are under
common control. AJW Partners, LLC is a private investment fund that is owned by
its investors and managed by SMS Group, LLC. SMS Group, LLC, of which Mr. Corey
S. Ribotsky is the fund manager, has voting and investment control over the
shares listed below owned by AJW Partners, LLC. AJW Offshore, Ltd., formerly
known as AJW/New Millennium Offshore, Ltd., is a private investment fund that is
owned by its investors and managed by First Street Manager II, LLC. First Street
Manager II, LLC, of which Corey S. Ribotsky is the fund manager, has voting and
investment control over the shares owned by AJW Offshore, Ltd. AJW Qualified
Partners, LLC, formerly known as Pegasus Capital Partners, LLC, is a private
investment fund that is owned by its investors and managed by AJW Manager, LLC,
of which Corey S. Ribotsky and Lloyd A. Groveman are the fund managers, have
voting and investment control over the shares listed below owned by AJW
Qualified Partners, LLC. New Millennium Capital Partners II, LLC, is a private
investment fund that is owned by its investors and managed by First Street
Manager II, LLC. First Street Manager II, LLC, of which Corey S. Ribotsky is the
fund manager, has voting and investment control over the shares owned by New
Millennium Capital Partners II, LLC. We have been notified by the selling
stockholders that they are not broker-dealers or affiliates of broker-dealers
and that they believe they are not required to be broker-dealers.
(4) Assumes that all securities registered will be sold.
</table>
DESCRIPTION OF SECURITIES
We are authorized to issue 100,000,000 shares of common stock, par value $0.001
per share, and 20,000,000 shares of preferred stock, par value $0.001 per share.
As of February 1, 2006, there were 13,167,974 shares of common stock and -0-
shares of preferred stock issued and outstanding.
<page>24
Common Stock
Subject to any prior rights to receive dividends to which the holders of shares
of any series of the preferred stock may be entitled, the holders of shares of
common stock shall be entitled to receive dividends, if and when declared
payable from time to time by the board of directors, from funds legally
available for payment of dividends.
In the event of any dissolution, liquidation or winding up of the Company,
whether voluntary or involuntary, after there shall have been paid to the
holders of shares of preferred stock the full amounts to which they shall be
entitled, the holders of the then outstanding shares of common stock shall be
entitled to receive, pro rata, any remaining assets of the Company available for
distribution to our shareholders. The board of directors may distribute in kind
to the holders of the shares of common stock such remaining assets of the
Company or may sell, transfer or otherwise dispose of all or any part of such
remaining assets to any other corporation trust or entity and receive payment in
cash, stock or obligations of such other corporation, trust or entity or any
combination of such cash, stock, or obligations, and may sell all or any part of
the consideration so received, and may distribute the consideration so received
or any balance or proceeds of it to holders of the shares of common stock. The
voluntary sale, conveyance, lease, exchange or transfer of all or substantially
all the property or assets of the Company (unless in connection with that event
the dissolution, liquidation or winding up of the Company is specifically
approved), or the merger or consolidation of the Company into or with any other
corporation, or the merger of any other corporation into it, or any purchase or
redemption of shares of stock of the Company of any class, shall not be deemed
to be a dissolution, liquidation or winding up of the Company.
Except as provided by law or this certificate of incorporation with respect to
voting by class or series, each outstanding share of common stock shall entitle
the holder of that share to one vote on each matter submitted to a vote at a
meeting of shareholders.
Such numbers of shares of common stock as may from time to time be required for
such purpose shall be reserved for issuance (i) upon conversion of any shares of
preferred stock or any obligation of the Company convertible into shares of
common stock and (ii) upon exercise of any options or warrants to purchase
shares of common stock.
Preferred Stock
The board of directors is expressly authorized to adopt, from time to time, a
resolution or resolutions providing for the issue of preferred stock in one or
more series, to fix the number of shares in each such series and to fix the
designations and the powers, preferences and relative, participating, optional
and other special rights and the qualifications, limitations and restrictions
of such shares, of each such series. The authority of the board of directors
with respect to each such series shall include a determination of the following,
which may vary as between the different series of preferred stock:
(a) The number of shares constituting the series and the distinctive designation
of the series;
(b) The dividend rate on the shares of the series, the conditions and dates upon
which dividends on such shares shall be payable the extent, if any, to which
dividends on such shares shall be cumulative, and the relative rights of
preference, if any, of payment of dividends on such shares;
<page>25
(c) Whether or not the shares of the series are redeemable and, if redeemable,
the time or times during which they shall be redeemable and the amount per
share payable on redemption of such shares, which amount may, but need not,
vary according to the time and circumstances of such redemption;
(d) The amount payable in respect of the shares of the series, in the event of
any liquidation, dissolution or winding up of this corporation, which amount
may, but need not, vary according to the time or circumstances of such
action, and the relative rights of preference, if any, of payment of such
amount;
(e) Any requirement as to a sinking fund for the shares of the series, or any
requirement as to the redemption, purchase or other retirement by the
Company of the shares of the series;
(f) The right, if any, to exchange or convert shares of the series into other
securities or property, and the rate or basis, time, manner and condition of
exchange or conversion;
(g) The voting rights, if any, to which the holders of shares of the series
shall be entitled in addition to the voting tights provided by law, and
(h) Any other terms, conditions or provisions with respect to the series not
inconsistent with the provisions of the articles of incorporation or any
resolution adopted by the board of directors pursuant thereto.
