SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
------------------
Date of Report: June 16, 2005
Medical Staffing Solutions, Inc.
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Nevada 000-23967 91-2135006
------ --------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8150 Leesburg Pike, Suite 1200, Vienna, Virginia 22182
------------------------------------------------ -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (703) 641-8890
--------------
ITEM 2.01. ACQUISITION OR DISPOSITION OF ASSETS
Medical Staffing Solutions, Inc., a Nevada corporation ("MSSI") entered
into an asset purchase agreement (the "Purchase Agreement") on June 16, 2005, by
and among MSSI, Nurses PRN Acquisition Corp., a Nevada corporation and
wholly-owned subsidiary of MSSI ( "Purchaser"), Nurses PRN, LLC, a Florida
limited liability company (the "Target") and the members listed therein
(collectively, the "Members", and together with MSSI, Purchaser and the Target,
the "Parties"). The Parties agreed to close the transaction in escrow subject to
the confirmation of delivery to the escrow agent (the "Agent") of those certain
escrow documents listed in Schedule A to the Confirmation of Closing in Escrow,
dated June 16, 2005.
Pursuant to the Purchase Agreement, the Purchaser acquired all of the
assets, properties, privileges, rights, interests, business and goodwill
belonging to the Target, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (the "Purchased Assets").
The Purchased Assets include all cash items, securities and financial
instruments of the Target, all Fixed Assets, Accounts Receivable, Real Property
Leases, Intellectual Property, Material Contracts, Files and Records and
Goodwill (as each term is defined in the Purchase Agreement).
As consideration for the Purchased Assets, the Purchaser caused MSSI to
issue and deliver 9,500,000 shares of common stock of MSSI to the Target which
were delivered to the Members in the denominations set forth opposite each
Member's name on Exhibit A to the Purchase Agreement, and 2,500,000 shares to a
creditor. The Purchaser also paid to the Target One Million Six Hundred Thousand
Dollars ($1,600,000) as a cash consideration. In addition to the share and cash
consideration, the Purchaser paid a contigent payment to the Target based on the
Purchaser's achievement of financial targets based on an EBITDA Target (as
defined in the Purchase Agreement) not to exceed Five Hundred Thousand Dollars
($500,000).
In addition to the Purchased Assets, the Purchaser assumed certain Assumed
Liabilities (as defined in the Purchase Agreement) including (a) a Three Hundred
Sixty Five Thousand Four Hundred Eighty Seven and 50/100 Dollar ($365,487.50)
note payable issued to Jeff Dowling by the Purchaser; (b) a Two Hundred Fifty
Thousand Dollar ($250,000) note payable to Aftabe Adamjee by the Purchaser and
(c) certain general payables as set forth in Schedule 1.4 of the Purchase
Agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Provided herewith.
(b) Provided herewith.
(c) Exhibit No. and Description:
Exhibit 99.1 Asset Purchase Agreement, effective as of June 16, 2005, Incorporated by reference to
by and among MSSI, Nurses PRN Acquisition Corp., Nurses Exhibit 99.1 to the
PRN, LLC and the Members listed therein Company's Current Report on
Form 8-K filed with the U.S.
Securities and Exchange
Commission on July 11, 2004
Exhibit 99.2 $250,000 Promissory Note, effective June 16, 2005, by Nurses PRN Incorporated by reference to
Acquisition Corp., Inc. issued to Mr. Aftab Adamjee Exhibit 99.2 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.3 Executive Employment Agreement, dated June 16, 2005, by and between Incorporated by reference to
Nurses PRN Acquisition Corp. and Mr. Robert Murphy Exhibit 99.3 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.4 Executive Employment Agreement, dated June 16, 2005, by and between Incorporated by reference to
Nurses PRN Acquisition Corp. and Ms. Linda Romano Exhibit 99.4 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.5 Release, dated June 16, 2005, by Mr. Aftab Adamjee releasing all Incorporated by reference to
claims against Nurses PRN, LLC, Mr. Robert Murphy and Ms. Linda Exhibit 99.5 to the Company's
Romano Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.6 Release, dated May 26, 2005, by Mr. Phil Dodge releasing all claims Incorporated by reference to
against Nurses PRN, LLC Exhibit 99.6 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.7 Release, dated June 16, 2005, by Mr. Robert Murphy releasing all Incorporated by reference to
claims against Nurses PRN, LLC Exhibit 99.7 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.8 Release, dated June 16, 2005, by Ms. Linda Romano releasing all Incorporated by reference to
claims against Nurses PRN, LLC Exhibit 99.8 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.9 Assumption Agreement, dated June 16, 2005, by and among Nurses PRN, Incorporated by reference to
LLC, Nurses PRN Acquisition Corp. and Mr. Jeffrey T. Dowling Exhibit 99.9 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.10 Pledge Agreement, dated June 16, 2005, by and between Mr. Robert Incorporated by reference to
Murphy and Ms. Linda J. Romano as Pledgor and Mr. Jeffrey T. Exhibit 99.10 to the Company's
Dowling as Pledgee Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.11 Indemnity and Guaranty Agreement, dated June 16, 2005, by and among Incorporated by reference to
Mr. Aftab Adamjee, Mr. Robert Murphy and Ms. Linda Romano as Exhibit 99.11 to the Company's
Indemnitors and Nurses PRN, LLC Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.12 Guaranty of Payment, dated June 16, 2005, by Medical Staffing Incorporated by reference to
Solutions, Inc. with respect to Mr. Jeffrey T. Dowling Exhibit 99.12 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.13 Guaranty of Payment, dated June 16, 2005, by Medical Staffing Incorporated by reference to
Solutions, Inc. with respect to Mr. Aftab Adamjee Exhibit 99.13 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.14 Guaranty, dated June 16, 2005, by Mr. Robert Murphy and Ms. Linda Incorporated by reference to
