SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
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. (the "Company" or "MSSI") is amending this
Current Report to correct certain figures set forth in the MSSI and Subsidiaries
Unaudited Proforma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 2004 and to add certain disclosures to the MSSI and
Subsidiaries Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
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 contingent 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, Incorporated by reference
effective as of June 16, to Exhibit 99.1 to the
2005, by and among MSSI, Company's Current Report
Nurses PRN Acquisition on Form 8-K filed with the
Corp., Nurses PRN, LLC and U.S. Securities and
the Members listed therein Exchange Commission on
July 11, 2004
Exhibit 99.2 $250,000 Promissory Note, Incorporated by reference
effective June 16, 2005, to Exhibit 99.2 to the
by Nurses PRN Acquisition Company's Current Report
Corp., Inc. issued to Mr. on Form 8-K filed with the
Aftab Adamjee U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.3 Executive Employment Incorporated by reference
Agreement, dated June 16, to Exhibit 99.3 to the
2005, by and between Company's Current Report
Nurses PRN Acquisition on Form 8-K filed with the
Corp. and Mr. Robert U.S. Securities and
Murphy Exchange Commission on
July 11, 2004
2
Exhibit 99.4 Executive Employment Incorporated by reference
Agreement, dated June 16, to Exhibit 99.4 to the
2005, by and between Company's Current Report
Nurses PRN Acquisition on Form 8-K filed with the
Corp. and Ms. Linda Romano U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.5 Release, dated June 16, Incorporated by reference
2005, by Mr. Aftab Adamjee to Exhibit 99.5 to the
releasing all claims Company's Current Report
against Nurses PRN, LLC, on Form 8-K filed with the
Mr. Robert Murphy and Ms. U.S. Securities and
Linda Romano Exchange Commission on
July 11, 2004
Exhibit 99.6 Release, dated May 26, Incorporated by reference
2005, by Mr. Phil Dodge to Exhibit 99.6 to the
releasing all against Company's Current Report
Nurses PRN, LLC claims on Form 8-K filed with the
U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.7 Release, dated June 16, Incorporated by reference
2005, by Mr. Robert Murphy to Exhibit 99.7 to the
releasing all claims Company's Current Report
against Nurses PRN, LLC on Form 8-K filed with the
U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.8 Release, dated June 16, Incorporated by reference
2005, by Ms. Linda Romano to Exhibit 99.8 to the
releasing all claims Company's Current Report
against Nurses PRN, LLC on Form 8-K filed with the
U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.9 Assumption Agreement, Incorporated by reference
dated June 16, 2005, by to Exhibit 99.9 to the
and among Nurses PRN, LLC, Company's Current Report
Nurses PRN Acquisition on Form 8-K filed with the
Corp. and Mr. Jeffrey T. U.S. Securities and
Dowling Exchange Commission on July 11,
2004
Exhibit 99.10 Pledge Agreement, dated Incorporated by reference
June 16, 2005, by and to Exhibit 99.10 to the
between Mr. Robert Murphy Company's Current Report
and Ms. Linda J. Romano as on Form 8-K filed with the
Pledgor and Mr. Jeffrey T. U.S. Securities and
Dowling as Pledgee Exchange Commission on
July 11, 2004
Exhibit 99.11 Indemnity and Guaranty Incorporated by reference
Agreement, dated June 16, to Exhibit 99.11 to the
2005, by and among Mr. Company's Current Report
Aftab Adamjee, Mr. Robert on Form 8-K filed with the
Murphy and Ms. Linda U.S. Securities and
Romano as Indemnitors and Exchange Commission on
Nurses PRN, LLC July 11, 2004
3
Exhibit 99.12 Guaranty of Payment, dated Incorporated by reference
June 16, 2005, by Medical to Exhibit 99.12 to the
Staffing Solutions, Inc. Company's Current Report
with respect to Mr. on Form 8-K filed with the
Jeffrey T. Dowling U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.13 Guaranty of Payment, dated Incorporated by reference
June 16, 2005, by Medical to Exhibit 99.13 to the
Staffing Solutions, Inc. Company's Current Report
with respect to Mr. Aftab on Form 8-K filed with the
Adamjee U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.14 Guaranty, dated June 16, Incorporated by reference
2005, by Mr. Robert Murphy to Exhibit 99.14 to the
and Ms. Linda Romano with Company's Current Report
respect to Jeffrey T. on Form 8-K filed with the
Dowling and the payment of U.S. Securities and
all indebtedness of Nurses Exchange Commission on
PRN, LLC July 11, 2004
Exhibit 99.15 Bill of Sale, undated, by Incorporated by reference
and between Nurses PRN, to Exhibit 99.15 to the
LLC and Nurses PRN Company's Current Report
Acquisition Corp. on Form 8-K filed with the
U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.16 Assignment and Assumption Incorporated by reference
