ý
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended March 31, 2009
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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11-3255619
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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195
Route 9 South, Suite 109
Manalapan,
New Jersey 07726
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||
(Address
of principal executive offices)
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||
(732)
333-3622
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||
(Registrant’s
telephone number, including area code)
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||
Large
accelerated Filer o
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Accelerated
filer o
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Non
- accelerated filer o
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Smaller
reporting company x
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PART
I – FINANCIAL INFORMATION
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Page
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|
Item
1.
|
Financial
Statements (Unaudited)
|
|
Balance
Sheets as of March 31, 2009 and September 30, 2008
|
1
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|
Statements
of Operations for the Three and Six Months Ended March 31, 2009 and
2008
|
2
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|
Statement
of Stockholders’ Equity for the Six Months Ended March 31,
2009
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3
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|
Statements
of Cash Flows for the Six Months Ended March 31, 2009 and
2008
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4
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|
Notes
to Financial Statements
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5-11
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|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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12
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Item
3.
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Quantitative
and Qualitative Disclosures about Market Risks
|
20
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Item
4.
|
Controls
and Procedures
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20
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PART
II – OTHER INFORMATION
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||
Item
1.
|
Legal
Proceedings
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21
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Item
1A.
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Risk
Factors
|
21
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Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
21
|
Item
3.
|
Defaults
Upon Senior Securities
|
22
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Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
22
|
Item
5.
|
Other
Information
|
22
|
Item
6.
|
Exhibits
|
22
|
Signatures
|
March
31,
|
September
30,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 31,000 | $ | 69,000 | ||||
Accounts
receivable – less allowance for doubtful accounts of $515,000 and
$445,000, respectively
|
913,000 | 1,362,000 | ||||||
Due
from financial institution
|
271,000 | 202,000 | ||||||
Unbilled
receivables
|
422,000 | 671,000 | ||||||
Prepaid
expenses
|
243,000 | 326,000 | ||||||
Due
from related party
|
40,000 | 51,000 | ||||||
Total
current assets
|
1,920,000 | 2,681,000 | ||||||
Property
and equipment, net
|
286,000 | 340,000 | ||||||
Other
assets
|
9,000 | 10,000 | ||||||
Intangible
assets, net
|
1,189,000 | 1,426,000 | ||||||
Goodwill
|
3,332,000 | 3,332,000 | ||||||
Total
assets
|
$ | 6,736,000 | $ | 7,789,000 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 1,566,000 | $ | 1,431,000 | ||||
Accrued
wages and related obligations
|
1,417,000 | 2,019,000 | ||||||
Current
portion of long-term debt
|
413,000 | 420,000 | ||||||
Current
portion of related party long-term debt
|
947,000 | 946,000 | ||||||
Acquisition
related contingent liability
|
109,000 | 193,000 | ||||||
Due
to related party
|
243,000 | 61,000 | ||||||
Total
current liabilities
|
4,695,000 | 5,070,000 | ||||||
Long
term debt, net of current portion
|
248,000 | 307,000 | ||||||
Related
party long-term debt, net of current portion
|
936,000 | 1,144,000 | ||||||
Total
liabilities
|