The number of authorized shares of preferred stock may be increased or decreased
by the affirmative vote of the holders of a majority of the stock of the Company
entitled to vote at a meeting of shareholders. No holder of shares of preferred
stock of the Company shall, by reason of such holding have any preemptive right
to subscribe to any additional issue of any stock of any class or series nor to
any security convertible into such stock.
Stock Purchase Warrants
Each of the 1,600,000 warrants issued to the investors pursuant to the Private
Placement referred to herein entitles the holder thereof to purchase shares of
our common stock at an exercise price of $1.50 per share, subject to anti-
dilution adjustments, from the date of issuance until the fifth anniversary
thereof.
Callable Secured Convertible Notes
The Company has outstanding 8% Callable Secured Convertible Notes (the "Notes")
in the aggregate principal amount of $3,000,000. These Notes are convertible at
anytime prior to payment into shares of the Company's common stock at a rate
based on the trading price of the Company's common stock.
<page>26
The conversion price of the Notes are subject to adjustment upon the occurrence
of certain events, including with respect to stock splits or combinations. The
Notes are not registered under applicable securities laws and were sold in
reliance on an exemption from such registration. Each of the investors is an
"accredited investor" and the Company believes that the issuance and sale of the
Convertible Notes qualified for an exemption from registration pursuant to
Section 4(2) of the Securities Act of 1933.
Trading Information
Our common stock is currently quoted on the OTC Bulletin Board under the trading
symbol IFHR.OB. As soon as practicable, and assuming we satisfy all necessary
initial listing requirements, we intend to apply our common stock for trading
on the American Stock Exchange or Nasdaq SmallCap Market, although we cannot be
certain that this application will be approved.
The transfer agent for our common stock is Computershare Trust Company, Inc.
PLAN OF DISTRIBUTION
We are registering an aggregate of 14,100,00 shares of our common stock
covered by this prospectus on behalf of the selling stockholders. The selling
stockholders and any of their donees, pledgees, assignees and successors-in-
interest may, from time to time, offer and sell any and all of their shares of
common stock on any stock exchange, market, or trading facility on which such
shares are traded. The selling stockholders will act independently of us and
each other in making decisions with respect to the timing, manner and size of
each such sale. Sales may be made at fixed or negotiated or market prices. The
shares may be sold by way of any legally available means, including in one or
more of the following transactions:
o a block trade in which a broker-dealer engaged by a selling stockholder
attempts to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer for
its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which a broker-dealer
solicits purchasers; and
o privately negotiated transactions.
<page>27
Transactions under this prospectus may or may not involve brokers or dealers.
The selling stockholders may sell shares directly to purchasers or to or
through broker-dealers, who may act as agents or principals. Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in selling shares. Broker-dealers or agents may receive
compensation in the form of commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated in connection with the sale.
Broker-dealers or agents also may receive compensation in the form of discounts,
concessions, or commissions from the purchasers of shares for whom the broker-
dealers may act as agents or to whom they sell as principal, or both. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Selling stockholders
and any broker-dealers and any other participating broker-dealers who execute
sales for the selling stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. 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 deemed to be underwriting
discounts and commissions under the Securities Act. If the selling stockholders
are deemed to be underwriters, they may be subject to certain statutory and
regulatory liabilities, including liabilities imposed pursuant to Sections 11,
12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
To the extent required, the number of shares to be sold, the name of the selling
stockholder, the purchase price, the name of any agent or broker and any
applicable commissions, discounts or other compensation to such agents or
brokers and other material facts with respect to a particular offering will be
set forth in a prospectus supplement as required by the Rules and Regulations
under the Securities Act.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act if available, rather than pursuant to this prospectus.
In order to comply with the securities laws of certain states, if applicable,
the shares will be sold in such jurisdictions, if required, only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless the shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and complied with. The anti-manipulative provisions of Regulation M
promulgated under the Exchange Act may apply to sales of the shares offered by
the selling stockholders.