Romano with respect to Jeffrey T. Dowling and the payment of all Exhibit 99.14 to the Company's
indebtedness of Nurses PRN, LLC Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.15 Bill of Sale, undated, by and between Nurses PRN, LLC and Nurses Incorporated by reference to
PRN Acquisition Corp. Exhibit 99.15 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.16 Assignment and Assumption Agreement, dated June 16, 2005, by and Incorporated by reference to
between Nurses PRN, LLC and Nurses PRN Acquisition Corp. Exhibit 99.16 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.17 Joinder, dated June 10, 2005, by and between Mr. Aftab Adamjee and Incorporated by reference to
Mr. Jeffrey T. Dowling Exhibit 99.17 to the Company's
Current Report on Form 8-K filed
with the U.S. Securities and
Exchange Commission on July 11,
2004
Exhibit 99.18 Confirmation of Closing in Escrow, dated June 16, 2005, Incorporated by reference to
by and between attorneys for MSSI, Nurses PRN Exhibit 99.18 to the
Acquisition Corp. and Nurses PRN, LLC Companyss Current Report on
Form 8-K filed with the U.S.
Securities and Exchange
Commission on July 11, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDICAL STAFFING SOLUTIONS, INC.
Date: September 12, 2005 By: /s/ Dr. Brajnandan B. Sahay
--------------------------------
Name: Dr. Brajnandan B. Sahay
Title: President
ITEM 9.01. (a):
NURSES PRN, L.L.C.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003
NURSES PRN, L.L.C.
FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
TABLE OF CONTENTS
PAGE(S)
-------
Report of Independent Registered Public Accounting Firm 1
Financial Statements
Balance Sheets As of December 31, 2004 and 2003 2
Statements of Operations For The Years Ended
December 31, 2004 and 2003 3
Statements of Members' Deficit For The Years Ended
December 31, 2004 and 2003 4
Statements of Cash Flows For The Years Ended
December 31, 2004 and 2003 5 - 6
Notes to Financial Statements 7 - 13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the members of
Nurses PRN, LLC
West Palm Beach, FL
We have audited the accompanying balance sheets of Nurses PRN, LLC as of
December 31, 2004 and 2003 and the related statements of operations, changes in
members' deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversights Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 6 to the financial
statements, the Company has incurred losses in the last two years of operations,
and will be looking to raise capital over the next year to assist in funding
their operations. These factors raise substantial doubt about its ability to
continue as a going concern. Management's operating and financing plans in
regards to these matters are also discussed in Note 6. The financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nurses PRN, LLC as of December
31, 2004 and 2003, and the results of its operations and its cash flows for the
years ended December 31, 2004 and 2003 in conformity with accounting principles
generally accepted in the United States of America.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Bagell, Josephs & Company, LLC.
Gibbsboro, New Jersey
March 1, 2005
NURSES PRN, L.L.C.
NURSES PRN, L.L.C.
BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
ASSETS
2004 2003
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 281,640 $ 358,687
Accounts receivable - net 3,076,919 3,295,655
Prepaid expenses and other current assets 150,263 2,183
----------- -----------
Total current assets 3,508,822 3,656,525
----------- -----------
Fixed assets - net 67,858 206,067
----------- -----------
OTHER ASSET
Security deposit 6,657 6,682
----------- -----------
Total other asset 6,657 6,682
TOTAL ASSETS $ 3,583,337 $ 3,869,274
=========== ===========
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 377,958 $ 369,557
Note payable - receivable line of credit 2,645,938 2,866,714
Current portion of note payable - other 182,071 62,888
Due to member 1,061,331 631,600
Due to related party 88,156 -
Taxes payable 1,761,140 1,006,787
----------- -----------
Total current liabilities 6,116,594 4,937,546
----------- -----------
LONG-TERM LIABILITIES
Note payable - other, net of current portion 237,154 420,875
----------- -----------
Total long-term liabilities 237,154 420,875
----------- -----------
TOTAL LIABILITIES 6,353,748 5,358,421
----------- -----------
MEMBERS' DEFICIT (2,770,411) (1,489,147)
----------- -----------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 3,583,337 $ 3,869,274
=========== ===========
The accompanying notes are an integral part of these financial statements
-2-
NURSES PRN, L.L.C.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
----------- ------------
REVENUES $10,931,812 $ 8,727,973
----------- ------------
COST OF GOODS SOLD
Payroll expense - nurses 8,109,910 7,064,140
Tax expense - nurses 759,138 304,573
Workmen's compensation expense - nurses 263,644 153,881
----------- ------------
Total cost of goods sold 9,132,692 7,522,594
----------- ------------
GROSS PROFIT 1,799,120 1,205,379
----------- ------------
OPERATING EXPENSES
Administrative payroll 1,563,284 1,174,492
Dealer commissions 424,892 385,552
Background and drug testing 19,332 1,430
Bad debt expense 57,500 52,058
Bank fees 35,230 40,672
Computer expense 13,089 6,110
Depreciation 52,807 13,306
Insurance 297,213 173,681
Interest expense 1,182,431 613,050
Licenses, permits and taxes 12,380 5,691
Maintenance and cleaning 10,968 5,780
Marketing 19,619 3,625
Miscellaneous 161,470 51,562
Meals and travel 152,134 108,555
Office supplies and printing 68,289 62,902
Postage and delivery 38,760 10,484
Professional fees 120,514 129,243
Recruiting 23,921 39,294
Rent and utilities 120,364 69,120
Telephone 99,125 49,439
Website hosting 90,145 49,309
----------- ------------
Total operating expenses 4,563,467 3,045,355
----------- ------------
NET LOSS FROM CONTINUING OPERATIONS (2,764,347) (1,839,976)
----------- ------------
DISCONTINUED OPERATIONS
Income from discontinued operations 576,945 346,074
Income on disposal 906,138 -
----------- ------------
NET LOSS $(1,281,264) $ (1,493,902)
=========== ============
The accompanying notes are an integral part of these financial statements
-3-
NURSES PRN, L.L.C.
