SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
[ ] Transition report under Section 13 or 15(d) of the Exchange
Act
For the transition period from __________ to __________
Commission file number 0-29485
RESOLVE STAFFING, INC.
--------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 33-0850639
--------------------------------- -------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) identification No.)
105 North Falkenburg Road, Suite B
Tampa, Florida 33619
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(Address of Principal Executive Offices)
(813) 662-0074
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(Issuer's Telephone Number, Including Area Code)
COLUMBIALUM STAFFING, INC.
310 East Harrison Street
Tampa, Florida 33602
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(Former Name, Former Address and Former Fiscal Year,
If changed since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes[X] No[ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of August 14, 2002 there
were outstanding 5,335,034 shares of common stock, par value $0.0001, and no
shares of preferred stock.
Part I Financial Information
Item 1. Consolidated Financial Statements
Consolidated balance sheets as of June 30, 2002 and
December 31, 2001 3
Consolidated statements of operations for the three and
six months ended June 30, 2002 and 2001 4
Consolidated statements of cash flows for the three and
six months ended June 30, 2002 and 2001 5
Consolidated statements of stockholders' equity for the
six months ended June 30, 2002 6
Notes to consolidated financial statements 7
2
RESOLVE STAFFING, INC.
BALANCE SHEETS
JUNE 30, 2002 AND 2001
(Unaudited)
June 30,
ASSETS 2002 December 31, 2001
--------------------- -------------------
CURRENT ASSETS
Cash $ 38,629 $ 19,467
Accounts receivable, net of allowance
for bad debts 54,011 30,069
Prepaid and other assets 94,788 8,317
-------------------- ------------------
Total current assets 187,428 57,853
-------------------- ------------------
PROPERTY AND EQUIPMENT
Property and equipment 28,382 28,382
Less: Accumulated depreciation 9,682 8,202
-------------------- ------------------
Net property and equipment 18,700 20,180
-------------------- ------------------
TOTAL ASSETS $ 206,128 $ 78,033
==================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 38,573 $ 23,698
Accrued payroll taxes 1,922 17,171
Insurance financing 37,941 -
Debentures payable 11,150 18,450
Notes payable 43,996 -
Other current liabilities 2,593 642
-------------------- ------------------
Total current liabilities 136,175 59,961
-------------------- ------------------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 50,000,000 shares
authorized, issued and outstanding: 2002 - 5,335,034
shares; 2001 - 50,000 shares (restated) 534 8
Paid-in capital 695,789 425,467
Retained earnings (deficit) (626,370) (407,403)
-------------------- ------------------
Total stockholders' equity 69,953 18,072
-------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 206,128 $ 78,033
==================== ==================
See accompanying notes to these financial statements.
3
RESOLVE STAFFING, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
--------------- -------------- --------------- ---------------
SERVICE REVENUES $ 99,564 $ 147,116 $ 185,104 $ 322,991
DIRECT COST OF SERVICES 77,066 110,073 132,524 241,068
--------------- -------------- --------------- ---------------
GROSS MARGIN 22,498 37,043 52,580 81,923
OPERATING EXPENSES
Legal & professional fees 48,.971 2,000 102,356 4,575
Advertising/Promotion 841 4,149 4,489 12,341
Salaries and benefits 55,315 47,935 104,440 97,342
Payroll taxes 3,526 2,881 6,663 9,257
Penalties - - - 19,638
Rent & leases 7,023 7,388 16,351 12,320
Travel & entertainment - 2,797 607 4,726
Administrative expenses 13,645 16,754 29,184 26,143
--------------- -------------- --------------- ---------------
Total operating expenses 129,321 83,904 264,290 186,342
--------------- -------------- --------------- ---------------
LOSS FROM OPERATIONS (106,823) (46,861) (211,710) (104,419)
OTHER INCOME (EXPENSES)
Interest and other income 240 - 240 58
Interest expense (5,696) (11,053) (7,498) (13,206)
--------------- -------------- --------------- ---------------
Net other income (expenses) (5,456) (11,053) (7,258) (13,148)
--------------- -------------- --------------- ---------------
NET INCOME (LOSS) $ (112,279) $ (57,914) $ (218,968) $ (117,567)
=============== ============== =============== ===============
LOSS PER SHARE
Basic $ (.17) $ (1.16) $ (.58) $ (2.35)
=============== ============== =============== ===============
Fully diluted $ (.02) $ (.01) $ (.04) $ (.02)
=============== ============== =============== ===============
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 664,705 50,000 374,863 50,000
=============== ============== =============== ===============
Fully diluted 5,776,205 5,161,500 5,486,363 5,161,500
=============== ============== =============== ===============
See accompanying notes to these financial statements.