We are required to pay all fees and expenses incident to the registration of the
shares. Otherwise, all discounts, commissions or fees incurred in connection
with the sale of our common stock offered hereby will be paid by the selling
stockholders.
<page>28
SHARES ELIGIBLE FOR FUTURE SALE
As of February 1, 2006, we had outstanding an aggregate of 13,167,974 shares of
our common stock, assuming no exercises of our outstanding Stock Purchase
Warrants or conversion of our outstanding 8% Callable Secured Convertible Notes.
All shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act, unless they are purchased by our
"affiliates," as that term is defined in Rule 144 promulgated under the
Securities Act.
Public Float
As of February 1, 2006, the public float for our common stock consisted of
4,657,642 shares. These shares are freely tradable without restriction or
further registration under the Securities Act, unless they are purchased by our
"affiliates," as that term is defined in Rule 144 promulgated under the
Securities Act.
Rule 144
In general, under Rule 144, as currently in effect, a person who has
beneficially owned shares of our common stock for at least one year, including
the holding period of prior owners other than affiliates, is entitled to sell
within any three month period a number of shares that does not exceed the
greater of:
o 1% of the number of shares of our common stock then outstanding or
o the average weekly trading volume of our common stock on the OTC Bulletin
Board during the four calendar weeks preceding the filing of a notice on Form
144 with respect to that sale.
Sales under Rule 144 are also subject to manner-of-sale provisions, notice
requirements and the availability of current public information about us. In
order to effect a Rule 144 sale of our common stock, our transfer agent will
require an opinion from legal counsel. We may charge a fee to persons requesting
sales under Rule 144 to obtain the necessary legal opinions.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our affiliates
at any time during the three months preceding a sale and who has beneficially
owned shares for at least two years, including the holding period of certain
prior owners other than affiliates, is entitled to sell those shares without
complying with the manner-of-sale, public information, volume limitation or
notice provisions of Rule 144. Our transfer agent will require an opinion from
legal counsel to effect a Rule 144(k) transaction. We may charge a fee to
persons requesting transactions under Rule 144(k) to obtain the necessary legal
opinions. No shares of our common stock currently outstanding will be eligible
for sale pursuant to Rule 144(k) until June 24, 2007.
<page>29
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, and other information with the
SEC. Our filings are available to the public at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Further
information on the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
We have filed a registration statement on Form SB-2 with the SEC under the
Securities Act for the common stock offered by this prospectus. This prospectus
does not contain all of the information set forth in the registration
statement, certain parts of which have been omitted in accordance with the rules
and regulations of the SEC. For further information, reference is made to the
registration statement and its exhibits. Whenever we make references in this
prospectus to any of our contracts, agreements or other documents, the
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for the copies of the actual contract,
agreement or other document.
LEGAL MATTERS
The validity of the securities being offered by this prospectus have been passed
upon for us by Laura Anthony, Esq., Legal & Compliance, LLC, 330 Clematis
Street, Suite 217 West Palm Beach, Florida 33401. Telephone (561) 514-0936
EXPERTS
The financial statements of the Company as of November 30, 2005 appearing in
this prospectus have been so included in reliance on the report of Bagell,
Josephs & Levine, CPA's, an independent registered public accounting firm, given
on the authority of said firm as experts in accounting and auditing. The
financial statements as of November 30, 2005 and November 30, 2004 included in
this prospectus have been so included in reliance on the report of Bagell,
Josephs & Levine, CPA's, an independent certified public accounting firm, given
on the authority of said firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers or persons controlling us, we have been
advised that it is the SEC's opinion that such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
<page>30
- ----------------------------------------------------------------------------
INFE-HUMAN RESOURCES, INC.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE(S)
CONSOLIDATED AUDITED FINANCIAL STATEMENTS: -------
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets as of November 30, 2005 and 2004 F-2
Statements of Operation for the years ended November 30, 2005 F-3
Statements of Comprehensive Income (Deficit) for the years ended
November 30, 2005 and 2004 F-4
Statements of Changes in Stockholders' (Deficit) for the years ended
November 30, 2005 and 2004 F-5
Statements of Cash Flows for the years ended November 30, 2005
and 2004 F-6
Notes to Financial Statements F-7-13
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
INFe Human Resources, Inc. and Subsidiary
New York, NY
We have audited the accompanying consolidated balance sheets of INFe Human
Resources, Inc. and Subsidiary (reverse acquisition with Daniels Corporate
Advisory Company, Inc.)(the "Company") as of November 30, 2005 and 2004 and the
related consolidated statements of operations, changes in stockholders' equity
(deficit), comprehensive income (deficit), and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying consolidated financial statements for the years ended November
30, 2005 and 2004 have been prepared assuming that the Company will continue as
a going concern. As discussed in Note 11 to the consolidated financial
statements, the Company has raised certain issues that lead to substantial doubt
about its ability to continue as a going concern. The Company did not have an
operating company generating revenues in 2004. The Company also has sustained
operating losses and deficits in 2005 and 2004. Management's plans in regard to
these matters are described in Note 11. The consolidated financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of INFe- Human
Resources, Inc and Subsidiary (reverse acquisition with Daniels Corporate
Advisory Company, Inc.) as of November 30, 2005 and 2004 and the results of its
operations and its cash flows for each of the two year period ended November 30,
2005 in conformity with accounting principles generally accepted in the United
States.