STATEMENT OF MEMBERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
BALANCE - JANUARY 1, 2003 $ 4,755
Net loss (1,493,902)
-----------
BALANCE - DECEMBER 31, 2003 (1,489,147)
Net loss (1,281,264)
-----------
BALANCE - DECEMBER 31, 2004 $(2,770,411)
===========
The accompanying notes are an integral part of these financial statements
-4-
NURSES PRN, L.L.C.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing operations:
Net loss $ (2,764,347) $(1,839,976)
------------ -----------
Adjustments to reconcile net loss to net cash
provided by operating activities
Non cash adjustments - net 132,871 -
Depreciation 89,528 13,306
Changes in assets and liabilities:
(Increase) decrease in account receivable 218,736 (2,943,034)
(Increase) in prepaid expenses and other current assets (68,080) (2,183)
(Increase) decrease in security deposit 25 (6,682)
Increase in accounts payable and accrued expenses 8,401 356,251
Increase in taxes payable 754,353 892,951
------------ -----------
Total adjustments 1,135,834 (1,689,391)
------------ -----------
Net cash (used in) operating activities - continuing
operation (1,628,513) (3,529,367)
------------ -----------
Discontinued operations:
Income from discontinued operations 576,945 346,074
------------ -----------
Net cash provided by discontinuing operations 576,945 346,074
------------ -----------
CASH FLOWS FROM INVESTINGING ACTIVITIES
Continuing operations:
(Acquisition) of property and equipment - (168,214)
------------ -----------
Discontinued operations:
Proceeds from disposal of assets 821,948 -
------------ -----------
Net cash provided by investing activities 821,948 (168,214)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Continuing operations:
Net proceeds from related party advances 88,156 -
Net proceeds from note payable - receivable line of credit (300,776) 2,582,662
Net proceeds from member 429,731 581,600
Net proceeds from note payable - other (64,538) 483,763
------------ -----------
Net cash provided by financing activities 152,573 3,648,025
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (77,047) 296,518
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 358,687 62,169
------------ -----------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 281,640 $ 358,687
============ ===========
The accompanying notes are an integral part of these financial statements
-5-
NURSES PRN, L.L.C.
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
--------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest paid $ 580,215 $ 613,850
========= =========
Income taxes paid $ - $ -
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Note payable for the acqusition of property and equipment $ 100,000 $ -
========= =========
Relief of accounts payable and notes payable upon disposal of
property and equipment - net $ 132,871 $ -
========= =========
The accompanying notes are an integral part of these financial statements
-6-
NURSES PRN, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Nurses PRN, LLC (the "Company") is a Limited Liability Company
formed in the State of Florida as a licensed temporary
staffing agency in the business of providing supplemental
staffing to medical care providers. In the recruiting process
Nurses PRN is responsible for personally interviewing all
potential representatives of Nurses PRN before they are
assigned to a hospital or healthcare facility. The Company
offers to its clients per diem staffing, local contracts,
travel nurses and international nurses. The representatives of
the Company specialize in telemetry, med-surg, emergency room
and operating room environments.
The financial statements for the year ended December 31, 2003
include reclassifications of the operations of the Company to
reflect the sale and disposal of certain assets and business
that was generated between Nurse Staffing, LLC and Nurses PRN,
LLC. This disposal occurred on November 1, 2004. Accordingly,
the Company follows FASB 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". The Company has
reclassified its December 31, 2003 financial statements to
reflect the operations below the line as discontinued
operations in accordance with FASB 144.