4
RESOLVE STAFFING, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -----------------------------------
2002 2001 2002 2001
------------- ------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (112,279) $ (57,914) $ (218,967) $ (117,567)
------------- ------------- -------------- --------------
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation - 792 1,480 1,464
Interest converted to capital stock - - 251 -
Contributed services 21,400 - 41,200 -
Decrease (increase) in current assets:
Accounts receivable (2,422) 40,024 (23,942) 6,070
Prepaid and other assets 2,033 1,306 (86,471) 1,167
Increase (decrease) in current liabilities:
Accounts payable 28,770 8,642 14,875 40,128
Payroll tax accruals (4,869) 8,551 (15,249) (34,837)
Other current liabilities 766 (321) 1,952 (10,627)
------------- ------------- -------------- --------------
Total adjustments 45,688 58,994 (65,904) 3,365
------------- ------------- -------------- --------------
Net cash (used) by operating activities (66,591) 1,080 (284,871) (114,202)
------------- ------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - 7,550 - (7,758)
------------- ------------- -------------- --------------
Net cash (used) by investing activities - 7,550 - (7,758)
------------- ------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from insurance financing - - 93,061 -
Repayments of insurance financing (24,263) - (55,120) -
Loan from stockholder, net 45,596 4,692 163,996 108,306
Proceeds from sale of common stock 40,000 - 40,000 -
Proceeds from note payable - - 40,000 -
Capital contribution - - 22,096 -
------------- ------------- -------------- --------------
Net cash provided by financing activities 61,333 4,692 304,033 108,306
------------- ------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH
(5,258) (1,778) 19,162 (13,654)
CASH, BEGINNING OF THE PERIOD 43,887 7,821 19,467 19,697
------------- ------------- -------------- --------------
CASH, END OF THE PERIOD $ 38,629 $ 6,043 $ 38,629 $ 6,043
============= ============= ============== ==============
See accompanying notes to these financial statements.
5
RESOLVE STAFFING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
COMMON STOCK
-------------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- --------- --------- ---------- ---------
BALANCE, DECEMBER 31, 2001 83,334 $ 8 $ 425,467 $ (407,403) $ 18,072
Issuance of common stock
for services 3,333 - 100 - 100
Donated services - - 19,800 - 19,800
Contributed capital by
shareholder - - 22,096 - 22,096
Issuance of common stock in
conversion of debenture 248,367 25 7,426 - 7,451
Net loss during period - - - (106 ,689) (106,689)
--------- ------ --------- ---------- ---------
Balance, March 31, 2002 335,034 33 474,889 (514,091) (39,169)
Donated services - - 21,400 21,400
Issuance of common stock for
cash, notes and debt 5,000,000 500 199,500 200,000
Loss for the period - - - (112,279) (112,279)
--------- ------ --------- ---------- ---------
Balance, June 30, 2002 5,335,034 $ 533 $ 695,789 $ (626,370) $ 69,953
========= ====== ========= ========== =========
See accompanying notes to these financial statements.
6
RESOLVE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the instructions to Form 10-QSB.