5,879,000 | 6,521,000 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, $0.0001 par value, 5,000,000 shares authorized; zero shares issued
and outstanding
|
- | - | ||||||
Common
stock, $0.0001 par value, 95,000,000 shares authorized; 23,703,000 and
23,792,000 shares issued and outstanding as of March 31, 2009 and
September 30, 2008, respectively
|
2,000 | 2,000 | ||||||
Additional
paid-in capital
|
3,318,000 | 3,236,000 | ||||||
Accumulated
deficit
|
(2,463,000 | ) | (1,970,000 | ) | ||||
Total
stockholders’ equity
|
857,000 | 1,268,000 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 6,736,000 | $ | 7,789,000 | ||||
Three
Months
|
Six
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
March
31,
2009
|
March
31,
2008
|
March
31,
2009
|
March
31,
2008
|
|||||||||||||
Revenue
|
$ | 13,376,000 | $ | 15,743,000 | $ | 30,727,000 | $ | 33,891,000 | ||||||||
Direct
cost of services
|
11,470,000 | 13,304,000 | 26,128,000 | 28,391,000 | ||||||||||||
Gross
profit
|
1,906,000 | 2,439,000 | 4,599,000 | 5,500,000 | ||||||||||||
Selling,
general and administrative expenses *
|
2,207,000 | 2,747,000 | 4,627,000 | 5,346,000 | ||||||||||||
Depreciation
and amortization
|
103,000 | 118,000 | 215,000 | 225,000 | ||||||||||||
Loss
from operations
|
(404,000 | ) | (426,000 | ) | (243,000 | ) | (71,000 | ) | ||||||||
Interest
expense
|
107,000 | 229,000 | 250,000 | 543,000 | ||||||||||||
Loss
on goodwill impairment
|
- | 148,000 | - | 148,000 | ||||||||||||
Net
loss on debt extinguishments
|
- | 100,000 | - | 100,000 | ||||||||||||
Net
loss
|
$ | (511,000 | ) | $ | (903,000 | ) | $ | (493,000 | ) | $ | (862,000 | ) | ||||
Net
loss per share:
|
||||||||||||||||
Basic
|
$ | (0.02 | ) | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.05 | ) | ||||
Diluted
|
$ | (0.02 | ) | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.05 | ) | ||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
22,445,000 | 18,983,000 | 22,297,000 | 17,934,000 | ||||||||||||
Diluted
|
22,445,000 | 18,983,000 | 22,297,000 | 17,934,000 | ||||||||||||
*
Includes $41,000 and $82,000 for the three and six months ended March 31,
2009, respectively, and $198,000 and $209,000 for the three and six months
ended March 31, 2008, respectively, in non-cash charges for stock based
compensation.
|
Six
Months Ended
|
||||
March
31, 2009
|
||||
Common
Stock – Shares:
|
||||
Balance
at beginning of period
|
23,792,000 | |||
Forfeitures
of restricted stock awards
|
(89,000 | ) | ||
Balance
at end of period
|
23,703,000 | |||
Common
Stock – Par Value:
|
||||
Balance
at beginning of period
|
$ | 2,000 | ||
- | ||||
Balance
at end of period
|
$ | 2,000 | ||
Additional
Paid-In Capital:
|
||||
Balance
at beginning of period
|
$ | 3,236,000 | ||
Stock-based
compensation relating to restricted common stock
|
82,000 | |||
Balance
at end of period
|
$ | 3,318,000 | ||
Accumulated
Deficit:
|
||||
Balance
at beginning of period
|
$ | (1,970,000 | ) | |
Net
loss
|
(493,000 | ) | ||
Balance
at end of period
|
$ | (2,463,000 | ) | |
Six
Months Ended
|
||||||||
March
31,
|
March
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$
|
(493,000
|
)
|
$
|
(862,000
|
)
|
||
Adjustments
to reconcile net loss to cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
215,000
|
225,000
|
||||||
Stock-based
compensation
|
82,000
|
209,000
|
||||||
Bad
debt expense
|
76,000
|
159,000
|
||||||
Loss
on goodwill impairment
|
-
|
148,000
|
||||||
Net
loss on debt extinguishments
|
-
|
100,000
|
||||||
Amortization
of discount on long-term debt
|
-
|
18,000
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Trade
accounts receivable
|
622,000
|
(100,000
|
)
|
|||||
Due
from financial institution
|
(69,000
|
)
|
106,000
|
|||||
Prepaid
expenses
|
83,000
|
(10,000
|
)
|
|||||
Due
to/from related party
|
193,000
|
(94,000
|
)
|
|||||
Other
assets
|
1,000
|
26,000
|
||||||
Accounts
payable and accrued liabilities
|
(467,000
|
)
|
464,000
|
|||||
Net
cash provided by operating activities
|
243,000
|
389,000
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchase
of property and equipment
|
(8,000
|
)
|
(244,000
|
)
|
||||
Net
cash used in investing activities
|
(8,000
|
)
|
(244,000
|
)
|
||||
Cash
flows from financing activities:
|
||||||||
Principal
payments on long-term debt
|
(66,000
|
)
|
(137,000
|
)
|
||||
Proceeds
from issuance of long-term debt – related parties
|
-
|
27,000
|
||||||
Principal
payments on long-term debt – related parties
|
(207,000
|
)
|
(387,000
|
)
|
||||
Payments
on contingent acquisition related liability
|
-
|
(62,000)
|
