U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2005
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______
Commission File No. 000-23967
MEDICAL STAFFING SOLUTIONS, INC.
--------------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 91-2135006
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
8150 Leesburg Pike, Suite 1200, Vienna, Virginia 22182
- ------------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
(703) 641-8890
--------------
(Issuer's Telephone Number, Including Area Code)
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 |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as to the latest practicable date:
OUTSTANDING SHARES ON
CLASS May 11, 2005
----- ------------
Common Stock 159,758,089
PART I
ITEM 1. FINANCIAL STATEMENTS
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
March 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents $ 1,567,195
Accounts receivable, net of allowance for doubtful accounts of $46,096 1,229,936
Prepaid expenses 31,080
-----------
Total Current Assets 2,828,211
-----------
Fixed assets, net of depreciation 55,103
Loan commitment fees, net 52,500
Deposits 55,643
-----------
TOTAL ASSETS $ 2,991,457
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
Current Liabilities:
Note payable - current portion $ 764,763
Prommissory note - Standby Equity Distribution Agreement 1,300,000
Due to related parties 83,333
Accounts payable and accrued expenses 857,298
Loan payable - Officer / Litigation settlement payable 63,000
-----------
Total Current Liabilities 3,068,394
-----------
Total Liabilities 3,068,394
-----------
STOCKHOLDERS' (DEFICIT)
Preferred Stock, $.001 Par Value; 30,000,000 shares authorized
0 shares issued and outstanding --
Common Stock, $.001 Par Value; 300,000,000 shares authorized
151,788,053 shares issued and outstanding 151,788
Additional Paid-in-Capital 5,546,468
Deficit (5,775,193)
-----------
Total Stockholders' (Deficit) (76,937)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 2,991,457
===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
1
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
2005 2004
---- ----
OPERATING REVENUES
Revenue $ 1,646,090 $ 1,685,016
COST OF SALES 1,125,561 1,315,628
------------- -------------
GROSS PROFIT 520,529 369,388
------------- -------------
OPERATING EXPENSES
Administrative payroll, benefits and overhead costs 518,266 561,784
General and administrative expenses 267,949 237,038
Depreciation and amortization 18,711 3,401
------------- -------------
Total Operating Expenses 804,926 802,223
------------- -------------
(LOSS) BEFORE OTHER INCOME (EXPENSES) (284,397) (432,835)
OTHER INCOME (EXPENSES)
Interest income 5,118 599
Interest expense (67,385) (34,877)
------------- -------------
Total Other Income (Expenses) (62,267) (34,278)
------------- -------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES $ (346,664) $ (467,113)
Provision for Income Taxes -- --
------------- -------------
NET LOSS APPLICABLE TO COMMON SHARES $ (346,664) $ (467,113)
============= =============
NET LOSS PER BASIC AND DILUTED SHARES $ (0.00257) $ (0.01072)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 134,732,159 43,592,227
============= =============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
2
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
2005 2004
---- ----
CASH FLOW FROM OPERTING ACTIVIITES
Net loss $ (346,664) $ (467,113)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 18,711 3,401
Common stock issued for services -- 1,400
Common stock issued for interest payments 62,142 --
Changes in assets and liabilities
Decrease in accounts receivable 247,901 48,451
(Increase) decrease in prepaid expenses 22,030 (40,567)
(Increase) in deposits (3,000) --
Increase in accounts payable and
and accrued expenses 23,541 100,581
----------- -----------
Total adjustments 371,325 113,266
----------- -----------
Net cash provided by (used in) operating activities 24,661 (353,847)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures -- (3,422)
(Increase) decrease in amounts due related parties (11,659) 30,007
----------- -----------
Net cash provided by (used in) investing activities (11,659) 26,585
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITES
Common stock issuances for cash - net of expenses 897,666 75,017
Proceeds (payments) from convertible debentures - net 935,000 250,000
Net payments from loan payable - officer / litigation
settlement payable (2,000) (25,000)
Net proceeds (payments) of notes payable (304,821) (46,314)
----------- -----------
Net cash provided by financing activities 1,525,845 253,703
----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 1,538,847 (73,559)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 28,348 77,068
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,567,195 $ 3,509
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest expense $ 53,954 $ 34,877
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Common stock issued for services $ -- $ 1,400
=========== ===========
Common stock issued for loan commitment fees $ 160,000 $ 105,000
=========== ===========
Common stock issued for interest payment $ 62,142 $ --
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005 AND 2004
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The condensed consolidated unaudited interim financial statements
included herein have been prepared, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission
("SEC"). The condensed consolidated financial statements and notes
are presented as permitted on Form 10-QSB and do not contain
information included in the Company's annual consolidated statements
and notes. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be
read in conjunction with the December 31, 2004 audited financial
statements and the accompanying notes thereto. While management
believes the procedures followed in preparing these condensed
consolidated financial statements are reasonable, the accuracy of
the amounts are in some respects dependent upon the facts that will
exist, and procedures that will be accomplished by the Company later
in the year.
These condensed consolidated unaudited financial statements reflect
all adjustments, including normal recurring adjustments which, in
the opinion of management, are necessary to present fairly the
consolidated operations and cash flows for the periods presented.
Medical Staffing Solutions, Inc. (the "Company" or "MSSI"), was
incorporated in the State of Nevada on June 21, 2001. The Company
had no revenues, operations and was considered a development stage
company until September 26, 2003 when they entered into a reverse
merger with TeleScience International, Inc. Prior to the
transaction, MSSI had 10,499,333 shares of common stock. Upon the
merger, MSSI cancelled 9,953,333 of these shares and issued
2,200,000 shares to acquire TeleScience for 100% of the outstanding
stock of TeleScience.
Upon the share exchange, the Board of Directors approved a stock
dividend in the amount of 14 for 1 stock or 1400% on September 29,
2003, increasing the outstanding shares of the Company to
41,200,005. As of March 31, 2005, the Company had 151,788,053 shares
of common stock issued and outstanding.
4
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
(CONTINUED)
For accounting purposes, the transaction has been accounted for as a
reverse acquisition under the purchase method of accounting.
Accordingly, TeleScience will be treated as the continuing entity
for accounting purposes, and the condensed consolidated financial
statements presented herein are those of TeleScience.
The Company is a provider of medical personnel to state and federal
government agencies, primarily hospital and medical facilities. The
Company's business plan anticipates diversification into building up
a technology division, which includes developing a Homeland Security
subdivision. The Company expensed some start-up costs relating to
this in 2003.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed 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
disclosures 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.
5
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Revenue and Cost Recognition
Revenue is recognized under the accrual method of accounting when
the services are rendered rather than when cash is collected for the
services provided.
Cost is recorded on the accrual basis as well, when the services are
incurred rather than paid for.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other
short-term investments with an initial maturity of three months or
less to be cash equivalents.
The Company maintains cash and cash equivalent balances at several
financial institutions that are insured by the Federal Deposit
Insurance Corporation up to $100,000. As of March 31, 2005, the
Company had deposits of $1,510,914 in excess of the insured limits.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed primarily
using the straight-line method over the estimated useful life of the
assets.
Furniture and fixtures 7 Years
Office equipment 5 Years
Income Taxes
The income tax benefit is computed on the pretax loss based on the
current tax law. Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax basis of
assets and liabilities and their financial reporting amounts at each
year-end based on enacted tax laws and statutory tax rates.
6
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Advertising
Costs of advertising and marketing are expensed as incurred.
Advertising and marketing costs are included in general and
administrative costs in the condensed consolidated statements of
operations for the three months ended March 31, 2005 and 2004,
respectively.