Accordingly, they do not include all the information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, the interim
financial statements include all adjustments considered necessary for a fair
presentation of the Company's financial position, results of operations and cash
flows for the three and six months ended June 30, 2002. These statements are not
necessarily indicative of the results to be expected for the full fiscal year.
These statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB for the year ended December
31, 2001as filed with the Securities and Exchange Commission.
Nature of Operations
Resolve Staffing, Inc., formerly Columbialum Staffing, Inc., was organized under
the laws of the State of Nevada on April 9, 1998. Integra Staffing, Inc., was
organized under the laws of the State of Florida corporation, was organized on
August 16, 1999 (collectively referred to as "Resolve").
Resolve Staffing, Inc. was in the development stage until its merger with
Integra Staffing, Inc. on December 10, 2001. Integra Staffing, Inc. ("Integra")
is a temporary staffing company. Integra's strategy has been to provide
efficient and affordable solutions to its customers' employment and labor force
needs.
Principles of Consolidation
The consolidated financial statements include the accounts of Resolve Staffing,
Inc. (formerly Columbialum, Ltd.) and its wholly owned subsidiary Integra
Staffing, Inc. All significant intercompany accounts and transactions have been
eliminated.
Recent Accounting Pronouncements
In June 2001, the FASB issued Statement of Financial Accounting Standards No.
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142, which includes
the requirements to test for impairment goodwill and intangible assets of
indefinite life, rather than amortize them, is effective for fiscal years
beginning after December 31, 2001. Adoption of this pronouncement is not
anticipated to have a significant impact on the Company. Intangible assets
consist of patents' rights. These costs are amortized over a 17-year period,
their estimated economic life.
In August 2001, the FASB issued SFAS No.144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". SFAS No. 144 retains the fundamental provisions of SFAS 121 for the
recognition and measurement of the impairment of long-lived assets to be held
and used and the measurement of long-lived assets to be disposed of by sale.
Under SFAS No.144, long-lived assets are measured at the lower of carrying
amount or fair value less cost to sell. The standard became effective on January
1, 2002. Management does not believe adoption of this standard will have a
significant impact on the results of operations, financial position and cash
flows of the Company.
7
RESOLVE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss per Share
Resolve records basic and fully diluted loss per share in accordance with
Financial Accounting Standards Board Statement No. 128, "Earnings per Share".
Basic earnings (loss) per share includes no dilution and is computed by dividing
income (loss) available to common stockholders by the weighted average number of
shares outstanding for the period. Diluted earnings (loss) per share reflect the
potential dilution of securities that could share in the earnings (loss) of the
entity. For purposes of computation of loss per share, the number of shares
outstanding have been retroactively adjusted to reflect Resolve's one-for-thirty
reverse stock split.
NOTE B - CONVERTIBLE DEBENTURES PAYABLE
On November 16, 2001, Resolve borrowed $7,300 from an former shareholders of
Integra and unrelated individuals evidenced by a 5% convertible debenture due
December 31, 2002. On March 30, 2002, the debenture holders exercised their
rights under the 6% convertible debenture and converted the debentures, and the
accrued interest thereon, in exchange for 248,367 shares of Resolve's common
stock.
On December 6, 2001, Resolve borrowed $11,150 from an unrelated individuals
evidenced by a 6% convertible debenture due June 30, 2003. The debenture is
convertible into Resolve's $0.001 par value common stock at $0.10 per share
through the debenture's maturity date.
NOTE C - SUBORDINATED CONVERTIBLE NOTES
The Board of Directors authorized the issue and sale of its 18% Subordinated
Convertible Note due October 1, 2002 in the aggregate principal amount of not
more than U.S. $250,000. Resolve has the option to extend the maturity date for
up to two successive three months periods ending January 1, 2003 and April 1,
2003. The principal amount of the notes are convertible into shares of Resolve's
$0.001 par value common stock at $2 per share. As of March 31, 2002, notes were
issued in the amount of $100,000. On June 24, 2002, the $100,000 in notes were
cancelled in exchange for units, each consisting of one share of common stock
and one purchase warrant at $.04 per unit.