||||||
Proceeds
from issuance of common stock
|
-
|
310,000
|
||||||
Net
cash used in financing activities
|
(273,000
|
)
|
(249,000
|
)
|
||||
Change
in cash
|
(38,000
|
)
|
(104,000
|
)
|
||||
Cash
at beginning of period
|
69,000
|
137,000
|
||||||
Cash
at end of period
|
$
|
31,000
|
$
|
33,000
|
||||
As
of March 31, 2009
|
As
of September 30, 2008
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
lists and relationships (7 years)
|
$
|
1,923,000
|
$
|
(759,000
|
)
|
$
|
1,164,000
|
$
|
2,007,000
|
$
|
(625,000
|
)
|
$
|
1,382,000
|
||||||||||
Non-competition
agreements
(3
years)
|
111,000
|
(86,000
|
)
|
25,000
|
111,000
|
(67,000
|
)
|
44,000
|
||||||||||||||||
Total
|
$
|
2,034,000
|
$
|
(845,000
|
)
|
$
|
1,189,000
|
$
|
2,118,000
|
$
|
(692,000
|
)
|
$
|
1,426,000
|
||||||||||
Goodwill
(indefinite life)
|
$
|
3,332,000
|
$
|
3,332,000
|
$
|
3,332,000
|
$
|
3,332,000
|
||||||||||||||||
March
31,
|
September
30,
|
|||||||
2009
|
2008
|
|||||||
Long-term
debt
|
||||||||
16.25%
subordinated note (i)
|
$ | 102,000 | $ | 102,000 | ||||
3%
convertible subordinated note (ii)
|
407,000 | 436,000 | ||||||
18%
unsecured note (iii)
|
80,000 | 80,000 | ||||||
Long
term capitalized consulting obligations (v)
|
10,000 | 38,000 | ||||||
Long
term capitalized lease obligation (xii)
|
12,000 | 21,000 | ||||||
Other
debt
|
50,000 | 50,000 | ||||||
Total
|
661,000 | 727,000 | ||||||
Less
current maturities
|
413,000 | 420,000 | ||||||
Non-current
portion
|
248,000 | 307,000 | ||||||
Related
party long-term debt
|
||||||||
13%
unsecured demand note (iv)
|
104,000 | 104,000 | ||||||
Long
term capitalized consulting obligations (vi)
|
3,000 | 17,000 | ||||||
18%
unsecured convertible note (vii)
|
100,000 | 100,000 | ||||||
Demand
loans (viii)
|
55,000 | 65,000 | ||||||
6%
unsecured note (ix)
|
100,000 | 100,000 | ||||||
6%
unsecured note (x)
|
1,521,000 | 1,631,000 | ||||||
9%
unsecured note (xi)
|
- | 73,000 | ||||||
Total
|
1,883,000 | 2,090,000 | ||||||
Less
current maturities
|
947,000 | 946,000 | ||||||
Non-current
portion
|
936,000 | 1,144,000 | ||||||
Total
long-term debt
|
2,544,000 | 2,817,000 | ||||||
Less
current maturities
|
1,360,000 | 1,366,000 | ||||||
Total
non-current portion
|
$ | 1,184,000 | $ | 1,451,000 | ||||
(i)
|
A
$175,000 subordinated note was issued March 31, 2006, and was due January
30, 2007. The note had an annual interest rate of 8% with
principal and interest payable in equal monthly installments of
$18,150. The note is secured by office equipment and other
fixed assets. Due to the failure to make timely payments under
the terms of the note, the holder elected the option of declaring the note
in technical default and began assessing interest, beginning April 1,
2007, at the rate of 11.25% per annum, and imposed a 5% late charge on the
overdue balance outstanding. On October 31, 2007, the Company
entered into a forbearance agreement with the holder of the note wherein
the holder agreed to waive defaults and refrain from exercising its rights
and remedies against the Company until October 31, 2008, in exchange for
an increase in the interest rate to 16.25%. On October 31,
2008, the Company entered into another forbearance agreement with the
holder of the note effectively extending the terms of the original
forbearance agreement until October 31,
2009.
|
(ii)
|
A
$675,000 convertible subordinated note was issued March 31, 2006, and is
due March 31, 2012. The note bears interest at an annual rate
of 3%, and is convertible in part or in whole into common shares at any
time at the option of the holder at the specified price of $1.50 per
share. The note is secured by office equipment and other fixed
assets.
|
(iii)
|
An
$80,000 unsecured non-interest bearing note was issued March 31, 2006, and
was due June 29, 2006. Due to the failure to make timely
payments under the terms of the note, on April 1, 2007, the holder elected
the option of declaring the note in technical default and began charging
interest at a rate of 18% per annum. On October 31, 2007, the
Company entered into a forbearance agreement with the holder of the note
wherein the holder agreed to waive defaults and refrain from exercising
its rights and remedies against the Company until October 31, 2008, in
exchange for an increase in the interest rate to 18% per annum. On October
31, 2008, the Company entered into another forbearance agreement with the
holder of the note effectively extending the terms of the original
forbearance agreement until October 31,
2009.
