U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to ________________
Commission file no. 0-24551
JS Business Works, Inc.
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(Name of small business issuer in its charter)
Florida 65-0790758
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
219 Almeria
West Palm Beach, Florida 33405
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (561) 804-9744
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value
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(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $-0-
Of the 2,296,500 shares of voting stock of the registrant issued and
outstanding as of December 29, 1998, 646,000 shares are held by non-affiliates.
Because of the absence of an established trading market for the voting stock,
the registrant is unable to calculate the aggregate market value of the voting
stock held by non-affiliates as of a specified date within the past 60 days.
<PAGE>
PART I
Item 1. Description of Business.
(a) Business Development.
JS Business Work, Inc. (hereinafter referred to as the "Company" or "JSBW")
was organized under the laws of the State of Florida on October 20, 1997. The
Company was organized by Mr. Charles Adams, an executive officer and director of
the Company for the purpose of engaging in the business of providing human
resource services in the flexible industrial staffing market. In this regard,
the Company retained the services of Ms. Lyn Garrett as Executive Vice
President. The Company intends to deploy temporary industrial personnel to its
clients. It is anticipated that the Company will benefit from the synergy
expected to result from the combination of the general business experience and
expertise of Mr. Adams with Ms Garrett's fourteen (14) plus years experience in
the placement of temporary and permanent personnel. The Company's executive
offices are presently located at 219 Almeria, West Palm Beach, Florida 33405 and
its telephone number is (561) 804-9744.
The Company generally has been inactive, having conducted no business
operations except organizational and fund raising activities since its
inception. JSBW received gross proceeds in the amount of $20,200 from the sale
of a total of 646,000 shares of common stock, $.0001 per value per share (the
"Common Stock"), in two (2) offerings conducted pursuant to Section 3(b) of the
Securities Act of 1933, as amended (the "Act"), and Rule 504 of Regulation D
promulgated thereunder ("Rule 504"). These offering were made in the State of
Georgia and the State of Florida. The Company undertook its first offering of
302,500 shares of Common Stock pursuant to Rule 504 on April 3, 1998 and its
second offering of 343,500 shares of Common Stock pursuant to Rule 504 on April
20, 1998. While no offering memorandum was used in connections with these
offerings, the business plan of the Company, which was disclosed to each
prospective investor, was for the provision of human resource services in the
flexible industrial staffing market. Neither Georgia nor Florida required a
disclosure document under the terms of the exemption under which these offering
were made.
There are no preliminary agreements or understandings between the Company
and its officers and directors or affiliates or lending institutions with
respect to any loan agreements or arrangements.
The Company intends to offer additional securities under Rule 506 of
Regulation D under the Act ("Rule 506) to fund its short and medium term
expansion plans. (See Part I, Item 1. "Description of Business - (b) Business of
Issuer.")
See (b) "Business of Issuer" immediately below for a description of the
Company's proposed business of deploying temporary industrial help to its
clients. As of the date hereof, the Company has no temporary staff or clients
for placement of such staff.
<PAGE>
(b) Business of Issuer.
General
Since its inception, the Company has conducted no business operations
except for organizational activities and an offering of Common Stock pursuant to
which it has received gross offering proceeds in the amount of $20,200. Further,
the Company has had no employees since its organization. It is anticipated that
the Company's executive officers and directors who, except for one lump-sum
consulting fee received by two such persons, have served in those positions
without compensation through the date hereof, will receive reasonable salaries
for services as executive officers at such time as the Company commences
business operations. (See Part III, Item 10. "Executive Compensation.") The
Company's executive officers and/or directors will devote such time and effort
as may be necessary to participate in the day-to-day management of the Company.
The Company has no plans to employ any individuals except its executive officers
on a part-time basis for the foreseeable future. The Company proposes to engage
in business as the provider of human resource services in the flexible
industrial staffing market. As of the date hereof, JSBW has no temporary staff
available for placement with any clients nor any client base with whom to place
such staff.
The following discussion of the flexible industrial staffing market, as it
relates to the Company's medium and long term business objectives, is of course
pertinent only if the Company is successful in obtaining sufficient debt and/or
equity financing to commence operations as a staffing agency and, in addition
thereto, is able to generate significant profits from operations (which are not
expected in the foreseeable future) and/or additional financing to continue in
business and/or fund the anticipated growth, assuming JSBW's proposed business
is successful. There can be no assurance such financing can be obtained or that
the Company's proposed business will be successful. While Mr. Adams, executive
officer, director and owner of approximately 69.71% of the outstanding common
stock of JSBW has over ten (10) years experience as a financial consultant and
leasing financier in the rolling stock, large commercial machinery, aviation,
commercial marine, automobile and limousine leasing business, he does not have
any specific experience or expertise in the temporary staffing business. (See
Part I, Item 1. "Description of Business", (b) "Business of Issuer - Risk
Factors.")