Fair Value of Financial Instruments
The carrying amount reported in the condensed consolidated balance
sheet for cash and cash equivalents, accounts payable and accrued
expenses approximate fair value because of the immediate or
short-term maturity of these financial instruments. The carrying
amount reported for notes payable approximates fair value because,
in general, the interest on the underlying instruments fluctuates
with market rates.
Start-up Costs
In accordance with Statement of Position 98-5, "Accounting for
Start-up Costs", the Company has expensed all of their costs
relating to the start-up of their Homeland Security division in the
period in which those costs related to. The Company expensed
approximately $0, $0 and $200,000 as of March 31, 2005, 2004 and
2003, respectively, and these costs are included in the accompanying
condensed consolidated statements of operations.
Deferred Financing Fees
In March 2004, the Company issued 750,000 shares of common stock
valued at $105,000 as a commitment fee in connection with the
Standby Equity Distribution Agreement. The Standby Equity
Distribution Agreement is for a period of 24-months, and commencing
April 2004, the Company began amortizing this deferred financing fee
at the rate of $4,375 per month. Amortization for the three months
ended March 31, 2005 and 2004 is $13,125 and $0, respectively.
7
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Earnings (Loss) Per Share of Common Stock
Historical net income (loss) per common share is computed using the
weighted average number of common shares outstanding. Diluted
earnings per share (EPS) include additional dilution from common
stock equivalents, such as stock issuable pursuant to the exercise
of stock options and warrants. Common stock equivalents are not
included in the computation of diluted earnings per share when the
Company reports a loss because to do so would be antidilutive for
the periods presented.
The following is a reconciliation of the computation for basic and
diluted EPS:
March 31, March 31,
2005 2004
------------- -------------
Net Loss ($ 346,664) ($ 467,113)
------------- -------------
Weighted-average common shares
outstanding (Basic) 134,732,159 43,592,227
Weighted-average common stock equivalents:
Stock options and warrants -- --
------------- -------------
Weighted-average common shares
outstanding (Diluted) 134,732,159 43,592,227
============= =============
Options and warrants outstanding to purchase stock were not included
in the computation of diluted EPS because inclusion would have been
antidilutive. As of March 31, 2005, there were no outstanding
options or warrants available.
Reclassifications
Certain amounts for the three months ended March 31, 2004 have been
reclassified to conform to the presentation of the March 31, 2005
amounts. The reclassifications had no effect on net income for the
three months ended March 31, 2004.
8
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements
In September 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under
the new rules, the pooling of interests method of accounting for
business combinations are no longer allowed and goodwill and
intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. The Company
adopted these new standards effective January 1, 2002.
On October 3, 2001, the FASB issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"), which is applicable to
financial statements issued for fiscal years beginning after
December 15, 2001. The FASB's new rules on asset impairment
supersede SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," and portions of
Accounting Principles Board Opinion 30, "Reporting the Results of
Operations." This Standard provides a single accounting model for
long-lived assets to be disposed of and significantly changes the
criteria that would have to be met to classify an asset as
held-for-sale. Classification as held-for-sale is an important
distinction since such assets are not depreciated and are stated at
the lower of fair value and carrying amount. This Standard also
requires expected future operating losses from discontinued
operations to be displayed in the period (s) in which the losses are
incurred, rather than as of the measurement date as presently
required.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. This statement rescinds SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt, and an amendment of
that statement, SFAS No. 44, Accounting for Intangible Assets of
Motor Carriers, and SFAS No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements.
9
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
This statement amends SFAS No. 13, Accounting for Leases, to
eliminate inconsistencies between the required accounting for
sales-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sales-leaseback transactions.
Also, this statement amends other existing authoritative
pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions.
Provisions of SFAS No. 145 related to the rescissions of SFAS No. 4
were effective for the Company on November 1, 2002 and provisions
affecting SFAS No. 13 were effective for transactions occurring
after May 15, 2002. The adoption of SFAS No. 145 did not have a
significant impact on the Company's results of operations or
financial position.
In June 2003, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This statement covers
restructuring type activities beginning with plans initiated after
December 31, 2002. Activities covered by this standard that are
entered into after that date will be recorded in accordance with
provisions of SFAS No. 146. The adoption of SFAS No. 146 did not
have a significant impact on the Company's results of operations or
financial position.
In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure, an amendment of
FASB Statement No. 123" ("SFAS 148"). SFAS 148 amends FASB Statement
No. 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for an entity that voluntarily
changes to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of
that Statement to require prominent disclosure about the effects on
reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. Finally, this
Statement amends Accounting Principles Board ("APB") Opinion No. 28,
"Interim Financial Reporting", to require disclosure about those
effects in interim financial information. SFAS 148 is effective for
financial statements for fiscal years ending after December 15,
2002.
10
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
The Company will continue to account for stock-based employee
compensation using the intrinsic value method of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," but has adopted the
enhanced disclosure requirements of SFAS 148.
In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities",
which amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under FASB Statement No.
133, Accounting for Derivative Instruments and Hedging Activities.
This Statement is effective for contracts entered into or modified
after June 30, 2003, except for certain hedging relationships
designated after June 30, 2003. Most provisions of this Statement
should be applied prospectively. The adoption of this statement did
not have a significant impact on the Company's results of operations
or financial position.
In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity". This Statement establishes standards for
how an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). This
statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003,
except for mandatorily redeemable financial instruments of nonpublic
entities, if applicable. It is to be implemented by reporting the
cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim period
of adoption. The adoption of this statement did not have a
significant impact on the Company's results of operations or
financial position.
11
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. FIN 45
requires a company, at the time it issues a guarantee, to recognize
an initial liability for the fair value of obligations assumed under
the guarantees and elaborates on existing disclosure requirements
related to guarantees and warranties. The recognition requirements
are effective for guarantees issued or modified after December 31,
2002 for initial recognition and initial measurement provisions. The
adoption of FIN 45 did not have a significant impact on the
Company's results of operations or financial position.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN
46"), Consolidation of Variable Interest Entities, an Interpretation
of ARB No. 51. FIN 46 requires certain variable interest entities to
be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at
risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual period beginning after June
15, 2003. The adoption of FIN 46 did not have a significant impact
on the Company' results of operations or financial position.
12
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
On December 16, 2004, the Financial Accounting Standards Board
("FASB") published Statement of Financial Accounting Standards No.
123 (Revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123R
requires that compensation cost related to share-based payment
transactions within the scope of SFAS 123R include stock options,
restricted stock plans, performance-based awards, stock appreciation
rights, and employee share purchase plans. The provisions of SFAS
123R are effective for small business issuers as of the first
interim period that begins after December 15, 2005. Accordingly, the
Company will implement the revised standard in the fourth quarter of
fiscal year 2005. Currently, the company accounts for its
share-based payment transactions under the provision of APB 25,
which does not necessarily require the recognition of compensation
cost in the financial statements. Management is assessing the
implications of this revised standard, which may materially impact
the Company's results of operations in the fourth quarter of fiscal
year 2005 and thereafter.
NOTE 3- ACCOUNTS RECEIVABLE
A majority of the Company's revenues are derived from government
contracts for personnel at various state and federal agencies
including hospitals, medical facilities and penitentiaries. As such,
payments for services rendered are based on negotiated terms. The
Company does provide for an allowance of doubtful accounts and often
evaluates receivables for collectibility. At March 31, 2005, the
Company has $1,276,032 due to them for their services. Additionally,
the Company has established an allowance for doubtful accounts of
$46,096 at March 31, 2005.
The accounts receivable are being used as collateral on a line of
credit the Company has with a factor (See Note 5).