/s/ BAGELL, JOSEPHS & COMPANY, L.L.C.
- ---------------------------------------
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
Gibbsboro, New Jersey
January 13, 2006
<page>F-1
INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED BALANCE SHEET(DEFICIT)
NOVEMBER 30, 2005 AND 2004
ASSETS
2005 2004
------ ------
CURRENT ASSETS $1,189,694 $ -
Cash
Accounts Receivable, net 20,000 -
Marketable securities 57,339 86,451
Deposits 15,000 -
--------- ---------
Total Current Assets 1,282,033 86,451
Other Assets:
Financing costs, net 300,000 -
---------- ---------
TOTAL ASSETS $1,582,033 $ 86,451
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
2005 2004
------ ------
CURRENT LIABILITIES
Deferred Revenue $ 49,107 $ -
Convertible Note Payable 1,480,000 -
Loan payable - Officer 25,100 16,500
---------- ----------
Total current Liabilities 1,554,207 16,500
---------- ----------
TOTAL LIABILITIES $1,554,207 $ 16,500
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value,
20,000,000 shares authorized;
none issued and outstanding - -
Common stock, $.001 par value,
100,000,000 shares authorized;
13,053,724 and 11,200,024 shares
issued and outstanding as of November 30,
2005 and 2004 13,054 11,200
Additional paid-in-capital 605,591 122,020
Accumulated other comprehensive (deficit) (70,169) (22,096)
Deficit (520,650) (41,173)
----------- ----------
Total stockholders' equity (deficit) 27,826 69,951
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,582,033 $ 86,451
=========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2005 AND 2004
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
2005 2004
--------- ---------
REVENUE $ 5,893 $ -
--------- ---------
OPERATING EXPENSES
Compensation & professional fee 505,503 20,500
Selling, general & administrative expenses 27,204 -
--------- ---------
Total operating expenses 532,707 20,500
--------- ---------
LOSS BEFORE OTHER INCOME (526,814) (20,500)
Net realized gain on sale of securities 47,337 2,640
--------- ---------
NET LOSS APPLICABLE TO COMMON SHARES $(479,477) $ (17,860)
========= =========
BASIC AND DILUTED LOSS
PER SHARE $ (0.04) $ (0.00)
========= =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 11,652,059 11,010,408
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS
CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (DEFICIT)
FOR THE YEARS ENDED NOVEMBER 30, 2005 AND 2004
Deficit, November 30, 2003 $ (23,313)
Net loss for the year ended November 30,2004 (17,860)
---------
Deficit, November 30,2004 (41,173)
Net loss for the year ended November 30,2005 (479,477)
----------
Deficit, November 30, 2005 $(520,650)
==========
Comprehensive income (deficit), November 30, 2003 $ 44,428
Other comprehensive income (deficit), net of tax:
Unrealized loss on securities (66,524)
---------
Comprehensive income (deficit), November 30, 2004 (22,096)
Other comprehensive income (deficit), net of tax:
Unrealized loss on securities (48,073)
---------
Comprehensive income (deficit), November 30, 2005 $(70,169)
=========
The accompanying notes are an integral part of these consolidated financial
statements.