|
(iv)
|
A
$150,000 unsecured demand note was issued March 31, 2006, to a principal
shareholder of the Company as a finders fee in consideration for sourcing
and completing the US Temp Acquisition. The note bore an annual
interest rate of 8%. On October 31, 2007, the Company entered into a
forbearance agreement with the holder of the note wherein the holder
agreed to waive defaults and refrain from exercising its rights and
remedies against the Company until October 31, 2008, in exchange for an
increase in the interest rate to 13% per annum. On October 31, 2008, the
Company entered into another forbearance agreement with the holder of the
note effectively extending the terms of the original forbearance agreement
until October 31, 2009.
|
(v)
|
Two
of the agreements were entered into with the principals of US Temp and
each requires annual payments of $60,000 in the first two years and
$30,000 in the final year, payable in fixed weekly
amounts. These two agreements in total were initially
recognized at a fair value of $292,000 using a discount rate of
8.75%.
|
(vi)
|
The
third agreement was entered into with a major shareholder of the Company
and requires annual payments of $30,000 in each of three years, payable in
fixed weekly amounts. The agreement was initially recorded at a
fair value of $84,000 using an interest rate of
5%.
|
(vii)
|
A
$100,000 unsecured convertible note and 600,000 shares of restricted
common stock were issued on January 31, 2008, to a shareholder and
director of the Company in exchange for another note that had an
outstanding principal balance of $200,000. This $100,000
unsecured convertible note was due October 31, 2008, and bore interest at
an annual rate of 12%. It is convertible at any time at the
option of the holder at a specified price of $0.40 per share. Due to the
failure to pay the note at maturity, the interest rate on the note has
increased to 18% per annum.
|
(viii)
|
Demand
Loans consist of amounts due to two separate shareholders of the
company. The amounts are not subject to interest, are
classified as short-term loans and are due and payable upon demand by the
shareholders.
|
(ix)
|
In February
2008, a $100,000 unsecured note was issued. The note was due
March 5, 2009, and bore an annual interest rate of 6%. The note
will be subject to an interest rate of 18% beginning in April, 2009, due
to the failure to pay the principal at its maturity
date.
|
(x)
|
In February
2008, a $1,700,000 unsecured note was issued. The note bears an
annual interest rate of 6% with principal and interest payable in equal
monthly installments of $39,925 over four years beginning May 1,
2008. As mentioned above, the note is subject to proportionate
reduction in principal in the event the acquired operations generate less
than $1,000,000 in net income (as defined in the asset purchase agreement)
in any calendar year during the term of the note. The Company
is currently in discussions with the note holder to review the net income
calculation for the year ended December 31, 2008, and potentially
favorably restructure both the amount and terms of the
note.
|
(xi)
|
In
February 2007, a $275,000 unsecured note was issued as partial finder’s
fee consideration, bearing annual interest of 9%, with principal and
interest payable in equal monthly installments of $2,885 over 104
months.
|
(xii)
|
In
November, 2007, the Company entered into a capital lease agreement to
purchase computer equipment. The original principal of $33,000
is payable over a lease term of 24 months in equal monthly installments of
$1,843.
|
Nonvested Shares
|
Shares
|
Weighted-Average
Grant-Date Fair Value
|
||||||
Nonvested
at October 1, 2008
|
1,624,000 | $ | 0.31 | |||||
Vested
|
(567,000 | ) | $ | 0.31 | ||||
Forfeited
|
(69,000 | ) | $ | 0.25 | ||||
Nonvested
at March 31, 2009
|
988,000 | $ | 0.31 | |||||
Six
Months Ended
|
Six
Months Ended
|
|||||||
March
31,
|
March
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
paid for interest
|
$
|
229,000
|
$
|
444,000
|
||||
Non-cash
investing and financing activities:
|
||||||||
ReStaff
Acquisition purchase price adjustment and debt reduction
|
-
|
1,398,000
|
||||||
Debt
converted to restricted common stock at fair value
|
-
|
622,000
|
||||||
Stock
based compensation
|
82,000
|
209,000
|
||||||
Capital
lease obligation for computer equipment
|
-
|
33,000
|
||||||
Issuance
of shares for related-party outstanding invoices
|
-
|
26,000
|
▪
|
The
economic uncertainties in which we currently operate make it challenging
for us to predict the near-term future. If the U.S. recession
continues for an extended period, it would likely have a significant
adverse impact on our clients and our business. The effects of
the recession have resulted in a deterioration of employment markets and
temporary staffing. We expect to continue to focus on our
strategic plan; however, until we witness sustained temporary staffing job
creation and signs of a strengthening economy, we will continue to take
decisive actions to minimize short-term
risks.