13
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 4- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 31, 2005:
Furniture, fixtures and equipment $153,065
Less: accumulated depreciation 97,962
--------
Net book value $ 55,103
========
Depreciation expense for the three months ended March 31, 2005 and
2004 was $5,586 and $3,401, respectively.
NOTE 5- NOTES PAYABLE
In May 2002, the Company entered into a line of credit agreement
with a factor. The loan, which is due on demand bears interest at
prime plus 1.00%. The factor lends up to 90% of the receivable
balance to the Company, and receives payment directly on the
outstanding receivables and the remaining balance is remitted to the
Company. The outstanding balance at March 31, 2005 was $764,763. The
balance is reflected net of a 10% reserve that the factor has
established which is adjusted on each funding.
In May 2002, the Company borrowed $220,000 from an individual to be
used in developing the Company's business plan, including the
Homeland Security division. The note payable was non-interest
bearing until May 2003 and now bears interest at 7%. The note is due
on demand. At March 31, 2005, the balance had been paid off.
In 1997, the Company borrowed $300,000 plus interest at 10% from an
individual and had started repayments of that note with interest and
paid down the balance to $163,000. The Company received notice in
2002 that the lender filed a lawsuit against the Company, and in
2002 recorded the full settlement amount due the lender. The
remaining balance of $163,000 is included in that settlement amount
as of December 2002 (see Note 11). The amount was paid back through
a private stock transaction by the officer in November 2003.
14
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 6- INVESTMENT
Beginning in 2001, the Company started investing in a private
airstrip in Branson, Missouri. The project, after the Company funded
approximately $387,269 as of March 31, 2004, ran out of funding, and
the project has since ceased. Management has reserved an allowance
for the entire amount, as the investment value is not known.
NOTE 7- DUE TO RELATED PARTIES
The Company had outstanding at March 31, 2005, $83,333 in
non-interest bearing amounts to related parties. These amounts have
no specific repayment terms, and were provided to the Company to
cover some of the costs of completing the merger. These amounts are
reflected in the condensed consolidated balance sheet as current
liabilities.
The Company has also advanced related parties certain amounts,
mostly in the form of employee advances. There was $10,050 due at
March 31, 2005 for these advances. These amounts have been included
in the accounts receivable.
NOTE 8- PROVISION FOR INCOME TAXES
Deferred income taxes will be determined using the liability method
for the temporary differences between the financial reporting basis
and income tax basis of the Company's assets and liabilities.
Deferred income taxes will be measured based on the tax rates
expected to be in effect when the temporary differences are included
in the Company's consolidated tax return. Deferred tax assets and
liabilities are recognized based on anticipated future tax
consequences attributable to differences between financial statement
carrying amounts of assets and liabilities and their respective tax
bases.
At March 31, 2005, deferred tax assets approximated the following:
Deferred tax assets $ 1,744,000
Less: valuation allowance (1,744,000)
-----------
Net deferred tax assets $ -0-
===========
15
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 8- PROVISION FOR INCOME TAXES (Continued)
At March 31, 2005, the Company had an accumulated deficit in the
amount of $5,775,193, available to offset future taxable income
through 2023. The Company established valuation allowances equal to
the full amount of the deferred tax assets due to the uncertainty of
the utilization of the operating losses in future periods.
NOTE 9- STOCKHOLDERS' EQUITY (DEFICIT)
The Company has two classes of stock; a preferred class with a par
value of $.001 and 30,000,000 shares authorized, and a common class
with a par value of $.001 and 300,000,000 shares authorized. These
levels were increased by the Board of Directors on March 9, 2004
from 5,000,000 and 50,000,000, respectively.
The Company has not issued any shares of preferred stock.
The Company has 151,788,053 common shares issued and outstanding as
of March 31, 2005.
Upon the merger, the Company cancelled 9,953,333 of the 10,499,333
shares then issued and outstanding and issued 2,200,000 shares to
acquire 100% of the outstanding stock of TeleScience.
Upon the share exchange, the Board of Directors of the Registrant
approved a stock dividend in the amount of 14 for 1 or 1400% on
September 29, 2003, increasing the outstanding shares of the Company
to 41,200,005.
On January 27, 2004 and February 18, 2004, the Company issued
2,000,000 S-8 shares on each date for a total of 4,000,000 shares.
The price of these shares ranged between $.10 and $.16 for a total
value of $505,000, which was reflected as a subscription receivable
and was collected in the second quarter of 2004.
16
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 9- STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
The Company paid a one-time placement agent fee of 10,000 restricted
shares of common stock equal to approximately $1,400 based on the
Company's stock price on March 11, 2004.
The Company issued 2,416,667 shares of common stock for $362,500 in
the first quarter of 2004.
The Company issued shares in March 2004 to Cornell Capital Partners,
LP as a commitment fee for the Standby Equity Distribution
Agreement. The value of these shares is $105,000 and has been
reflected as loan commitment fees in the condensed consolidated
balance sheet at March 31, 2005. Since the effective date of the
registration statement, the Company has recognized $52,500 of
amortization.
The Company issued 27,814,409 shares of common stock for $1,065,000
and 1,464,261 shares for the conversion of interest costs in the
amount of $62,142.
NOTE 10- LOAN PAYABLE - OFFICER
The Company was party to a claim pursuant to which an individual was
seeking damages under an agreement the Company entered into in 2002.
The Company eventually settled this claim, and consequently recorded
a liability for the settled amount of $1,092,156, which included
attorney's fees. The payout of this settlement was to be over
forty-two months in semi-monthly installments of $12,500 commencing
February 2003. The settlement accrued interest at 12% upon any
default of the agreement. As part of this agreement the individual
can seek no further damages against the Company.
17
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 10- LOAN PAYABLE - OFFICER (Continued)
The Company paid $216,236 of this amount, and then in November 2003,
the President of the Company in a private stock transaction, signed
over personal shares of Medical Staffing Solutions, Inc. stock in
consideration for this liability. As such, the Company has recorded
a loan payable to the President for the unpaid liability at that
time, $875,920. The Company has paid down this liability and the
total outstanding at March 31, 2005 is $63,000.
NOTE 11- COMMITMENTS
The Company had established a 401(k) Plan for its employees and
agreed to match a portion of the contribution. The expense for the
Company for the three months ended March 31, 2003 was $26,830.
Effective January 1, 2004, the Company discontinued its matching
portion of the contribution.
In October 2003, the Company extended their agreement with the
California State Department of Corrections for Contract Nursing
Staff. This agreement has an annual estimated value of 2.5 million
dollars.
In November 2003, the Company was awarded a three-year 2.6 million
dollar contract with the Department of Health and Human Services to
provide nursing staff to the U.S. Public Health Service in support
of the National Hansen's Disease Programs based in Louisiana. This
is the second such contract won by the Company.
NOTE 12- STANDBY EQUITY DISTRIBUTION AGREEMENT
On March 11, 2004, the Company entered into a Standby Equity
Distribution Agreement with Cornell Capital Partners. Under the
agreement, the Company may issue and sell to Cornell Capital
Partners common stock for a total purchase price of up to $15.0
million. The purchase price for the shares is equal to 100% of the
market price, which is defined as the lowest volume weighted average
price of the common stock during the five trading days following the
notice date.
18
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 12- STANDBY EQUITY DISTRIBUTION AGREEMENT (Continued)
The amount of each advance is subject to an aggregate maximum
advance amount of $250,000, with no advance occurring within seven
trading days of a prior advance. Cornell Capital Partners received a
one-time commitment fee of 750,000 shares of the Company's common
stock.