NOTE D - SALE OF SECURITES
On June 24, 2002, Resolve sold 5,000,000 units, each consisting of one share of
common stock and one warrant. The consideration was $.04 per unit, for an
aggregate of $200,000. The consideration consisted of $40,000 in cash, $100,000
in cancellation of promissory notes, and $60,000 from the cancellation of
certain obligations.
NOTE E - SHAREHOLDERS' ACTIONS
On May 28, 2002, by written consent, the majority of shareholders voted to (1)
elect two directors, (2) amend the Articles of Incorporation to (a) change the
name of the company to Resolve Staffing, Inc., (b) reverse split the outstanding
common stock one-for-thirty, (c) maintain the par value of the Resolve's common
stock at $.0001 per share, (d) restore the number of shares of common stock
Resolve is authorized to issue at 50,000,000, and (3) amend Resolve's 2001 Stock
Incentive Plan to restore the number of shares which may be issued under the
plan to 3,000,000. All shares disclosures have been retroactively adjusted to
reflect the one-for-thirty reversed split.
8
RESOLVE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE E - SHAREHOLDERS' ACTIONS (Continued)
Additionally, the Board of Directors agreed to waive the anti-dilution
provisions of Resolve's 6% convertible debentures due June 30, 2003 and to fix
the conversion price of such debentures at $.10 per share.
NOTE F - RELATED PARTIES TRANSACTIONS
During the period ended March 31, 2002, Resolve borrowed $23,000 from its
president, R. Gale Porter, and $35,400 from other shareholders. The debt is
evidenced by unsecured promissory, including interest at the rate of 12% per
annum. The full amount of the notes remain outstanding at March 31, 2002.
During the three months and six months ended June 30, 2002, the President and
Chief Financial Officer provided services to Resolve valued at $21,400 and $-0-,
which were donated to the Company.
NOTE G - COMMITMENTS
On June 14, 2002, Resolve entered into a lease agreement, effective July 8,
2002, for approximately 1,056 square feet of office space, housing its operating
offices, pursuant to a three-year lease with an unrelated landlord, expiring
June 30, 2005 at $1,106 per month, plus applicable Florida sales tax. Resolve
has the option to renew the lease for two successive terms under the same terms
and conditions as the original lease.
Resolve previously occupied a 1,540 square feet office space, housing its
operating offices, pursuant to a three-year lease expiring October 30, 2002. The
space has been leased to another tenant, therefore, Resolve was relieved of any
liability on the remainder of the lease after August 31, 2002.
NOTE H - SUBSEQUENT EVENTS
On July 27, 2002, Resolve filed a registration statement on Form SB-2
with the Securities and Exchange Commission, under the Securities Act of 1933,
whereby 6,330,366 shares of common stock are being registered and offered
(including 111,500 shares underlying convertible debentures and 5,000,000 shares
underlying the warrants. The registration has not yet been declared effective.
The Company is in the process of revising the registration statement, including
the number of shares and warrants being registered.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Note Regarding Forward Looking Statements
You should read the following discussion in conjunction with the
Company's unaudited consolidated financial statements and notes included herein.
The results described below are not necessarily indicative of the results to be
expected in any future period. Certain statements in this discussion and
analysis, including statements regarding our strategy, financial performance and
revenue sources, are forward-looking statements based on current expectations
and entail various risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements.
Readers are referred to our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2001 and to the section entitled "Risk Factors" contained
herein which identify important risk factors that could cause actual results to
differ from those contained in the forward looking statements.
GENERAL
Resolve Staffing, Inc., formerly Columbialum Staffing, Inc. was
organized as a Nevada corporation on April 9, 1998 and since its inception until
its acquisition of Integra Staffing, Inc. on December 10, 2001, had been
devoting most of its efforts developing its business plan, raising capital,
obtaining financing, establishing its accounting systems, and other
administrative functions.