|
▪
|
We
have financed our growth largely through the issuance of debt and have
incurred negative working capital. As of March 31, 2009 we had
negative working capital of ($2,775,000), for which the component
constituting the current portion of long-term debt was
$1,360,000. Total outstanding debt as of March 31, 2009 was
$2,544,000, $764,000 of which is past due or due upon demand, and
$1,521,000 of which is subject to proportionate reduction in the event the
associated acquired businesses for which the debt was issued do not
produce agreed upon levels of profitability. In order to
service our debt, maintain our current level of operations, as well as
fund the increased costs of becoming a reporting company and our growth
initiatives, we must be able to generate sufficient amounts of cash flow
and working capital. Management is engaged in several
activities, as explained further in the “Working Capital” section below,
to effectively accomplish these objectives; however, continued or
increased volatility and disruption in the global capital and credit
markets could negatively impact our business operations and therefore our
liquidity and ability to meet working capital
needs.
|
▪
|
A
significant component of our growth to date has come through
acquisitions. Management continues to invest resources in
activities to seek, complete and integrate acquisitions that enhance
current service offerings, and effectively assimilate into our operations,
marketing and sales strategies. Additionally, management seeks
acquisitions in desired geographical markets and which have minimal costs
and risks associated with integration. Management believes that
effectively acquiring businesses with these attributes will be critical to
our growth.
|
▪
|
Our
success depends on our ability to provide our clients with highly
qualified and experienced personnel who possess the skills and experience
necessary to satisfy their needs. Such individuals are in great
demand, particularly in certain geographic areas, and are likely to remain
a limited resource for the foreseeable future. Management is
responding to this demand through proactive recruiting efforts and
targeted marketing.
|
▪
|
As
a result of becoming a fully reporting public company, we will experience
increases in certain general and administrative expenses to comply with
the laws and regulations applicable to public companies. These laws and
regulations include the provisions of the Sarbanes-Oxley Act of 2002 and
the rules of the Securities and Exchange Commission and the OTC Bulletin
Board . To comply with the corporate governance and operating
requirements of being a public company, we will incur increases in such
items as personnel costs, professional services fees, and fees for
independent directors.
|
▪
|
Stratus Services Group, Inc.
Offices Acquisition (“Stratus Acquisition”). In November
2005, we acquired the operations of three general staffing offices from
Stratus Services Group, Inc. in exchange for certain future earn-out
payments.
|
▪
|
US Temp Services, Inc. Offices
Acquisition (“US Temp Acquisition”). On March 31, 2006,
we acquired the operations, including five general staffing offices, of US
Temp Services, Inc. in exchange for cash, notes and shares of our common
stock.
|
▪
|
ReStaff Services, Inc. Offices
Acquisition (“ReStaff Acquisition”). On February 26,
2007, we acquired the operations, including three general staffing
offices, of ReStaff Services, Inc. in exchange for, cash, notes and shares
of our common stock.
|
|
a)
|
In
October 2008, we extended the terms of three forbearance agreements with
respect to $286,000 of the $764,000 past due or due upon demand
debt. These short term debt holders have agreed to waive
defaults and refrain from exercising their rights and remedies against us
until October 31, 2009.
|
|
b)
|
In
the second fiscal quarter of 2009, we received advances totaling $212,000
from a major shareholder.