<page>F-4
INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS
CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED STATEMENTS IN CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED NOVEMBER 30, 2005 AND 2004
<table>
<caption>
<s> <c> <c> <c> <c> <c> <c>
Accumulated
Preferred Stock Common Stock Additonal Other
--------------- ------------------- Paid-in Comprehensive Accumulated
Shares Amount Shares Amount Capital Income Deficit Total
------ ------ ---------- ------- --------- ------------- ------------ ----------
BALANCE-November 30, 2003 - $ - 11,000,000 $ 11,000 $ 108,220 $ 44,428 $ (23,313) $140,335
Stock issued for debt reduction - - 200,024 200 13,800 - - 14,000
Comprehensive loss - - - - - (66,524) - (66,524)
Net Loss - - - - - - (17,860) (17,860)
------ ------ ---------- ------ ------ ------- ------ --------
BALANCE-November 30, 2004 - $ - 11,200,024 $ 11,200 $ 122,020 $ (22,096) $ (41,173) $ 69,951
Stock issued for services - - 1,033,700 1,034 219,391 - - 220,425
Stock issued as compensation - - 740,000 740 244,260 - - 245,000
Stock issued for cash - - 80,000 80 19,920 - - 20,000
Comprehensive loss - - - - - (48,073) - (48,073)
Net Loss - - - - - - (479,477) (479,477)
------ ------ ----------- -------- --------- -------- --------- ---------
Balance November 30, 2005 - $ - 13,053,724 $ 13,054 $ 605,591 $ (70,169) $(520,650) $ 27,826
====== ======= =========== ======== ========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</table>
F-5
INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 2005 AND 2004
<table>
<caption>
<s> <c> <c>
2005 2004
----------- ----------
CASH FLOW FROM OPERATING ACTIVITES
Net Loss $ (479,477) $ (17,860)
Adjustments to reconcile net loss to net
cash used in operating activites:
Stock issued for services 220,425 -
Stock issued for compensation 245,000 -
(Increase) in accounts receivable (20,000) -
Increase in deferred revenue 49,107 -
(Decrease) in accounts payable - (10,000)
Unrealized loss in marketable securities (48,073) -
----------- ---------
Net cash used in operating activities (33,018) (27,860)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits on acquisition of business (15,000) -
Equity financing costs on convertible note payble (300,000) -
Securities purchased, securities sold - net 29,112 (2,640)
----------- ----------
Net cash (used in) investing activities (285,888) (2,640)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Officer loans 8,600 30,500
Proceeds of Convertible Notes Payable 1,480,000 -
Issuance of common stock 20,000 -
----------- ----------
Net cash provided by financing activitiy 1,508,600 30,500
----------- ----------
NET INCREASES IN CASH AND CASH EQUIVALENTS 1,189,694 -
CASH AND CASH EQUIVALENTS
- -BEGINNING OF YEAR - -
----------- ----------
CASH AND CASH EQUIVALENTS
- -END OF YEAR $ 1,189,694 $ -
=========== ==========
2005 2004
----------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ - $ -
========== ==========
Cash paid for income taxes $ - $ -
========== ==========
SUPPLEMENTAL DISCLOSURE OF NON CASH
ACTIVITY:
Common stock issued for debt reduction $ - $ 14,000
=========== ===========
Common stock issued for services $ 220,425 $ -
=========== ===========
Common stock issued as compensation $ 245,000 $ -
=========== ===========
Unrealized net gain (loss) on securities $ (48,073) $ (66,524)
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</table>
F-6
INFe- HUMAN RESOURCES, INC. AND SUBSIDIARY
(REVERSE ACQUISITION WITH DANIELS CORPORATE ADVISORY COMPANY, INC.)
CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30,
2005 and 2004
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
INFe- Human Resources, Inc. and Subsidiary (the "Company") was incorporated in
the State of Nevada on March 31, 2000. The Company was a subsidiary of INFe,
Inc. a publicly trading entity on the OTC BB (INFe) through October 31, 2003.
The Company was organized to provide human resource administrative management,
executive compensation plans and staffing services to client companies.
On October 21, 2003 the Company purchased all of the common stock of Daniels
Corporate Advisory Company, Inc. ("Daniels"), a Nevada company formed on May 2,
2002. For accounting purposes, the transaction had been accounted for as a
reverse acquisition, under the purchase method of accounting. Accordingly,
Daniels will be treated as the continuing entity for accounting purposes and the
historical financial statements presented will be those of "Daniels". Daniels is
structured as a start-up and will be operated as a "Human Resource/ Financial
Services" corporation. The Company currently has two divisions, the corporate
financial consulting division and the merchant banking division.
The Corporate Financial Consulting Division has as its growth goal-advisory to
payroll client as well as non-payroll client companies. This division will work
with companies seeking to create and/or acquire adjunct service businesses,
whose services will initially provide better lifestyles for its existing
workforce, and ultimately will be packaged, on an additional profit center
basis, for sale to other small companies for the retention of their employees.
The profits generated from all the Financial Consulting Assignments will be
available for venture investment through the second division, The Merchant
Banking Division.
The Merchant Banking Division has an in-house equity funding program, whereby
Daniels will profit by helping finance the growth of client, payroll service
companies, as well as non-payroll service companies. This division will also
profit by the purchase of equity in attractive small public companies whose
growth strategies are in line with Daniels' philosophy - growth through
leveraged acquisition(s).
<page>F-7
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All significant inter-company accounts and
transactions have been eliminated in consolidation.
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.