Cornell Capital Partners is entitled to retain a fee of 5% of each
advance. In addition, the Company entered into a placement agent
agreement with Newbridge Securities Corporation, a registered
broker-dealer. Pursuant to the placement agent agreement, the
Company paid a one-time placement agent fee of 10,000 restricted
shares of common stock equal to approximately $1,400 based on the
Company's stock price on March 11, 2004.
In January 2005, the Company incurred additional financing fees
valued at $160,000. The Company charged the financing fees and
associated legal fees against paid-in-capital in connection with the
equity financing agreement.
NOTE 13- GOING CONCERN
On March 11, 2004, the Company entered into a Standby Equity
Distribution Agreement with Cornell Capital Partners. Under the
agreement, the Company may issue and sell to Cornell Capital
Partners common stock for a total purchase price of up to $15.0
million. The purchase price for the shares is equal to 100% of the
market price, which is defined as the lowest volume weighted average
price of the common stock during the five trading days following the
notice date.
As shown in the accompanying condensed consolidated financial
statements, the Company incurred substantial net losses for the
years ended December 31, 2004 and 2003, and additional losses in the
three months ended March 31, 2005. There is no guarantee whether the
Company will be able to generate enough revenue and/or raise capital
to support those operations. This raises doubt about the Company's
ability to continue as a going concern.
Management also states that they believe that they can improve
operations and raise the appropriate funds needed through their
recent contracts the Company has entered into in the last few
months.
19
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 13- GOING CONCERN (Continued)
On January 15, 2004, the Company received a term sheet from Cornell
Capital Partners, LP regarding a Standby Equity Distribution
Agreement. Under this agreement, and upon an effective registration
of the shares, Cornell Capital Partners will commit to purchase up
to 15 million dollars of the Company stock pursuant to the terms
agreed upon.
Cornell Capital Partners, LP and the Company entered into a
Convertible Debenture Agreement in the first quarter 2005 for
$600,000. Cornell Capital Partners had originally advanced $250,000
of this amount at closing and advanced the remaining $350,000 upon
the filing of the registration statement, which occurred in April
2004. The Company also negotiated a promissory note in the amount of
$2,000,000 during the first quarter of 2005. The balance due at
March 31, 2005 was $1,300,000. For the three months ended March 31,
2005, the Company issued 1,464,261 shares of common stock to Cornell
Capital Partners under the Standby Equity Distribution Agreement,
the proceeds of which were used to satisfy $62,142 of interest due
under promissory notes outstanding.
On January 5, 2005, the Company entered into a third promissory note
for $2,000,000 with Cornell Capital Partners and placed 40,000,000
shares of common stock into escrow, per the promissory note. As of
March 31, 2005, 19,663,256 shares still remain in escrow.
The condensed consolidated financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Introduction - Forward Looking Statements
This Form 10-QSB contains "forward-looking statements" relating to Medical
Staffing Solutions, Inc. ("Medical Staffing" or the "Company") which represent
Medical Staffing's current expectations or beliefs including, but not limited
to, statements concerning Medical Staffing's operations, performance, financial
condition and growth. For this purpose, any statements contained in this Form
10-QSB that are not statements of historical fact are forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may", "anticipation", "intend", "could", "estimate", or "continue" or the
negative or other comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, such as credit losses, dependence on management and key
personnel, variability of quarterly results, and the ability of Medical Staffing
to continue its growth strategy and competition, certain of which are beyond
Medical Staffing's control. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual
outcomes and results could differ materially from those indicated in the
forward-looking statements.
Any forward-looking statement speaks only as of the date on which such
statement is made, and Medical Staffing undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, cause actual results to differ materially from those
contained in any forward-looking statements.
General
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements, and the Notes thereto included herein.
The information contained below includes statements of Medical Staffing's or
management's beliefs, expectations, hopes, goals and plans that, if not
historical, are forward-looking statements subject to certain risks and
uncertainties that could cause actual results to differ materially from those
anticipated in the forward-looking statements. For a discussion on
forward-looking statements, see the information set forth in the Introductory
Note to this Annual Report under the caption "Forward Looking Statements", which
information is incorporated herein by reference.
Going Concern
As reflected in the Company's financial statements as of March 31, 2005
the Company had an accumulated deficit of $5,775,193 and its working capital
deficiency of $240,183 raises doubt about its ability to continue as a going
concern. The ability of the Company to continue as a going concern is dependent
on the Company's ability to raise additional debt or capital, including the
ability to raise capital under the Standby Equity Distribution Agreement. The
financial statements for March 31, 2005, do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
Critical Accounting Policies And Estimates
Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, or
GAAP. These accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments and
assumptions upon which we rely are reasonably based upon information available
to us at the time that these estimates, judgments and assumptions are made.
These estimates, judgments and assumptions can affect the reported amounts of
assets and liabilities as of the date of the financial statements, as well as
the reported amounts of revenue and expenses during the periods presented. To
the extent there are material differences between these estimates, judgments and
assumptions and actual results, our financial statements will be affected. The
significant accounting policies that we believe are the most critical to aid in
fully understanding and evaluating our reported financial results include the
following:
21
o Revenue recognition;
o Allowance for doubtful accounts; and
o Accounting for income taxes.
In many cases, the accounting treatment of a particular transaction is
specifically dictated by GAAP and does not require management's judgment in its
application. There are also areas in which management's judgment in selecting
among available alternatives would not produce a materially different result.
Our senior management has reviewed these critical accounting policies and
related disclosures. See Notes to Condensed Consolidated Financial Statements,
which contain additional information regarding our accounting policies and other
disclosures required by GAAP.
Revenue Recognition
Revenue on time-and-materials contracts is recognized based upon hours
incurred at contract rates plus direct costs. Revenue on fixed-price contracts
is recognized on the percentage-of-completion method based on costs incurred in
relation to total estimated costs. Anticipated losses are recognized as soon as
they become known. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.
Allowance For Doubtful Accounts
We determine our allowance by considering a number of factors, including
the length of time trade accounts receivable are past due, our previous loss
history, the customer's current ability to pay its obligation to us, and the
condition of the general economy and the industry as a whole. We make judgments
as to our ability to collect outstanding receivables based on these factors and
provide allowances for these receivables when collections become doubtful.
Provisions are made based on specific review of all significant outstanding
balances.
Accounting For Income Taxes
We account for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
Under the asset and liability method of SFAS No. 109, deferred income taxes are
recognized for the expected future tax consequences of temporary differences
between financial statement carrying amounts, and the tax bases of existing
assets and liabilities using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Any deferred tax asset has been reserved by the Company
with an offsetting valuation allowance adjustment.
Results Of Operations For The Quarter Ended March 31, 2005, Compared To Quarter
Ended March 31, 2004
Revenues
Revenues for the quarter ended March 31, 2005, were $1,646,090, a decrease
of $38,926 as compared to revenues of $1,685,016 for the quarter ended March 31,
2004. The decrease in revenues for the quarter ended March 31, 2005 was
primarily attributable to the completion of a significant government contracts
for the providing of services in the nursing industry to government facilities.
Cost Of Sales
Cost of sales for the quarter ended March 31, 2005 was approximately $1.13
million, or approximately 68% of revenues, as compared to approximately $1.32
million, or approximate 78% of revenues, for the quarter ended March 31, 2004.
The percentage decrease in cost of sales for the quarter ended March 31, 2005,
was primarily attributable to the fact that some labor cost was incurred and
recognized in prior periods (vacation and sick leave), but billed (and
respectively revenue recognized) in the first quarter of 2005.
22
Gross Profit
Gross profit for the quarter ended March 31, 2005, was $520,529, or 32% of
revenues, as compared to gross profit of $369,388, or 22% of revenues, for the
quarter ended March 31, 2004.