Integra Staffing, Inc., ("Integra") was organized under the laws of the
State of Florida corporation, on August 16, 1999. Integra is a temporary
staffing company. Integra's strategy has been to provide efficient and
affordable solutions to its customers' employment and labor force needs.
On September 27, 2001, the our shareholders entered into a Securities
Exchange Agreement, as amended, to exchange 100% of the issued and outstanding
common stock of Integra for an aggregate of 1,500,000 shares of Resolve's $0.001
par value common stock.
During the year ended December 31, 2001, Columbialum, Ltd. approved an
amendment its articles of incorporation to (a) change the name of the company to
Columbialum Staffing, Inc.; (b) reduce the par value of its common stock and
preferred stock from $0.01 to $0.001; (d) increase the number of common shares
we are authorized to issue from 20,000,000 to 50,000,000; and (e) increase the
number of preferred shares Columbialum is authorized to issue from 2,000,000 to
10,000,000 shares.
During the year ended December 31, 2001, we adopted a 2001 Equity
Incentive Plan ("Incentive Plan") for the benefit of key employees (including
officers and employee directors) and consultants of Columbialum and its
affiliates. Our Board of Directors reserved 3,000,000 shares of the Resolve's
$0.001 par value common stock for grants under the Incentive Plan. The Incentive
Plan is intended to provide those persons who have substantial responsibility
for the management and growth of Columbialum with additional incentives and an
opportunity to obtain or increase their proprietary interest in Resolve,
encouraging them to continue in the employ of Resolve.
Subsequent to March 31, 2002, by written consent, the majority of
shareholders voted to (1) elect two directors, (2) amend the Articles of
Incorporation to (a) change the name of the company to "Resolve Staffing, Inc.,"
(b) reverse split the outstanding common stock one-for-thirty, (c) maintain the
par value of the Resolve's common stock at $.0001 per share, (d) restore the
number of shares of common stock Resolve is authorized to issue at 50,000,000,
and (3) amend Resolve's 2001 Stock Incentive Plan to restore the number of
shares which may be issued under the plan to 3,000,000. These actions became
effective on May 28, 2002.
10
The Board of Directors also agreed to waive the anti-dilution
provisions of Resolve's 6% convertible debentures due June 30, 2003 and to fix
the conversion price of such debentures at $.10 per share. It is also
negotiating with holders of 18% subordinated notes to adjust the conversion
price of their notes. At this time no agreement has been reached.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are more fully described in Note A to our
financial statements. However, certain of our accounting policies are
particularly important to the portrayal of our financial position and results of
operations and require the application of significant judgment by our
management; as a result they are subject to an inherent degree of uncertainty.
In applying these policies, our management uses their judgment to determine the
appropriate assumptions to be used in the determination of certain estimates.
Those estimates are based on our historical, terms of existing contracts, our
observance of trends in the industry, information provided by our customers and
information available from other outside sources, as appropriate. Our
significant accounting policies include:
Revenue cost recognition: We record our service revenues from our
customers at the time our temporary employees perform services on
customer assignments. We record revenues from permanent placement at
the time the customer agrees to hire a candidate we supply to them.
Consistent with industry practice, we are at risk for all employee
salaries and wages, employment-related taxes, workers compensation
insurance and other benefits we provide to the employee, whether or not
we are able to collect our accounts receivable from our customers.
Allowance for uncolletible accounts receivable: We estimate and provide
an allowance for uncollectible accounts receivable based on analysis
and age of our open accounts, our experience with the particular
customer, our own historical experience with bad debts, as well as
other information obtained from outside sources.
Workers compensation insurance: The cost of our workers compensation
insurance is based on premiums determined by our insurance carrier for
the particular type of service our employees provide to our customers,
modified by a factor computed based on our claims history. A
deterioration in our claims experience would result in increased
insurance costs for future salary and wages base. Although we attempt
to estimate our future liability, often it is the result of
unanticipated claims for work related injuries.