|
|
c)
|
In
connection with our receivable sale agreement dated March 1, 2007
with a financial institution, we have failed to make timely
payments on our overadvance of $500,000, as well as certain other
debt obligations to other third parties, which may constitute a default
under the receivable sale agreement. In addition, while no such
advice or notification has been provided, our current negative
working capital position and limited access to additional financing could
cause the financial institution to deem themselves to be
insecure. As a consequence, the financial institution may deem
itself to be entitled to exercise its right to either declare immediately
due and payable, and to charge back, all indebtedness including
outstanding purchased accounts, and all other fees costs and expenses, or
to withhold payment on all sold receivables up to an amount equaling the
sum of outstanding purchased accounts, plus discounts and fees owed, and
the overadvance, as well as increase the discount rate to 18%
while we are in default. Should this occur, there could be
a severe adverse impact on our ability to generate working capital and
consequently to operate our business going forward, if we would
then be unable to secure new financing with acceptable terms in an
appropriate timeframe . We are currently in discussions with
the financial institution to seek a waiver of any default and to favorably
restructure the amount and terms of the overadvance, including but not
limited to, its repayment. In
addition, we are in discussions with our largest shareholder, which owns
approximately 43% of our outstanding common shares and which is also the
entity through which we obtain our leased employees, to provide additional
sources of funds. If necessary we will also continue to seek
other sources of funding should a favorable restructuring agreement with
the financial institution appear unlikely. Although there can
be no assurances that a favorable restructuring will be obtained or
additional sources of funding will be secured, we believe that our
projected cash flows from operations in combination with the above
restructuring and financing efforts will result in sufficient cash
availability to support our operations for the coming twelve
months.
|
|
d)
|
We
are currently in discussion with the holder of the $1,700,000 note
disclosed in Note 7 (x) to our financial statements to review the net
income calculation performed by management for the year ended December 31,
2008, and potentially favorably restructure both the amount and terms of
the note.
|
|
e)
|
In
April 2009, we discontinued our CPA Partner on Premise strategy and are in
discussions with a third party controlled by certain officers, to assume
the finance and accounting services that were provided through our Direct
Professional Services offering. During the six months ended
March 31, 2009 and 2008, these service offerings generated losses from
operations of approximately ($371,000) and ($347,000),
respectively.
|
|
f)
|
We
are aggressively managing cash and expenses, including the increased costs
of being a reporting company, with activities such as seeking additional
efficiencies in our operating offices and corporate functions including
headcount reductions, if appropriate, improving our accounts receivable
collection efforts, obtaining more favorable vendor terms, and using our
finance and accounting consultants when available to aid in the necessary
obligations associated with being a reporting
company.
|
March
31,
|
September
30,
|
|||||||
2009
|
2008
|
|||||||
Long-term
debt
|
||||||||
16.25%
subordinated note (i)
|
$ | 102,000 | $ | 102,000 | ||||
3%
convertible subordinated note (ii)
|
407,000 | 436,000 | ||||||
18%
unsecured note (iii)
|
80,000 | 80,000 | ||||||
Long
term capitalized consulting obligations (v)
|
10,000 | 38,000 | ||||||
Long
term capitalized lease obligation (xii)
|
12,000 | 21,000 | ||||||
Other
debt
|
50,000 | 50,000 | ||||||
Total
|
661,000 | 727,000 | ||||||
Less
current maturities
|
413,000 | 420,000 | ||||||
Non-current
portion
|
248,000 | 307,000 | ||||||
Related
party long-term debt
|
||||||||
13%
unsecured demand note (iv)
|
104,000 | 104,000 | ||||||
Long
term capitalized consulting obligations (vi)
|
3,000 | 17,000 | ||||||
18%
unsecured convertible note (vii)
|
100,000 | 100,000 | ||||||
Demand
loans (viii)
|
55,000 | 65,000 | ||||||
6%
unsecured note (ix)
|
100,000 | 100,000 | ||||||
6%
unsecured note (x)
|
1,521,000 | 1,631,000 | ||||||
9%
unsecured note (xi)
|
- | 73,000 | ||||||
Total
|
1,883,000 | 2,090,000 | ||||||
Less
current maturities
|
947,000 | 946,000 | ||||||
Non-current
portion
|
936,000 | 1,144,000 | ||||||
Total
long-term debt
|
2,544,000 | 2,817,000 | ||||||
Less
current maturities
|
1,360,000 | 1,366,000 | ||||||
Total
non-current portion
|
$ | 1,184,000 | $ | 1,451,000 | ||||
Number
|
Description
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act
of 2002
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act
of 2002
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of Sarbanes-Oxley Act of 2002
|
ACCOUNTABILITIES, INC. | |||
Date:
May 15, 2009
|
By:
|
/s/ Jay H. Schecter | |
Name: Jay H. Schecter | |||
Title: Chief Executive Officer | |||
Date:
May 15, 2009
|
By:
|
/s/ Stephen DelVecchia | |
Name: Stephen DelVecchia | |||
Title: Chief Financial Officer | |||