Operating Expenses
Operating expenses for the quarter ended March 31, 2005, were $804,926, or
49% of revenues, as compared to $802,223, or 48% of revenues, for the quarter
ended March 31, 2004. The increase in operating expenses for the quarter ended
March 31, 2005 was primarily attributable to increased cost of general and
administrative expenses and depreciation and amortization.
Other Expense
Other expense for the quarter ended March 31, 2005, was $62,267, as
compared to $34,278 for the quarter ended March 31, 2004. The increase in other
expense was due to an increase in interest expense.
Net Loss
The Company had a net loss of $346,664 for the three months ended March
31, 2005, as compared to a net loss of $467,113 for the three months ended March
31, 2004. The decrease of $120,449 was mainly attributable to the reduced cost
of sales.
Liquidity and Capital Resources
The Company's financial statements have been prepared on a going concern
basis that contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. The Company
incurred a net loss of $346,664 and $467,113 for the three months ended March
31, 2005 and 2004, respectively, and had an accumulated deficit of $5,775,193 at
March 31, 2005. Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management is planning to obtain
additional capital principally through the sale of equity securities. The
realization of assets and satisfaction of liabilities in the normal course of
business is dependent upon Medical Staffing obtaining additional equity capital
and ultimately obtaining profitable operations. However, the Company may not be
successful in these activities. Should any of these events not occur, the
accompanying consolidated financial statements will be materially affected.
The Company is at present meeting its current obligations from its monthly
cash flows and cash proceeds from sale of equity securities and debt, which
during 2003, 2004 and to date in 2005 has included cash from operations,
investor capital, loans from related parties and from other lenders. However,
due to insufficient cash generated from operations, the Company currently does
not internally generate cash sufficient to pay all of its incurred expenses and
other liabilities. As a result, the Company is dependent on investor capital and
loans to meet its expenses and obligations. Although investor funds and related
party loans have allowed the Company to meet its obligations in the recent past,
there can be no assurances that the Company's present methods of generating cash
flow will be sufficient to meet future obligations. Historically, the Company
has, from time to time, been able to raise additional capital from sales of its
capital stock, but there can be no assurances that the Company will be able to
raise additional capital in this manner.
Cash provided by operating activities was $24,661 for the three months
ended March 31, 2005, as compared to cash used in operating activities of
$353,847 for the same period in 2004. The decrease in cash used was due
primarily to the decreased loss from operations and the decrease in accounts
receivable.
Cash used in investing activities was $11,659 for the three months ended
March 31, 2005, as compared to cash provided by investing activities of $26,585
for the same period in 2004. The decrease in cash used for investing activities
was principally due to a decrease in amounts funded to related parties in the
first quarter of 2005.
23
Cash provided by financing activities was $1,525,845 for the quarter ended
March 31, 2005, as compared to $253,703 during the same period in 2004. This
increase in cash provided by financing activities was mainly due to the increase
in common stock issuances and proceeds from convertible debentures.
In May 2002, the Company entered into a line of credit agreement with a
factor. The loan, which is due on demand, bears interest at prime plus 1.00%.
The factor lends up to 90% of the receivable balance to the Company, and
receives payment directly on the outstanding receivables and the remaining
balance is remitted to the Company. The outstanding balance at March 31, 2005
was approximately $764,763. The balance is reflected net of a 10% reserve that
the factor has established which is adjusted on each funding.
Additionally, the Company maintains a small credit line with a bank. There
was no balance outstanding as of March 31, 2005.
In May 2002, the Company borrowed $220,000 from an individual to be used
in developing the Company's business plan, including the Homeland Security
operations. The note payable was non-interest bearing until May 2003 and bore
interest at 7% going forward. The note was fully paid in May 2004.
On March 11, 2004, the Company entered into a Securities Purchase
Agreement with Cornell Capital Partners. Under the Securities Purchase
Agreement, Cornell Capital Partners was obligated to purchase $600,000 of
secured convertible debentures from the Company. On March 11, 2004, Cornell
Capital Partners purchased $250,000 of convertible debentures. In April 2004,
Cornell Capital Partners purchased $350,000 of additional debentures. These
debentures accrued interest at a rate of 5% per year and were to mature two
years from the issuance date. The debentures were convertible into the Company's
common stock at the holders' option any time up to maturity at a conversion
price equal to the lower of (i) 115% of the closing bid price of the common
stock as of the closing date or (ii) 85% of the lowest closing bid price of the
common stock the five trading days immediately preceding the conversion date.
The debentures were secured by the assets of the Company. At maturity, the
Company had the option to either pay the holder the outstanding principal
balance and accrued interest or to convert the debentures into shares of common
stock at a conversion price similar to the terms described above. During the
year ended December 31, 2004, Cornell Capital Partners converted the entire
$600,000 in convertible debentures into 19,489,204 shares of common stock, which
included conversions of $16,678 in accured interest and the Company recognized
$108,760 of amortization of discount on the debenture conversions.
On March 11, 2004, the Company entered into a Standby Equity Distribution
Agreement with Cornell Capital Partners. Under the Standby Equity Distribution
Agreement, the Company may issue and sell to Cornell Capital Partners common
stock for a total purchase price of up to $15.0 million. The purchase price for
the shares is equal to 100% of the market price, which is defined as the lowest
volume weighted average price of the common stock during the five trading days
following the notice date. The amount of each advance is subject to an aggregate
maximum advance amount of $250,000, with no advance occurring within seven
trading days of a prior advance. Cornell Capital Partners received a one-time
commitment fee of 750,000 shares of the Company's common stock. Cornell Capital
Partners is entitled to retain a fee of 5% of each advance. In addition, the
Company entered into a placement agent agreement with Newbridge Securities
Corporation, a registered broker-dealer. Pursuant to the placement agent
agreement, the Company paid a one-time placement agent fee of 10,000 restricted
shares of common stock equal to approximately $1,400 based on the Company's
stock price on March 11, 2004.
On June 11, 2004, the Company received $1,000,000 in return for a
promissory note issued to Cornell Capital Partners. As of March 31, 2005 the
note has been fully paid.
On October 18, 2004, the Company received $315,000 in return for a
promissory note issued to Cornell Capital Partners. As of March 31, 2005 the
note has been fully paid.
On January 5, 2005, the Company received $2,000,000 in return for a
promissory note issued to Cornell Capital Partners and placed 40,000,000 shares
of its common stock into escrow under this promissory note. As of March 31,
2005, $1,300,000 remained outstanding. As of May 11, 2005, $1,500,000 remained
outstanding.
24
On April 26, 2005, the Company received $500,000 in return for a
promissory note issued to Cornell Capital Partners. As of May 11, 2005, $500,000
remained outstanding.
Through March 31, 2005, the Company has drawn $1,300,000 under the Standby
Equity Distribution Agreement issuing 55,336,744 shares of common stock. The
proceeds have been utilized to repay principal of the $1,000,000 promissory note
issued to Cornell Capital Partners on June 11, 2004 and the $315,000 promissory
note issued to Cornell Capital Partners on October 18, 2004, and the $2,000,000
promissory note issued to Cornell Capital Partners on January 5, 2005. Through
May 11, 2005, the Company has drawn down $2,315,000 under the Standby Equity
Distribution Agreement and the Company has issued 70,148,706 shares of common
stock to Cornell Capital Partners. As set forth above, these proceeds were used
to repay a portion of the promissory notes held by Cornell Capital Partners.
From time to time, the Company may evaluate potential acquisitions
involving complementary businesses, content, products or technologies.