Cash and Cash Equivalents
For financial statement presentation purposes, short-term, highly liquid
investments with original maturities of three months or less are considered to
be cash and cash equivalents. The Company maintains it cash accounts at one (1)
financial institution, and the funds are insured to the maximum limit of
$100,000 set by the Federal Savings and Loan Association. At November 30, 2005,
the Company had a cash concentration risk of $1,089,695. The Company had no
cash equivalents at November 30, 2004.
Start-up Costs
In accordance with the American Institute of Certified Public Accountants
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", the
Company has expensed all costs incurred in connection with the start-up and
organization of the Company.
Financing Fees
The Company paid a fee in the amount of $300,000 in association with the
debenture note payable (See Note 7). The fee is being amortized over the life
of the loan.
Revenue and Cost Recognition
The Company records its transactions under the accrual method of accounting
whereby income gets recognized when the services are rendered and collection is
reasonably assured.
<page>F-8
Income Taxes
Effective May 2, 2002, the Company adopted the provisions of Statement of
Financial Accounting Standards No, 109 (the Statement), Accounting for Income
Taxes. The Statement requires an asset and liability approach for financial
accounting and reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the financial
reporting bases and tax bases of the Company's assets and liabilities at enacted
tax rates expected to be in effect when such amounts are realized or settled.
Advertising Costs
The Company expenses the costs associated with advertising as incurred.
Advertising and promotional expenses were $11,583 and $-0- for the years ended
November 30, 2005 and 2004.
Investments
In accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", securities are classified into three categories: held-to-
maturity, available-for-sale and trading. The Company's investments consist of
equity securities classified as available-for-sale securities. Accordingly, they
are carried at fair value in accordance with SFAS No. 115. Further SFAS No. 115
unrealized gains and losses for available-for-sale securities are excluded from
earnings, and reported net of deferred income taxes, as a separate component of
stockholder's equity, unless the loss is classified as other than a temporary
decline in market value.
Comprehensive Income (Deficit)
The Company has adopted Statement of Financial Accounting Standards No, 130,
"Reporting Comprehensive Income (Deficit)." (SFAS No. 130). SFAS No. 130
requires the reporting of comprehensive income (deficit) in addition to net
income (loss) from operations.
Comprehensive income (deficit) is a more inclusive financial reporting
methodology that includes disclosure of information that historically has not
been recognized in the calculation of net income.
(Loss) Per Share of Common Stock
Historical net loss per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings per share (EPS) include
additional dilution from common stock equivalents, such as stock issuable
pursuant to the exercise of stock options and warrants. Common stock equivalents
were not included in the computation of diluted earnings per share when the
Company reported a loss because to do so would be anti-diluted.
<page>F-9
The following is a reconciliation of the computation for basic and diluted EPS
for the years ended November 30, 2005 and 2004:
2005 2004
-------- --------
Net loss $ (479,477) $ (17,860)
---------- -----------
Weighted-average common shares 11,652,059 11,010,408
Weighted-average common stock
Equivalents
Stock options - -
Warrants - -
------------ -----------
Weighted-average common shares
Outstanding (Diluted) 11,652,059 11,010,408
============ ===========
There were no stock options available for the years ended November 30, 2004.
The Company has warrants outstanding for 1,200,000 shares of the Company's
common stock at November 30, 2005.
NOTE 3- ACCOUNTS RECEIVABLE
The Company has emerged from the developmental stage, and the Company has a
revenue stream. Accounts receivable represent the funds due to the Company for
services performed or to be performed. Accounts receivable are evaluated for
potential uncollectible amounts and are reduced for any existing bad debts.
Accounts receivable, net of reserve allowances were $20,000 and $-0- at November
30, 2005 and 2004, respectively.
NOTE 4- INVESTMENTS
The following is a summary of investments at November 30, 2005 and 2004 at fair
market value:
2005 2004
------- --------
Portfolio of common stocks
trading on the OTC: BB
at fair market value $57,339 $86,451
======= ========
The marketable securities (depreciated) $(48,073) and $(66,524) for the years
ended November 30, 2005 and 2004, respectively. There were sales of investments
during the year, which resulted in a net realized gain of $47,337. Additionally,
no amounts were reclassified out of accumulated other comprehensive
income/(loss) for the periods presented.
<page>F-10
NOTE 5- DEPOSITS
The Company has made an offer to acquire a company for purposes of expanding
their revenue base (See Note 12). As part of the acquisition, the Company
placed a $15,000 deposit for security purposes.
NOTE 6- DEFERRED REVENUE
The Company received a $55,000 contract to perform consulting services over a
14-month period beginning October 13, 2005 through December 14, 2006. The
Company earned $5,982 in the fiscal year ended November 30, 2005. The balance
has been deferred.