The Company recognized a $906,138 gain on the disposal of the
assets of Nurse Staffing, LLC.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Accounts Receivable
Accounts receivable are evaluated for potential uncollectible
amounts and are reduced for any existing bad debts. Accounts
receivable, net of reserve allowances was $3,076,919 and
$3,295,655 at December 31, 2004 and 2003, respectively.
-7-
NURSES PRN, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment is stated at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the assets; three years for computers and five
years for furniture. Reviews are regularly performed to
determine whether facts and circumstances exist that indicate
carrying amount of assets may not be recoverable of the useful
life is shorter than originally estimated. The Company
assesses the recoverability of its fixed assets by comparing
the projected undiscounted net cash flows associated with the
related asset or group of assets over their remaining lives
against their respective carrying amounts. Impairment, if any,
is based on the excess of the carrying amount over the fair
value of those assets. If assets are determined to be
recoverable, but the useful lives are shorter than originally
estimated, the net book value of the assets is depreciated
over the newly determined remaining useful lives. When fixed
assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts
and the resulting gain or loss in included in operations.
Income Taxes
The Company was organized as a Limited Liability Company
(L.L.C.). Under these provisions, the Company is taxed as a
partnership for federal and state income tax purposes. The
Company does not pay corporate income taxes on its taxable
income. Instead, the member is liable for its income taxes.
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 this reported
period. Actual results could differ from those estimates.
Advertising and Marketing
Advertising and marketing costs charged to expense were
$19,619 and $3,625 for the years ended December 31, 2004 and
2003 respectively.
-8-
NURSES PRN, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Revenue is primarily recognized after services are rendered
and confirmed by a time card authorized by the clients. They
are billed to the client once per week for the prior week. An
accrual is made every month for service rendered and billed to
the particular clients that were booked the following month.
Fair Value of Financial Instruments
The carrying amount reported in the balance sheets 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.
Recent Accounting Pronouncements
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 mandatory redeemable
financial instruments of nonpublic entities, if applicable.
-9-
NURSES PRN, L.L.C.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
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 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.
-10-
NURSES PRN, L.L.C.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 2- FIXED ASSETS
Fixed assets at December 31, 2004 and 2003 is as follows:
2004 2003
-------- ---------
Office furniture and computers $106,277 $ 219,373
Less: accumulated depreciation (38,419) (13,306)
-------- ---------
Net property and equipment $ 67,858 $ 206,067
======== =========
Depreciation expense for the years ended December 31, 2004 and
2003 was $89,528 and $13,306 respectively.
NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT
The Company on June 4, 2002 entered into a mastering factoring
agreement with Rockland Credit Finance, a subsidiary of
Webbank, Inc. The agreement states from time to time during
the term of the agreement that the Company may offer to sell
to Rockland Credit certain amounts of the Company's account
receivables.
In turn of the acceptance of the account receivables, Rockland
Credit will pay to the Company an amount up to 90% of the
aggregate net face value of the assigned accounts. If the
aggregate net face value of the receivables accepted by
Rockland Credit is less than $1,500,000, the Company would be
required to pay a fee not less than $2,000. The term of the
agreement is for one year and the agreement automatically
renews for successive one-year periods.
-11-
NURSES PRN, L.L.C.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 4- NOTE PAYABLE - OTHER
The Company has a note payable which was originally $250,000
as of July 2003. The note was amended for another additional
$250,000 in September 2003, for a total principal balance of
$500,000, of which $419,225 and $483,763 was outstanding as of
December 31, 2004 and 2003, respectively. Interest is payable
monthly at an annual rate of 9%. The term of the note is for
four years, and the principal balance is payable in monthly
installments of principal plus accrued interest at which time
the final installment equal to the remaining balance shall be
due and payable. The maturities over the next three years and
in the aggregate are as follows:
Fiscal year ending December 31, 2005 $ 182,071
December 31, 2006 150,000
December 31, 2007 87,154
---------
$ 419,225
=========
NOTE 5- DUE TO RELATED PARTY
The Company as of December 31, 2004 had an amount of $88,156
due to a related party. The amount refers to the pre-funding
of the payroll by the related party. The related party was not
ready to perform their own payroll and the Company performed
this function for them during the month of December 2004. The
pre-funding by the related party ended up being too much and
the amount was returned on January 14, 2005.
The Company has been advanced amounts from its members to
cover working capital needs and expansion costs over time. At
December 31, 2004 and 2003, there is $1,061,331 and $631,600
outstanding, respectively. There is no stated interest due on
these amounts and they are due on demand. These payments will
be repaid upon a sale of the Company.
-12-
NURSES PRN, L.L.C.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 6- GOING CONCERN
As shown in the accompanying financial statements, the Company
incurred net losses for the years ended December 31, 2004 and
2003. There is no guarantee whether the Company will be able
to generate enough revenue and/or raise capital to support
current operations and generate anticipated sales. This raises
substantial doubt about the Company's ability to continue as a
going concern.
Management believes that the Company's capital requirements
will depend on many factors including the success of the
Company's service efforts.
The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
NOTE 7- COMMITMENTS AND CONTINGENCIES
Leases
The Company conducts its operations in either leased facilities,
where the leases are month to month or have provisions that provide
for renewal options, in hospitals, where no rent is charged or they
have agreements where no rent required is part of the agreement.