Currently, the Company has entered into non-binding letters of intent to acquire
certain assets of A&T Systems, Inc., Staff Relief, Inc. and Nurses PRN, LLC
("Nurses PRN"). Of these, the Company has focused its attention on concluding
the Nurses PRN transaction which has proven to be far more difficult than
originally anticipated. While no time can be specified, the Company remains
confident of the near term successful conclusion of this asset acquisition. The
Company's future capital requirements will depend on many factors, such as the
success of our operations, economic conditions and other factors including the
results of future operations. If the Company is unable to raise sufficient funds
to meet its long-term capital needs, there is a risk that the Company will be
required to cease operations.
Plan Of Operations
The Company, through its TeleScience subsidiary, will continue to provide:
o medical staffing services,
o information technology and telecommunications services, and
o Homeland Security products and services.
TeleScience provides two categories of services:
o Medical Systems
o Technology
The Medical Systems operations specialize in the long-term staffing of
medical personnel, including physicians, nurses, technicians, and dental
assistants, for various federal and state government medical facilities
throughout the country. In 2005, the Company intends to expand to provide
long-term staffing of nurses (RNs and LPNs) to private hospitals in the
tri-state area (Virginia, Maryland, D.C.), as well as sections of Pennsylvania.
The Technology operations specialize in long-term professional consulting
and staffing of experienced and qualified IT personnel in the government and
private sectors. We provide systems integration and information technology (IT)
services. We also serve homeland security efforts with emergency equipment,
decontamination products, vehicles, and supplies within the federal government,
particularly the Department of Defense and the Veteran's Administration. The
Company is planning to do this through acquisitions in the private healthcare
field.
In May 2002, the Company was awarded a three-year $2.6 million dollar
contract with the Department of Health and Human Services to provide nursing
staff to the U.S. Public Health Service in support of the National Hansen's
Disease Programs based in Louisiana. This is the second such contract won by the
Company. This contract expires in May 2005 and the Company intends to
participate in the re-competition of the contract.
25
In October 2003, the Company extended their agreement with the California
State Department of Corrections for Contract Nursing Staff. This agreement has
an annual estimated value of $2.5 million dollars.
In September 2004, the Company signed new master contracts with the
California State Department of Corrections for Contract Nursing Staff. These
contracts, each a multiple award vendor award have estimated ceiling values of
$50 million and $4.11 million respectively and are effective for three years
starting October 1, 2004. These contracts allow the Company to compete for this
amount of business. The Company has not yet made any sales pursuant to these
contracts.
During 2004 the Company was awarded an extension of contracts for medical
services that the Company holds on a number of Air Force Bases and on which it
has performed during the period ending March 31, 2005.
Management Strategy
The Company's management has taken several initiatives to grow and expand
its current businesses of medical and technology services and to develop and
market its homeland security business.
Management Strategic Plan For Future Growth And Expansion
The Management's strategic plan for future growth and expansion is
fourfold: (1) expand its medical services into the private sector; (2) enhance
recruitment; (3) develop a homeland security marketing plan; and (4) acquire
suitable companies.
Expansion of Medical Services into the Private Sector The Company has
hired a seasoned executive to direct the Company's expansion of its medical
services into the private health care sector. This expansion will provide
long-term part-time staffing of registered nurses (RNs) and licensed
professional nurses (LPNs) to private health care facilities in the tri-state
area (Virginia, Maryland, DC), as well as parts of Pennsylvania. Examples of
such facilities are hospitals, nursing homes, private clinics, and assisted
living centers.
Enhancing Recruitment. The Company is embarking on a long-range plan for
recruiting ancillary and professional level staff for medical contracts. This
plan is geared toward expanding the business of the Company's most active
services, the Medical Systems Operations. The Medical Systems operations
presently provide long-term medical staffing services for a wide array of
military, federal, and state government health care facilities, such as
hospitals and clinics. Medical Staffing is also moving into similar staffing
arrangements with its private sector. The Company believes that our long-range
recruiting plans will support both of these initiatives. These initiatives arise
from the recognition of the opportunities provided by the well known and chronic
shortage of health care professionals -especially nurses (RNs) in the United
States.
Overseas Recruiting of Registered Nurses. The largest shortage in terms of
vacancies and intractability of recruiting domestic personnel exists in the
nursing profession. This profession, historically dominated by women, is
experiencing nurse shortages that are closely related to the opening of many
alternative career fields to a younger generation of women. This situation is
unlikely to change, leading to the intractability of attracting a large number
of American women into nursing. The Company perceives an opportunity in this
situation, which can provide business expansion for many years. It is the
Company's plan to aggressively recruit nurses from suitable countries overseas
over the next few years.
Domestic Recruiting of Health Care Professionals. The Company has a
constant need for recruiting medical and non-medical professionals for filling
positions created by newly won contracts or for filling vacancies caused by
turnover, terminations, or relocations. Medical Staffing is in the process of
establishing a national recruiting center in Vienna, Virginia, upon completion
of its pending acquisition of Nurses PRN, for the recruitment of health care
professionals to meet such needs on a regular basis, as well as its future
contract requirements on a proactive basis. However, the pending acquisition of
Nurse PRN may not close. Currently the Company uses newspaper and internet media
extensively for this purpose. The Company's website was updated in 2004 to
attract these professionals to apply for jobs directly for open or future
upcoming positions.
26
Acquisition of Suitable Companies. On December 1, 2004, Medical Staffing
entered into a non-binding letter of intent with Nurses PRN and the shareholders
of Nurses PRN. Pursuant to the letter of intent and upon the consummation of a
definitive agreement, Nurses PRN was to become a 100% wholly-owned subsidiary of
the Company. However, this transaction has now been restructured as an asset
purchase transaction. On December 30, 2004, Medical Staffing entered into a
non-binding letter of intent with A&T Systems, Inc. ("A&T"). Pursuant to the
letter of intent and upon the consummation of a definitive agreement, the
Company will acquire certain assets of A&T. The A&T letter of intent expired on
April 15, 2005. There can be no assurance that a definitive agreement will be
entered into with A&T or Nurses PRN. The Company has devoted considerable effort
to the negotiation and actions which must be accomplished in conjunction with
the Nurses PRN transaction and anticipates a successful conclusion to these
efforts.
Develop A Homeland Security Marketing Plan
The Company views this market sector as an opportunity for growth. The
Company has invested significant resources to build an infrastructure and to
generate an initial presence in this sector. During the first quarter of 2004,
the Company formed a strategic alliance with Mobile Healthcare Solutions (MHS),
a provider of deployable, mobile medical treatment facilities. The two companies
intend to partner for joint bidding on select projects in homeland security
arenas that fit their combined expertise. The Company's initial marketing plan
in the homeland security arena is to utilize the power and expertise of its
alliances to market its decontamination products. This marketing plan further
extends marketing of emergency equipment, decontamination products, vehicles,
and personal protective equipment to federal, state, and local governments. The
Company was named as one of the participants in a $1,000,000,000 IDIQ
(indefinite delivery indefinite quantity) contract in the homeland security area
with the state of Pennsylvania, and this contract has recently been renewed for
another year through June 30, 2006. The Company has not yet made any sales
pursuant to these contracts.
Recent Accounting Pronouncements
In September 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, the pooling of interests
method of accounting for business combinations are no longer allowed and
goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives. The Company adopted these new standards effective January 1, 2002.