Long-lived assets: We depreciate property and equipment over the
respective asset's estimated useful life. We determine the useful lives
of each asset based of how long we determine the asset will generate
revenue or has a useful economic life. We review the remaining useful
life of the assets annually to ascertain that our estimate is still
valid. If we determine the useful lives has materially changed, we
either change the useful life of the assets or in some cases, may write
the asset if we determined the asset has exhausted its useful life.
Income taxes: As part of the process of preparing our financial
statements, we are required to estimate our income taxes. This process
involved estimating our actual current tax exposure together with
assessing temporary differences resulting from differing treatment of
specific items, such as depreciation, allowance for uncollectible
accounts receivable and others. These differences result in deferred
tax assets and liabilities. We must then assess the likelihood that our
deferred tax assets will be recovered from future taxable income, and
to the extent we believe that recovery is not likely, we must establish
a valuation allowance. To the extent we establish a valuation allowance
or increase the allowance in a period, we must include an expense
within the tax provision in the statement of operations.
11
We recorded a valuation allowance of $112,600 as of December 31, 2001
due to uncertainties relating to our ability to utilize some of our
deferred tax assets, consisting primarily of net operating losses
carried forward to the period over which they could be recoverable. In
the event that actual results differ from these estimates or we adjust
these estimates in future periods, we may need to establish an
additional valuation allowance which could materially impact our
financial position and results of operations.
RESULTS OF OPERATIONS
For the six months ended June 30, 2002
Revenues for the six months ended June 30, 2002 compared to 2001
decreased from $322,991 to $185,104 or a 43% decrease reflecting a slow down in
the industry and in the economy, especially subsequent to the September 11, 2001
disaster.
During the same periods cost of revenues decreased from $241,068 to
$132,524 reflecting a commensurate decrease in relative costs of providing
services to our customers. The major components of costs of revenues decreased
as follows: labor, $214,189 to $116,862, workers compensation insurance
increased $3,138 to $3,832, and payroll taxes and benefits $23,743 to $11,830.
For this periods salaries increased slightly from $97,342 to $104,440.
The June 30, 2002 salaries include $43,200 in donated services by our CEO and
CFO, while other salaries decreased by $36,102 reflecting the commensurate
decrease in revenues.
During the same periods, legal and professional expenses increased from
$4,575 to $102,356, reflecting substantially higher legal expenses incurred to
discharge Company's legal obligations under the Securities Exchange Act of 1934,
and filing its registration statement under the Securities Act of 1933,
including mailings to shareholders, quarterly and annual reports, and the cost
of auditing the Company's financial statements for 2001. The June 30, 2002
amount also includes $43,350 in consulting fees paid to an unrelated party.
Additionally, for the same periods, public company expense increased by
$3,929 reflecting filing fees and expenses in connection with the Company's
filing of compliance reports with the Securities and Exchange Commission. Rent
expense increased from $12,320 to $16,351 reflecting the increase in rent as
well as allocation of common area maintenance when we operated two offices. One
office was closed. Insurance increased by $4,296 to $4,927, reflecting a more
adequate level of coverage than previously available.
Other expenses decreased: Penalties decreased by $19,638 reflecting
better cash management and better funding. Advertising decreased from $12,341 to
$4,489, reflecting a cost reduction program and a more targeted advertising
program, as well as a lower level of operations.
12
For the three months ended June 30, 2002
Revenues for the three months ended June 30, 2002 compared to 2001
increased from $147,116 to $99,564 or a 32% decrease reflecting a slow down in
the industry and in the economy, especially subsequent to the September 11, 2001
disaster.