NOTE 7- CONVERTIBLE NOTES PAYABLE
The Company executed a Securities Purchase Agreement to issue 8% secured
convertible note payable in the amount of $3,000,000. The note is convertible
at anytime by the holder of the security into shares of common stock, par value
$.001 per share. In addition, the Company issued to the buyer warrants enabling
them to purchase 1,200,000 shares of common stock at an exercise price of $1.50
per share. The Company has received $1,480,000 of the $3,000,000 available.
The note matures November 30, 2008. In addition, the Company paid $300,000 in
related financing fees. These fees will be amortized over the life of the loan.
NOTE 8- STOCKHOLDERS' EQUITY (DEFICIT)
The Company, originally INFe, had 20,000,000 shares of preferred stock
authorized for the years ended November 30, 2005 and 2004. There were no shares
issued and outstanding. Daniels Corporate Advisory Company, Inc. has the same
capital structure.
The Company has 100,000,000 common shares authorized at November 30, 2005 and
2004. There were 13,053,724 and 11,200,024 shares issued and outstanding at
November 30, 2005 and 2004, respectively.
The Company "Daniels" in the reverse acquisition with INFe Human-Resources, Inc.
cancelled its shares of 7,500,000, assumed the 10,000,000 original INFe stock
and issued another 1,000,000 shares to the founders. The transaction is shown
net in the stockholders' equity section presented in the financial statements.
The Company in the fourth quarter 2004 issued 200,024 shares of common stock for
debt reduction of $14,000.
During the fiscal year ended November 30, 2005, the Company issued 1,033,700
shares of its common stock to outside consultants for services rendered. In
addition, the Company issued 740,000 shares to one of the officers as
compensation.
<page>F-11
In September 2005, the Company sold 80,000 shares of its common stock for
$20,000.
NOTE 9- PROVISION FOR INCOME TAXES
The Company did not provide for income taxes for the years ended November 30,
2005 and 2004. Additionally, the Company established a valuation allowance equal
to the full amount of the deferred tax assets due to the uncertainty of the
utilization of the net operating losses in future periods.
At November 30, 2005 and 2004, the deferred tax assets consists of the
following:
2005 2004
-------- --------
Deferred taxes due to net
operating loss carryforwards $172,000 $6,175
Less: Valuation allowance (172,000) (6,175)
---------- --------
Net deferred tax asset $ - $ -
========== ========
For the years ended November 30, 2005 and 2004, the Company and its subsidiary
had approximately $520,600 and $41,200, respectively, as operating losses for
tax purposes. The financial statements reflect the operations of Daniels
Corporate Advisory Company Inc. and not the net operating losses of original
Infe-Human Resources Inc., which have certain losses remaining for tax purposes.
Accordingly, the net effect of those losses and the net tax effect on
comprehensive other income have been considered.
NOTE 10- RELATED PARTY TRANSACTIONS
The Company utilizes office space at no charge from its president, Mr. Arthur
Viola.
During the year, the Company issued 740,000 shares of its common stock to Mr.
Arthur Viola as compensation. The value of the shares was $245,000.
NOTE 11-LOAN PAYABLE-OFFICER
Since inception, Mr. Arthur Viola has contributed a net $25,100 for working
capital purposes. The loan is non-interest bearing, and has no specific
repayment terms. As such, the loan has been classified as a current liability
<page>F-12
NOTE 12-GOING CONCERN
The accompanying consolidated financial statements have been presented in
accordance with accounting principles generally accepted in the United States of
America, which assume the continuity of the Company as a going concern. The
Company has incurred net losses for the years ended November 30, 2005 and 2004,
and has an accumulated deficit. However, the Company has realized its first
revenue stream and emerged out of the development stage. Presently, the Company
does not have the revenue stream necessary to operate or develop its business.
This raises substantial doubt about its ability to continue as a going concern.
Management has formulated and is in the process of implementing its business
plan intended to develop steady revenues and income in areas of operation. This
plan includes the following, subject to obtaining the necessary financing:
- - Signing up new clients
- - Building a financial services company, which could include payroll and related
human-resource services as well as corporate development to client companies.
- - Seeking out new companies for possible merge
Presently, the Company cannot ascertain the eventual success of management's
plans with any degree of certainty. The accompanying consolidated financial
statements do no include any adjustments that might result from the eventual
outcome of the risks and uncertainties described above.
NOTE 13-SUBSEQUENT EVENT
On December 20, 2005, the Company entered into an agreement with Monarch Human
Resources, Inc. (the "Target") for the Company to acquire 100% of the
outstanding shares the Target pursuant to the Stock Purchase Agreement. The
Agreement grant warrants for each of the Shareholders to each purchase a 10%
interest in Infe Human Resources, Inc., and will expire on the third (3rd)
anniversary of the closing. The exercise price on these warrants is $.001. In
consideration for this, the Company paid $300,000 in cash and extended a
$100,000 loan to the Target. The loan will accrue interest at 12% per annum and
is due on demand.