Facilities where there are leases are all operating leases and rent
expense is charged to operations as incurred.
As of December 31, 2004, the future minimum rental payments
due under noncancellable operating leases are as follows:
2005 $ 87,008
2006 44,657
Totals $131,665
========
NOTE 8- SUBSEQUENT EVENT
As of July 1, 2005, the Company sold its assets to Nurses PRN
Acquisition Corp., a wholly owned subsidiary of a public company,
Medical Staffing Solutions, Inc.
-13-
NURSES PRN, L.L.C.
REVIEWED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004
(UNAUDITED)
NURSES PRN, L.L.C.
REVIEWED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
TABLE OF CONTENTS
PAGE(S)
Report of Independent Registered Public Accounting Firm 1
Financial Statements (Unaudited)
Balance Sheets As of June 30, 2005 and 2004 2
Statements of Operations For The Six Months Ended
June 30, 2005 and 2004 3
Statements of Members' Deficit For The Six Months Ended
June 30, 2005 and 2004 4
Statements of Cash Flows For The Six Months Ended
June 30, 2005 and 2004 5
Notes to Financial Statements 6 - 11
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
High Ridge Commons
Suites 400-403
200 Haddonfield Berlin Road
Gibbsboro, New Jersey 08026
(856) 346-2828 Fax (856) 346-2882
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Member of
Nurses PRN, LLC
West Palm Beach, Florida
We have reviewed the accompanying balance sheets of Nurses PRN, LLC (the
"Company") as of June 30, 2005 and 2004 and the related statements of
operations, changes in members' (deficit), and cash flows for the six months
then ended. These interim financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with standards of the
Public Company Accounting Oversight Board, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the financial statements referred to above in order for them to be in
conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has sustained operating losses and capital
deficits that raise substantial doubt about its ability to continue as a going
concern. Management's operating and financing plans in regard to these matters
are also discussed in Note 6. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
Gibbsboro, New Jersey
September 7, 2005
MEMBER OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
SEC PRACTICE SECTION OF THE AICPA (SECPSI)
NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
FLORIDA STATE BOARD OF ACCOUNTANCY
NURSES PRN, L.L.C.
BALANCE SHEETS
JUNE 30, 2005 AND 2004
ASSETS
2005 2004
------------------ -----------------
CURRENT ASSETS
Cash and cash equivalents $ 10,789 $ 499,176
Accounts receivable - net 1,803,255 3,249,646
Prepaid expenses and other current assets 24,949 213,909
------------------ -----------------
Total current assets 1,838,993 3,962,731
------------------ -----------------
Fixed assets - net 68,187 264,598
------------------ -----------------
OTHER ASSET
Security deposit 7,057 10,371
------------------ -----------------
Total other asset 7,057 10,371
------------------ -----------------
TOTAL ASSETS $ 1,914,237 $ 4,237,700
================== =================
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 316,597 $ 558,374
Note payable - receivable line of credit 1,548,373 3,044,651
Current portion of note payable - other 203,332 86,213
Due to member 993,332 1,225,117
Taxes payable 2,237,323 1,750,205
------------------ -----------------
Total current liabilities 5,298,957 6,664,560
------------------ -----------------
LONG-TERM LIABILITIES
Note payable - other, net of current portion 162,155 365,487
------------------ -----------------
Total long-term liabilities 162,155 365,487
------------------ -----------------
TOTAL LIABILITIES 5,461,112 7,030,047
------------------ -----------------
MEMBERS' DEFICIT (3,546,875) (2,792,347)
------------------ -----------------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 1,914,237 $ 4,237,700
================== =================
The accompanying notes are an integral part of these financial statements
-2-
NURSES PRN, L.L.C.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
2005 2004
--------------- ----------------
OPERATING REVENUES $ 7,229,872 $ 5,034,373
--------------- ----------------
COST OF GOODS SOLD
Payroll expense - nurses 5,145,847 3,736,421
Tax expense - nurses 468,264 386,294
Workmen's compensation expense - nurses 284,376 118,985
--------------- ----------------
Total cost of goods sold 5,898,487 4,241,700
--------------- ----------------
GROSS PROFIT 1,331,385 792,673
--------------- ----------------
OPERATING EXPENSES
Administrative payroll 590,724 877,868
Dealer commissions 289,725 175,930
Background and drug testing 6,284 10,522
Bad debt expense 12,000 30,000
Bank fees 25,062 18,423
Computers expense 1,895 7,093
Depreciation 7,339 40,833
Interest expense 477,052 654,754
Insurance 248,439 149,402
Licenses, permits and taxes 15,418 5,530
Maintenance and cleaning 3,866 7,113
Marketing 1,406 13,640
Miscellaneous 11,286 16,393
Meals and travel 22,377 82,244
Office supplies and printing 21,835 42,873
Postage and delivery 15,484 19,560
Professional fees 193,669 61,467
Recruiting 8,619 14,381
Rent and utilities 79,088 48,539
Telephone 36,457 42,943
Website hosting 39,824 53,681
--------------- ----------------
Total operating expenses 2,107,849 2,373,189
--------------- ----------------
NET LOSS FROM CONTINUING OPERATIONS (776,464) (1,580,516)
DISCONTINUED OPERATIONS
Income from discontinued operations - 277,316
--------------- ----------------
NET LOSS $ (776,464) $ (1,303,200)
=============== ================
The accompanying notes are an integral part of these financial statements
-3-
NURSES PRN, L.L.C.