On October 3, 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144") that is applicable to financial statements issued for
fiscal years beginning after December 15, 2001. The FASB's new rules on asset
impairment supersede SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," and portions of Accounting
Principles Board Opinion 30, "Reporting the Results of Operations." This
Standard provides a single accounting model for long-lived assets to be disposed
of and significantly changes the criteria that would have to be met to classify
an asset as held-for-sale. Classification as held-for-sale is an important
distinction since such assets are not depreciated and are stated at the lower of
fair value and carrying amount. This Standard also requires expected future
operating losses from discontinued operations to be displayed in the period (s)
in which the losses are incurred, rather than as of the measurement date as
presently required.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This statement rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that statement, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
statement amends SFAS No. 13, Accounting for Leases, to eliminate
inconsistencies between the required accounting for sales-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sales-leaseback transactions.
27
Also, this statement amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. Provisions of SFAS No. 145 related to
the rescissions of SFAS No. 4 were effective for the Company on November 1, 2002
and provisions affecting SFAS No. 13 were effective for transactions occurring
after May 15, 2002. The adoption of SFAS No. 145 did not have a significant
impact on the Company's results of operations or financial position.
In June 2003, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This statement covers restructuring
type activities beginning with plans initiated after December 31, 2002.
Activities covered by this standard that are entered into after that date will
be recorded in accordance with provisions of SFAS No. 146. The adoption of SFAS
No. 146 did not have a significant impact on the Company's results of operations
or financial position.
In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure, an amendment of FASB
Statement No. 123"("SFAS 148"). SFAS 148 amends FASB Statement No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. It also amends the
disclosure provisions of that Statement to require prominent disclosure about
the effects on reported net income of an entity's accounting policy decisions
with respect to stock-based employee compensation. Finally, this Statement
amends Accounting Principles Board ("APB") Opinion No. 28, "Interim Financial
Reporting", to require disclosure about those effects in interim financial
information. SFAS 148 is effective for financial statements for fiscal years
ending after December 15, 2002. The Company will continue to account for
stock-based employee compensation using the intrinsic value method of APB
Opinion No. 25, "Accounting for Stock Issued to Employees," but has adopted the
enhanced disclosure requirements of SFAS 148.
In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities", which amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
This Statement is effective for contracts entered into or modified after June
30, 2003, except for certain hedging relationships designated after June 30,
2003. Most provisions of this Statement should be applied prospectively. The
adoption of this statement did not have a significant impact on the Company's
results of operations or financial position.
In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity". This Statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatorily redeemable
financial instruments of nonpublic entities, if applicable. It is to be
implemented by reporting the cumulative effect of a change in an accounting
principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim period of adoption.
The adoption of this statement did not have a significant impact on the
Company's results of operations or financial position.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires a company, at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantees and elaborates on existing
disclosure requirements related to guarantees and warranties. The recognition
requirements are effective for guarantees issued or modified after December 31,
2002 for initial recognition and initial measurement provisions. The adoption of
FIN 45 did not have a significant impact on the Company's results of operations
or financial position.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning after June 15, 2003. The adoption of FIN 46 did not
have a significant impact on the Company' results of operations or financial
position.
28
On December 16, 2004, the FASB published Statement of Financial Accounting
Standards No. 123 (Revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123R
requires that compensation cost related to share-based payment transactions
within the scope of SFAS 123R include stock options, restricted stock plans,
performance-based awards, stock appreciation rights, and employee share purchase
plans. The provisions of SFAS 123R are effective for small business issuers as
of the first interim period that begins after December 15, 2005. Accordingly,
the Company will implement the revised standard in the fourth quarter of fiscal
year 2005. Currently, the company accounts for its share-based payment
transactions under the provision of APB 25, which does not necessarily require
the recognition of compensation cost in the financial statements. Management is
assessing the implications of this revised standard, which may materially impact
the Company's results of operations in the fourth quarter of fiscal year 2005
and thereafter.
ITEM 3. CONTROLS AND PROCEDURES
(A) Evaluation Of Disclosure Controls And Procedures
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's Principal Executive Officer/Principal Financial Officer (one person)
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. The Company's disclosure controls and procedures are
designed to provide a reasonable level of assurance of achieving the Company's
disclosure control objectives. The Company's Principal Executive
Officer/Principal Financial Officer has concluded that the Company's disclosure
controls and procedures are, in fact, effective at this reasonable assurance
level as of the period covered. In addition, the Company reviewed its internal
controls, and there have been no changes in its internal controls during the
Company's last fiscal quarter or in other factors that have materially affected,
or are reasonably likely to materially affect those controls subsequent to the
date of their last evaluation or from the end of the reporting period to the
date of this Form 10-QSB.
(B) Changes In Internal Controls Over Financial Reporting
In connection with the evaluation of the Company's internal controls
during the Company's first fiscal quarter ended March 31, 2005, the Company's
Principal Executive Officer/Principal Financial Officer has determined that
there are no changes to the Company's internal controls over financial reporting
that has materially affected, or is reasonably likely to materially effect, the
Company's internal controls over financial reporting.
29
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently involved in any material legal proceedings. However,
in 2003, we thought we had settled a claim against the Company from an
individual who was a former officer and investor. In satisfaction of that
settlement, 2,655,678 restricted shares of Medical Staffing common stock were
delivered to the individual in November of 2003. The individual subsequently
decided to attempt to reject the share tender and demand a cash settlement. The
Company believes its tender to have been sufficient and binding. The parties are
engaged in legal proceedings to determine the issue and a trial date is
presently set for November 2005. The Company has been advised by counsel that
its position should prevail, however, a possibility exists that we could be
unsuccessful in these proceedings. The individual is demanding a payment of
$899,000 not including attorney's fees and collection costs.
On July 1, 2004, TeleScience was sued by Medsense LA, LLC for an
outstanding balance owed for nursing services provided on behalf of TeleScience.
The matter was fully settled by a payment of $30,000 and dismissed with
prejudice in February 2005.
The Company may become involved in litigation, from time to time, in the
ordinary course of business.
ITEM 2. CHANGES IN SECURITIES
The Company issued 29,678,670 shares of common stock during the first
quarter of 2005 for $1,065,000 in cash paid to the Company.
The facts relied on to make the exemption from registration provided by
Section 4(2) of the Securities Act of 1933 available for the sale of securities
discussed above were: (1) the limited number of purchasers; (2) the
sophistication or accreditation of the purchasers; (3) their relationship with
the Company and/or access to material information about the Company; (4) the
information furnished to them by the Company; (5) the absence of any general
solicitation or advertising; and (6) restrictions on transfer of the securities
issued to them as indicated by a legend on the certificates representing such
securities.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
30
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EXHIBIT NO.