<page>F-13
- -----------------------------------------------------------------------------
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Nevada corporation law provides that:
- - a corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except
an action by or in the right of the corporation, by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceed-ing if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful;
- - a corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including amounts
paid in settlement and attorneys' fees actually and reasonably incurred by
him in connection with the defense or settlement of the action or suit if he
acted in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation. Indemnification may not
be made for any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court
in which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper; and
- - to the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding, or in defense of any claim, issue or matter therein, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense.
<page>31
Our Articles of Incorporation provide that no director or officer shall be
personally liable to our company or any of its stockholders for damages for
breach of fiduciary duty as a director or officer involving any act or omission
of such director or officer unless a final adjudication establishes that such
acts or omissions involve: (i) intentional misconduct , (ii) fraud, or (iii) a
knowing violation of the law that was material to the cause of action.
Our Bylaws provide we have the power to indemnify, to the greatest allowable
extent permitted under the General Corporate Laws of Nevada, directors or
officers of our company for any duties or obligations arising out of any acts
or conduct of the officer or director performed for or on behalf of our company.
We will reimburse each such person for all legal and other expenses reasonably
incurred by him in connection with any such claim or liability, including power
to defend such persons from all suits or claims as provided for under the
provisions of the General Corporate Law of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of our company under
Nevada law or otherwise, we have been advised the opinion of the Securities and
Exchange Commission is that such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than
payment by us for expenses incurred or paid by a director, officer or
controlling person of our company in successful defense of any action, suit, or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, we 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 in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of our
common stock. All amounts shown are estimates except for the registration fee.
EXPENSES AMOUNT
- --------------- -----------
Registration Fee $1,088.72
Costs of Printing and Engraving $2,000.00
Legal Fees $20,000.00
Accounting Fees $20,000.00
Miscellaneous $3,000.00
- -----------------------------------------------
TOTAL $46,088.72
==============================================
<page>32
Item 26. Recent Sales of Unregistered Securities
The Private Placement
1. On November 30, 2005, we entered into a Securities Purchase Agreement with
various investors pursuant to which they have the right to acquire callable
secured convertible notes (the "Convertible Notes") in the aggregate
principal amount of $3,000,000, together with Stock Purchase Warrants (the
"Warrants") to acquire 1,200,000 shares of the Company's common stock. The
Convertible Notes and the Warrants may be collectively referred to herein as
the "Securities".
The Convertible Notes are convertible at anytime prior to payment into shares
of the Company's common stock at a rate based on the trading price of the
Company's common stock. The Warrants are exercisable into shares of common
stock at price of $1.50 per share. The conversion and exercise price of the
Securities are subject to adjustment upon the occurrence of certain events,
including with respect to stock splits or combinations.
The Securities were not registered under applicable securities laws and were
sold in reliance on an exemption from such registration. Each of the
investors is an "accredited investor" and the Company believes that the
issuance and sale of the Convertible Notes qualified for an exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933.
2. On September 22, 2005, we sold 80,000 shares of Rule 144 restricted common
stock to a private accredited investor for a total purchase price of
$20,000.00. This issuance was exempt from registration under section 4(2) of
the Securities Act of 1933.
3. On August 19, 2005, we issued 12,000 shares of unregistered and restricted
common stock to Richard Kaiser in ex-change for a debt owed to Mr. Kaiser for
services rendered. This issuance was exempt from registration under section
4(2) of the Securities Act of 1933.
________________________________________
<page>33
Item 27. Exhibits.
Exhibit
Number Description
- -------- --------------
5.1 Legal Opinion
10.1 Securities Purchase Agreement
10,2 Securities Agreement
10.3 Form of Stock Purchase Warrant
10.4 Registration Rights Agreement.
10.5 Form of Callable Secured Convertible Note
23.1 Consent of Auditor
23.2 Consent of Attorney (within Exhibit 5.1)
Item 28. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) 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) and any
de-viation 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 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) Include any additional or changed information on the plan of
distribution.
(2) For determining liability under the Securities Act, the Registrant will
treat each such post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that time to be the
initial bona fide offering.
<page>34
(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.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 24 above, or otherwise, the
Registrant has been advised that in the opinion of the SEC 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 Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding, is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of 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
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York on February 3, 2006.
INFE-Human Resources, Inc.:
By: /s/ Arthur Viola
------------------------------
Name: Arthur Viola
Title: Chief Executive Officer,
Chairman and Principal
Financial Officer
<page>35