STATEMENT OF MEMBERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
BALANCE - JANUARY 1, 2004 $(1,489,147)
Net loss (1,303,200)
-----------------
BALANCE - JUNE 30, 2004 $(2,792,347)
=================
BALANCE - JANUARY 1, 2005 $(2,770,411)
Net loss (776,464)
-----------------
BALANCE - JUNE 30, 2005 $(3,546,875)
=================
The accompanying notes are an integral part of these financial statements
-4-
NURSES PRN, L.L.C.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
2005 2004
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing Operations:
Net loss $ (776,464) $(1,580,516)
-------------- --------------
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation 7,339 47,030
Changes in assets and liabilities:
Decrease in account receivable 1,273,664 46,009
(Increase) decrease in prepaid expenses and other current assets 125,314 (211,726)
(Decrease) in security deposit (400) (3,689)
Increase (decrease) in accounts payable and accrued expenses (61,361) 188,817
Increase in taxes payable 476,183 743,418
-------------- --------------
Net cash provided by (used in) operating activities -
continuing operations 1,044,275 (770,657)
-------------- --------------
Discontinued Operations:
Income from discontinued operations - 277,316
-------------- --------------
Net cash provided by operating activities -
discontinued operations - 277,316
-------------- --------------
Net cash provided by (used in) operating activities 1,044,275 (493,341)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition) of property and equipment (7,668) (105,562)
-------------- --------------
Net cash (used in) investing activities (7,668) (105,562)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (reduction in) related party advances (88,156) -
Net proceeds from (reduction in) note payable - receivable line of credit(1,097,565) 177,938
Net proceeds from (reduction in) due to member (67,999) 593,517
Net (reduction in) note payable - other (53,738) (32,063)
-------------- --------------
Net cash provided by (used in) financing activities (1,307,458) 739,392
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (270,851) 140,489
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 281,640 358,687
-------------- --------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 10,789 $ 499,176
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest paid $ 477,052 $ 624,004
============== ==============
Income taxes paid $ - $ -
============== ==============
The accompanying notes are an integral part of these financial statements
-5-
NURSES PRN, LLC
NOTES TO REVIEWED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Nurses PRN, LLC (the "Company") is a Limited Liability Company
formed in the State of Florida as a licensed temporary staffing
agency in the business of providing supplemental staffing to medical
care providers. In the recruiting process Nurses PRN is responsible
for personally interviewing all potential representatives of Nurses
PRN before they are assigned to a hospital or healthcare facility.
The Company offers to its clients per diem staffing, local
contracts, travel nurses and international nurses. The
representatives of the Company specialize in telemetry, med-surg,
emergency room and operating room environments.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying amount reported in the balance sheet for cash and cash
equivalents approximates its fair value.
Accounts Receivable
Accounts receivable are evaluated for potential uncollectible
amounts and are reduced for any existing bad debts. Accounts
receivable, net of reserve allowances was $1,803,255 and $3,249,646
at June 30, 2005 and 2004, respectively.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of
the assets; three years for computers and five years for furniture.
Reviews are regularly performed to determine whether facts and
circumstances exist that indicate carrying amount of assets may not
be recoverable of the useful life is shorter than originally
estimated. The Company assesses the recoverability of its fixed
assets by comparing the projected undiscounted net cash flows
associated with the related asset or group of assets over their
remaining lives against their respective carrying amounts.
Impairment, if any, is based on the excess of the carrying amount
over the fair value of those assets. If assets are determined to be
recoverable, but the useful lives are shorter than originally
estimated, the net book value of the assets is depreciated over the
newly determined remaining useful lives. When fixed assets are
retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or
loss in included in operations.
-6-
NURSES PRN, L.L.C.
NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company was organized as a Limited Liability Company (L.L.C.).
Under these provisions, the Company is taxed as a partnership for
federal and state income tax purposes. The Company does not pay
corporate income taxes on its taxable income. Instead, the member is
liable for its income taxes.
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 this reported period. Actual results could differ
from those estimates.
Advertising and Marketing
Advertising and marketing costs charged to expense were $1,406 and
$13,640 for the six months ended June 30, 2005 and 2004,
respectively.
Revenue Recognition
Revenue is primarily recognized after services are rendered and
confirmed by a time card authorized by the clients. They are billed
to the client once per week for the prior week. An accrual is made
every month for service rendered and billed to the particular
clients that were booked the following month.
Fair Value of Financial Instruments
The carrying amount reported in the balance sheets 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.
-7-
NURSES PRN, L.L.C.
NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
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 mandatory 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 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.
-8-
NURSES PRN, L.L.C.
NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
NOTE 2- FIXED ASSETS
Fixed Assets at June 30, 2005 and 2004 are as follows:
2005 2004
--------- ---------
Office furniture and computers $ 113,945 $ 324,934
Less: accumulated depreciation 45,758 60,336
--------- ---------
Net property and equipment $ 68,187 $ 264,598
========= =========
Depreciation expense for the six months ended June 30, 2005 and 2004
was $7,339 and $47,030 respectively.
NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT
The Company on June 4, 2002 entered into a mastering factoring
agreement with Rockland Credit Finance, a subsidiary of Webbank,
Inc. The agreement states from time to time during the term of the
agreement that the Company may offer to sell to Rockland Credit
certain amounts of the Company's account receivables.
-9-
NURSES PRN, L.L.C.
NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT
(CONTINUED)
In turn of the acceptance of the account receivables, Rockland
Credit will pay to the Company an amount up to 90% of the aggregate
net face value of the assigned accounts. If the aggregate net face
value of the receivables accepted by Rockland Credit is less than
$1,500,000, the Company would be required to pay a fee not less than
$2,000. The term of the agreement is for one year and the agreement
automatically renews for successive one-year periods.
NOTE 4- NOTE PAYABLE - OTHER
The Company has a note payable which was originally $250,000 as of
July 2003. The note was amended for another additional $250,000 in
September 2003, for a total principal balance of $500,000, of which
$365,487 and $451,700 was outstanding as of June 30, 2005 and 2004,
respectively. Interest is payable monthly at an annual rate of 9%.
The term of the note is for four years, and the principal balance is
payable in monthly installments of principal plus accrued interest
at which time the final installment equal to the remaining balance
shall be due and payable.
NOTE 5- DUE TO MEMBERS
The Company has been advanced amounts from its members to cover
working capital needs and expansion costs over time. At June 30,
2005 and 2004, there is $993,332 and $1,225,117 outstanding,
respectively. There is no stated interest due on these amounts and
they are due on demand. These payments will be repaid upon a sale of
the Company.
-10-
NURSES PRN, L.L.C.
NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 6- GOING CONCERN
As shown in the accompanying financial statements, the Company
incurred net losses for the years ended December 31, 2004 and 2003.
There is no guarantee whether the Company will be able to generate
enough revenue and/or raise capital to support current operations
and generate anticipated sales. This raises substantial doubt about
the Company's ability to continue as a going concern.
Management believes that the Company's capital requirements will
depend on many factors including the success of the Company's
service efforts.
The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
NOTE 7- COMMITMENTS AND CONTINGENCIES
Leases
The Company conducts its operations in either leased facilities,
where the leases are month to month or have provisions that provide
for renewal options, in hospitals, where no rent is charged or they
have agreements where no rent required is part of the agreement.
Facilities where there are leases are all operating leases and rent
expense is charged to operations as incurred.
As of June 30, 2005, the future minimum rental payments due under
noncancellable operating leases are as follows:
2005 $ 43,504
2006 44,657
--------
Totals $ 88,161
========
NOTE 8- SUBSEQUENT EVENT
As of July 1, 2005, the Company sold its assets to Nurses PRN
Acquisition Corp., a wholly owned subsidiary of a public company
Medical Staffing Solutions, Inc.
-11-
ITEM 9.01 (b):
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 1, 2005, Medical Staffing Solutions Inc. and Subsidiaries ("The
Company") consummated an Asset Purchase Agreement with Nurses PRN, LLC, a
privately held Company whereby, Medical Staffing Solutions Inc. and
Subsidiaries, agreed to acquire all the assets, properties, rights, intents,
business and goodwill of Nurses PRN, LLC. The Company also acquired certain
liabilities.
The accompanying unaudited pro forma condensed consolidated balance sheet as of
June 30, 2005 has been presented with a consolidated subsidiary at June 30,
2005. The unaudited pro forma condensed consolidated statements of operations
for the six months ended June 30, 2005 purport what the acquisition would look
like. The year ended December 31, 2004 statement of operations has been
presented as if the acquisition had occurred January 1, 2004 combined.
The unaudited pro forma condensed consolidated statements do not necessarily
represent the actual results that would have been achieved had the companies
been combined at the beginning of the year, nor may they be indicative of future
operations. These unaudited pro forma condensed financial statements should be
read in conjunction with the companies' respective historical financial
statements and notes included thereto.
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2005
Medical
Staffing
Solutions, Inc.