Agreement, dated June 16, to Exhibit 99.16 to the
2005, by and between Company's Current Report
Nurses PRN, LLC and Nurses on Form 8-K filed with the
PRN Acquisition Corp. U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.17 Joinder, dated June 10, Incorporated by reference
2005, by and between Mr. to Exhibit 99.17 to the
Aftab Adamjee and Mr. Company's Current Report
Jeffrey T. Dowling on Form 8-K filed with the
U.S. Securities and
Exchange Commission on
July 11, 2004
Exhibit 99.18 Confirmation of Closing in Incorporated by reference
Escrow, dated June 16, to Exhibit 99.18 to the
2005, by and between Company's Current Report
attorneys for MSSI, Nurses on Form 8-K filed with the
PRN Acquisition Corp. and U.S. Securities and
Nurses PRN, LLC Exchange Commission on
July 11, 2004
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Company has duly caused this amended report to be signed on its behalf by
the undersigned hereunto duly authorized.
MEDICAL STAFFING SOLUTIONS, INC.
Date: June 9, 2006 By /s/ Dr. Brajnandan B. Sahay
------------------------------
Name: Dr. Brajnandan B. Sahay
Title: President
5
ITEM 9.01. (A):
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
6
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
7
NURSES PRN, L.L.C.
BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
2004 2003
----------- -----------
ASSETS
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
8
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
9
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
10
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
11
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 acquisition 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
12
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.
13
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.
14
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.
15
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.
16
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.
17
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.
18
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.
19
NURSES PRN, L.L.C.
REVIEWED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004
(UNAUDITED)
20
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
21
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
22
NURSES PRN, L.L.C.
BALANCE SHEETS
JUNE 30, 2005 AND 2004
2005 2004
----------- -----------
ASSETS
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
23
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
24
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
25
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
26
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.
27
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.
28
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.
29
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.
30
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.
31
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.
32
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.
33
MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2005
MEDICAL STAFFING
SOLUTIONS, INC. AND
SUBSIDIARIES NURSES PRN, LLC ADJUSTMENTS PRO 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.
34
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 SUBSIDIARIES NURSES PRN, LLC PRO 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.
35
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 SUBSIDIARIES NURSES PRN, LLC PRO 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)
Interest income 1,450 -- 1,450
Interest expense (240,259) (1,182,431) (1,422,690)
------------ ------------ ------------
Total Other Income (Expenses) (347,569) (1,182,431) (1,530,000)
------------ ------------ ------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES $ (2,111,663) $ (2,764,347) $ (4,876,010)
------------ ------------ ------------
PROVISION FOR INCOME TAXES -- -- --
NET LOSS APPLICABLE TO COMMON SHARES $ (2,111,663) $ (2,764,347) $ (4,876,010)
============ ============ ============
NET LOSS PER BASIC AND DILUTED SHARES $ (0.03) $ (0.08)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 63,586,027 63,586,027
============ ============ ============
36
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.
B. Nurses PRN, LLC had disposed of a subsidiary during the 2005
year, and had reported the income from discontinued operations
and the gain on the disposal of the assets from said
discontinued operations on their financial statements in the
amounts of $576,945 and $906,138, respectively. However, in
accordance with proper reporting requirements, those elements
have been eliminated in the pro-forma presentation, resulting
in an increase in loss reported on the pro-forma from an
actual amount of $(1,281,264) to a pro-forma loss amount of
$(2,764,347).
37