During the same periods cost of revenues decreased from $110,073 to
$77,066 reflecting a commensurate decrease in relative costs of providing
services to our customers. The major components of costs of revenues decreased
as follows: labor decreased from $96,509 to $65,653; workers compensation
insurance increased $2,341 to $3,477, and payroll taxes and benefits decreased
from $10,740 to $7,936.
For this period salaries increased from $47,935 to $55,315. The June
30, 2002 amount included $23,400 in services donated by our CEO and CFO. Other
salaries actually decreased by $16,020 reflecting a commensurate decrease in
revenue activity for the periods..
During the same period, legal and professional expenses increased by
$40,371, reflecting substantially higher legal expenses incurred to discharge
our legal obligations under the Securities Exchange Act of 1934, including
mailings to shareholders, quarterly and annual reports, and the cost of auditing
the our financial statements for 2001.
Additionally, for the same periods, public company expense increased by
$2,229 reflecting filing fees and expenses in connection with the Company's
filing of compliance reports with the Securities and Exchange Commission. Rent
expense for the periods remained substantially the same. Insurance decreased by
$3,620, reflecting a lower level of operations and coverage for the periods.
Repairs and maintenance expenses decreased by $1,696 reflecting a lower lever of
activity for the period.
Other expenses decreased: Advertising decreased $3,308 reflecting a
cost reduction program and a more targeted advertising program.
LIQUIDITY AND CAPITAL RESOURCES
In March 2002, our Board of Directors authorized the sale of up to
$250,000 of its 18% Subordinated Convertible Notes due October 1, 2002. We have
the option to extend the maturity date for up to two successive three
month-periods ending January 1, 2003 and April 1, 2003. The holders have the
option to convert the principal and interest into our common stock at $2 per
share. As of March 31, 2002, we received $100,000 of proceeds from the sale of
two such notes.
On June 24, 2002, these notes were cancelled in exchange for the
issuance of 2,500,000 units. The units consisted of one share of our common
stock and one 5-year warrant.
We also borrowed approximately $75,000 from officers, directors and
shareholders without evidence of promissory notes or interest, of which $60,000
were cancelled in exchange for the issuance of 1,500,000 units, consisting of
one share of our common stock and one 5-year warrant.
13
During the three months ended June 30, 2002, we borrowed $40,000 from
an unrelated individual evidenced by a promissory notes with interest at 12% per
annum. This debt is secured by our accounts receivables.
At the current level of operations we do not have sufficient resources
on hand, including cash and accounts receivables to operate for the next 12
months, without additional sources of capital. We are exploring financing
alternatives including but not limited to selling additional equity, bank or
private borrowing, or from officers, directors or shareholders. We do not have
any commitments in this regard and no assurance can be given that our financing
efforts will be successful.
At August 19, 2002, we had no material commitments for capital
expenditures.
Part II Other Information
Item 2. Changes in Securities
On June 24, 2002, we issued 5,000,000 units to 19 accredited investors
pursuant to Rule 506 of Regulation D. The units each consisted of one share of
common stock and one warrant. The consideration we received consisted of cash,
the notes described above, relieving us from an obligation to repay certain debt
or a combination of these items equal to $.04 per unit for an aggregate of
$200,000. Of the $200,000 received, $40,000 was in cash, $100,000 was in
cancellation of 18% promissory notes and we were relieved of $60,000 of debt.
The securities were offered by our directors and no commissions were paid.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification by Chief Executive Officer
99.2 Certification by Chief Financial Officer
(b) Reports on Form 8-K
None
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RESOLVE STAFFING, INC.
Dated: August 4, 2003 /s/ Cristino L. Perez
------------------------------
By: Cristino L. Perez
Chief Financial Officer
15
CERTIFICATIONS
I, Cristino L. Perez, Principal Executive Officer and Chief Financial Officer,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB/A of Resolve Staffing,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
August 4, 2003
/s/ Christino L. Perez
- ------------------------
Name: Cristino L. Perez
Title: Principal Executive Officer and
Chief Financial Officer