and Nurses PRN, Pro
Subsidiaries LLC Adjustments Forma
----------- ----------- ----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 10,682 10,789 -- $ 21,471
Accounts receivable, net of allowance for
doubtful accounts of $46,096 1,031,600 1,803,255 -- 2,834,855
Accounts receivables-other 9,100 -- -- 9,100
Prepaid expenses 38,518 24,949 -- 63,467
----------- ----------- ----------- -----------
Total Current Assets 1,089,900 1,838,993 -- 2,928,893
----------- ----------- ----------- -----------
Fixed assets, net of depreciation 49,517 68,187 -- 117,704
Loan commitment fees, net 39,375 -- -- 39,375
Deposits 1,650,643 7,057 -- 1,657,700
Goodwill -- -- 1,223,406 1,223,406
----------- ----------- ----------- -----------
TOTAL ASSETS $ 2,829,435 $ 1,914,237 $ 1,223,406 $ 5,967,078
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
Current Liabilities:
Note payable - current portion $ 551,765 $ 1,751,705 $(1,136,217) $ 1,167,253
Promissory note - Standby Equity Distribution Agreement 1,579,068 -- -- 1,579,068
Due to related parties 73,333 993,332 (993,332) 73,333
Accounts payable and accrued expenses 751,998 2,553,920 (2,553,920) 751,998
Loan payable - Officer / Litigation settlement payable 50,000 -- -- 50,000
----------- ----------- ----------- -----------
Total Current Liabilities 3,006,164 5,298,957 (4,683,469) 3,621,652
Long term liabilities -- 162,155 162,155
----------- ----------- ----------- -----------
Total Liabilities 3,006,164 5,461,112 (4,683,469) 3,783,807
----------- ----------- ----------- -----------
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 --
176,100,015 shares issued and outstanding 166,600 -- 9,500 176,100
Additional Paid-in-Capital 5,750,728 -- 2,350,500 8,101,228
Deficit (6,094,057) (3,546,875) 3,546,875 (6,094,057)
----------- ----------- ----------- -----------
Total Stockholders' (Deficit) (176,729) (3,546,875) 5,906,875 2,183,271
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 2,829,435 $ 1,914,237 $ 1,223,406 $ 5,967,078
=========== =========== =========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005
Medical Staffing
Solutions, Inc.
and Nurses PRN, Pro
Subsidiaries LLC Forma
------------- ------------- -------------
OPERATING REVENUES
Revenue $ 2,859,076 $ 7,229,872 $ 10,088,948
COST OF SALES 1,959,864 5,898,487 7,858,351
------------- ------------- -------------
GROSS PROFIT 899,212 1,331,385 2,230,597
------------- ------------- -------------
OPERATING EXPENSES
Administrative payroll, benefits and overhead costs 903,499 590,724 1,494,223
General and administrative expenses 485,070 1,032,734 1,517,804
Depreciation and amortization 37,422 7,339 44,761
------------- ------------- -------------
Total Operating Expenses 1,425,991 1,630,797 3,056,788
------------- ------------- -------------
(LOSS) BEFORE OTHER INCOME (EXPENSES) (526,779) (299,412) (826,191)
------------- ------------- -------------
OTHER INCOME (EXPENSES)
Amortization of discount on conversions -- -- --
Interest income 10,314 -- 10,314
Interest expense (149,063) (477,052) (626,115)
------------- ------------- -------------
Total Other Income (Expenses) (138,749) (477,052) (615,801)
------------- ------------- -------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES $ (665,528) $ (776,464) $ (1,441,992)
Provision for Income Taxes -- -- --
------------- ------------- -------------
NET LOSS APPLICABLE TO COMMON SHARES $ (665,528) $ (776,464) $ (1,441,992)
============= ============= =============
NET LOSS PER BASIC AND DILUTED SHARES $ (0.00445) $ (0.00963)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 149,722,241 149,722,241
============= =============
The accompanying notes are an integral part of the condensed
consolidated financial statements.
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
Medical Staffing
Solutions, Inc.
and Nurses PRN, Pro
Subsidiaries LLC Forma
------------- ------------- -----------
OPERATING REVENUES
Revenue $ 6,734,564 $ 10,931,812 $ 17,666,376
COST OF SALES 5,018,601 9,132,692 14,151,293
------------ ------------ ------------
GROSS PROFIT 1,715,963 1,799,120 3,515,083
------------ ------------ ------------
OPERATING EXPENSES
Administrative payroll, benefits and overhead costs 2,046,954 2,012,097 4,059,051
General and administrative expenses 1,371,377 1,316,132 2,687,509
Depreciation and amortization 61,726 52,807 114,533
------------ ------------ ------------
Total Operating Expenses 3,480,057 3,381,036 6,861,093
------------ ------------ ------------
(LOSS) BEFORE OTHER INCOME (EXPENSES) (1,764,094) (1,581,916) (3,346,010)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Amortization of discount on conversions (108,760) -- (108,760)
Income from discontinued operations -- 576,945 576,945
Gain on disposal of assets -- 906,138 906,138
Interest income 1,450 -- 1,450
Interest expense (240,259) (1,182,431) (1,422,690)
------------ ------------ ------------
Total Other Income (Expenses) (347,569) 300,652 (46,917)
------------ ------------ ------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES $ (2,111,663) $ (1,281,264) $ (3,392,927)
Provision for Income Taxes -- -- --
------------ ------------ ------------
NET LOSS APPLICABLE TO COMMON SHARES $ (2,111,663) $ (1,281,264) $ (3,392,927)
============ ============ ============
NET LOSS PER BASIC AND DILUTED SHARES $ (0.03) $ (0.05336)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 63,586,027 63,586,027
============ ============
The accompanying notes are an integral part of the condensed
consolidated financial statements.
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma adjustments are included in the accompanying
unaudited pro forma condensed consolidated balance sheet as of June 30, 2005 and
the unaudited pro forma condensed consolidated statements of operations for the
six months ended June 30, 2005 and the statement of operations for the year
ended December 31, 2004 to reflect the purchase of the assets and assumption of
certain liabilities.
A. To record the purchase of the assets and certain liabilities of Nurses PRN,
LLC.