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2.1 Articles of Incorporation, as amended Incorporated by reference to Exhibit 3(a) to the
Company's Registration Statement on Form SB-2 as filed
with the United States Securities and Exchange
Commission on October 9, 2001
3.1 By-laws Incorporated by reference to Exhibit 3(b) to the
Company's Registration Statement on Form SB-2 as filed
with the United States Securities and Exchange
Commission on October 9, 2001
3.2 Certificate of Amendment to Articles of Incorporated by reference to Exhibit 3 to the Company's
Incorporation Annual Report on Form 10-KSB as filed with the United
States Securities and Exchange Commission on March 27,
2003
3.3 Certificate of Amendment to Articles of Incorporated by reference to Exhibit 3 to the Company's
Incorporation Annual Report on Form 10-KSB as filed with the United
States Securities and Exchange Commission on April 9,
2004
10.1 Sublease Agreement dated December 23, 2002 by Incorporated by reference to Exhibit 10.1 to the
and among InterAmerica Technologies, Inc., Company's Annual Report on Form 10-KSB as filed with
Kemron Environmental Services and Telescience the United States Securities and Exchange Commission on
International, Inc. April 9, 2004
10.2 Promissory Note in the principal amount of Incorporated by reference to Exhibit 10.2 to the
$875,920 made by the Company in favor of B. B. Company's Annual Report on Form 10-KSB as filed with
Sahay the United States Securities and Exchange Commission on
April 9, 2004
10.3 Memorandum of Understanding dated March 10, Incorporated by reference to Exhibit 10.3 to the
2004, by and between Silver Star Technologies, Company's Annual Report on Form 10-KSB as filed with
Inc. and TeleScience International, Inc. the United States Securities and Exchange Commission on
April 9, 2004
10.4 Memorandum of Understanding by and between Incorporated by reference to Exhibit 10.4 to the
Telescience International, Inc. and Chesapeake Company's Annual Report on Form 10-KSB as filed with
Government Technologies, Inc. the United States Securities and Exchange Commission on
April 9, 2004
10.5 Proposal dated January 7, 2004 from Incorporated by reference to Exhibit 10.5 to the
Professional Nursing Resources, Inc. to Company's Annual Report on Form 10-KSB as filed with
Telescience International, Inc. the United States Securities and Exchange Commission on
April 9, 2004
10.6 Standby Equity Distribution Agreement dated Incorporated by reference to Exhibit 10.6 to the
March 11, 2004 between Medical Staffing and Company's Annual Report on Form 10-KSB as filed with
Cornell Capital Partners, LP the United States Securities and Exchange Commission on
April 9, 2004
31
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EXHIBIT NO.
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10.7 Registration Rights Agreement dated March 11, Incorporated by reference to Exhibit 10.7 to the
2004 between Medical Staffing and Cornell Company's Annual Report on Form 10-KSB as filed with
Capital Partners, LP the United States Securities and Exchange Commission on
April 9, 2004
10.8 Escrow Agreement dated March 11, 2004 among Incorporated by reference to Exhibit 10.8 to the
Medical Staffing, Cornell Capital Partners, LP Company's Annual Report on Form 10-KSB as filed with
and Butler Gonzalez the United States Securities and Exchange Commission on
April 9, 2004
10.9 Securities Purchase Agreement dated March 11, Incorporated by reference to Exhibit 10.9 to the
2004 among Medical Staffing and the Buyers Company's Annual Report on Form 10-KSB as filed with
the United States Securities and Exchange Commission on
April 9, 2004
10.10 Escrow Agreement dated March 11, 2004 among Incorporated by reference to Exhibit 10.10 to the
Medical Staffing, the Buyers and Butler Company's Annual Report on Form 10-KSB as filed with
Gonzalez, LP the United States Securities and Exchange Commission on
April 9, 2004
10.11 $250,000 Convertible Debenture dated March 11, Incorporated by reference to Exhibit 10.11 to the
2004 between Medical Staffing and Cornell Company's Annual Report on Form 10-KSB as filed with
Capital Partners, LP the United States Securities and Exchange Commission on
April 9, 2004
10.12 Investor Registration Rights Agreement dated Incorporated by reference to Exhibit 10.12 to the
March 11, 2004 between Medical Staffing and Company's Annual Report on Form 10-KSB as filed with
the Investors the United States Securities and Exchange Commission on
April 9, 2004
10.13 Placement Agent Agreement dated March 11, 2004 Incorporated by reference to Exhibit 10.13 to the
among Medical Staffing, Newbridge Securities Company's Annual Report on Form 10-KSB as filed with
Corporation and Cornell Capital Partners, LP the United States Securities and Exchange Commission on
April 9, 2004
10.14 Renewal Agreement dated February 5, 2004, from Incorporated by reference to Exhibit 10.14 to the
Commonwealth of Pennsylvania to Telescience Company's Annual Report on Form 10-KSB as filed with
International, Inc. regarding Contract 2550-09 the United States Securities and Exchange Commission on
Personal Protection Equipment PPE April 9, 2004
10.15 Memorandum of Understanding dated February 23, Incorporated by reference to Exhibit 10.15 to the
2004, to Mobile Healthcare Solutions, Inc. Company's Annual Report on Form 10-KSB as filed with
from Telescience International, Inc. the United States Securities and Exchange Commission on
April 9, 2004
10.16 Master Contract dated April 1, 2004, by and Incorporated by reference to Exhibit 10.17 to the
between Telescience International, Inc. and Company's Annual Report on Form 10-KSB as filed with
State of California Department of Corrections the United States Securities and Exchange Commission on
April 9, 2004
32
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EXHIBIT NO.
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10.17 Memorandum dated March 26, 2003 regarding Incorporated by reference to Exhibit 10.20 to the
Branch Office Location Company's Annual Report on Form 10-KSB as filed with
the United States Securities and Exchange Commission on
April 9, 2004
10.18 $1,000,000 Promissory Note issued to Cornell Incorporated by reference to Exhibit 10.18 to the
Capital Partners, LP by Medical Staffing on Company's Annual Report on Form 10-KSB as filed with
June 8, 2004 the United States Securities and Exchange Commission on
March 31, 2005
10.19 $315,000 Promissory Note issued to Cornell Incorporated by reference to Exhibit 10.19 to the
Capital Partners, LP by Medical Staffing on Company's Annual Report on Form 10-KSB as filed with
October 6, 2004 the United States Securities and Exchange Commission on
March 31, 2005
10.20 $2,000,0000 Promissory Note issued to Cornell Incorporated by reference to Exhibit 10.20 to the
Capital Partners, LP by Medical Staffing on Company's Annual Report on Form 10-KSB as filed with
January 6, 2005 the United States Securities and Exchange Commission on
March 31, 2005
10.21 Employment Agreement between Medical Staffing Incorporated by reference to Exhibit 10.21 to the
and Brajnandan B. Sahay dated January 1, 2005 Company's Annual Report on Form 10-KSB as filed with
the United States Securities and Exchange Commission on
March 31, 2005
10.22 Contract dated December 6, 2004, by and Incorporated by reference to Exhibit 10.22 to the
between Telescience International, Inc. and Company's Annual Report on Form 10-KSB as filed with
State of California Department of Corrections the United States Securities and Exchange Commission on
March 31, 2005
10.23 Master Contract dated December 19, 2004, by Incorporated by reference to Exhibit 10.23 to the
and between Telescience International, Inc. Company's Annual Report on Form 10-KSB as filed with
and State of California Department of the United States Securities and Exchange Commission on
Corrections March 31, 2005
14.1 Code of Ethics Incorporated by reference to Exhibit 14.1 to the
Company's Annual Report on Form 10-KSB as filed with
the United States Securities and Exchange Commission on
April 9, 2004
31.1 Certification by Chief Executive Provided herewith
Officer/Principal Financial Officer pursuant
to 15 U.S.C. Section 7241, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of
2002
32.1 Certification by Chief Executive Officer and Provided herewith
Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(B) Current Report on Form 8-K During The Quarter Ended March 31, 2005:
33
On January 5, 2005, Medical Staffing filed a Form 8-K concerning the
entering into a non-binding letter of intent with A&T Systems, Inc. on December
30, 2004.
On January 13, 2005, Medical Staffing filed a Form 8-K concerning the
entering into a non-binding letter of intent with Staff Relief, Inc. on January
11, 2005.
On January 14, 2005, Medical Staffing filed a Form 8-K concerning the
conversion of an $850,920 loan into shares of Medical Staffing's common stock
that were issued on January 12, 2005.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized May 16, 2005.
May 16, 2005 MEDICAL STAFFING SOLUTIONS, INC.
By: /s/ Brajnandan B. Sahay
-----------------------------------------------
Brajnandan B. Sahay,
President, Chief Executive Officer and Director
35