Mr. Adams decided to pursue the temporary staffing business via the Company
because of the belief that his prior business experience and expertise, when
combined with Ms. Garrett's fourteen (14) plus years in the placement of
temporary and permanent personnel, will enable them to develop a successful
temporary staffing company which will have the advantages of, among other
things, greater availability of capital and potential for growth through the
vehicle of a public company as compared to a privately-held company. The time
required to be devoted by each executive officer, including Mr. Adams and Ms.
Garrett, to manage the day-to-day affairs of the Company is presently estimated
to be approximately five to ten hours per week. This time commitment on the part
of the Company's executive officers is expected to increase at such time, if
ever, as JSBW obtains sufficient funding with which to commence the search for
suitable temporary staffing personnel and the establishment of a suitable client
base with whom such staff can be placed. (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer - Risk Factors.")
The Company will be dependent upon its Executive Vice President, Ms.
Garrett to develop the client base with whom to place the temporary staff and to
screen and train potential candidates for temporary placement. Ms. Garrett has
approximately fourteen (14) years experience in the temporary staffing and
permanent placement business and has managed her own employment agency for
approximately the last three (3) years, one and one-half year as a sole
proprietor and one and one-half year as a corporation. The Company plans to use
to its advantage Ms. Garrett's reputation in the staffing industry.
Nevertheless, while Ms. Garrett has been successful in the past, there can be no
assurance that she will be successful in building the client base and temporary
staff necessary for the successful operation of the Company. (See Part I, Item
1. "Description of Business" (b) "Business of Issuer - Risk Factors.")
<PAGE>
Although Ms. Garrett places temporary employees currently in the areas of
finance and mortgage banking, Ms. Garrett may be subject to direct conflicts of
interest because of her position as an executive officer of JSBW and her
management position with her own employment agency, with regard to opportunities
in the staffing industry which come to her attention and concerning any possible
business dealings between JSBW and her employment agency. In any instance where
such a conflict may arise, the Company intends to employ certain safeguards,
such as ensuring that any agreement between the Company and Ms. Garrett's
employment agency conforms with standard industry practice, if any, in the
southeastern United States and is fair and reasonable to the Company. For
example, if JSBW were to use staff of Ms. Garrett's employment agency, or place
JSBW staff with current clients of Ms. Garrett, the Board of Directors of the
Company would take action to ensure that any fees or commissions paid to Ms.
Garrett's employment agency would not exceed the fees or commissions, if any,
customarily paid to staffing agencies in the southeastern United States.
Further, Ms. Garrett has agreed, should she be elected to the Board of Directors
of JSBW at any time in the future, that she will abstain from voting as a member
of the Board of Directors on any such agreement in which her employment agency
is a party or has an interest or with regard to any business opportunity which
may be attractive to both companies. The Company's Amended Articles of
Incorporation provide that any such related party contract or transaction must
be authorized, approved or ratified at a meeting of the Board of Directors by
sufficient vote thereon by directors not interested therein or the contract or
transaction must be fair and reasonable to the Company. Accordingly, it is
possible for the Company's Board of Directors, by vote of a sufficient number of
disinterested members thereof, to authorize, approve or ratify a related party
contract or transaction or business opportunity involving Ms. Garrett's
employment agency which is unfair and/or unreasonable to the Company, even
though Ms. Garrett abstains from voting thereon. Neither the Company nor Ms.
Garrett has any current plans for related party transactions.(See Part I, Item
1. "Description of Business," (b) "Business of Issuer - Risk Factors.")
The Company intends to become a full-service flexible staffing service, and
to recruit, train and deploy temporary industrial personnel to companies in a
wide range of industries, initially in the Palm Beach County area, then
enlarging to the State of Florida and thereafter in selected areas nationwide.
The Company plans to be able to provide a full spectrum of staffing services for
its clients from a temporary employee of one day to comprehensive outsourcing of
human resource functions.
In its initial phase, the Company will operate out of the facility provided
by Mr. Adams. Ms. Garrett will begin by finding client employers and client
employees for the Company and instructing Mr. Adams in the operation of a
temporary staffing agency. To attract client employers, Ms. Garrett and Mr.
Adams will visit potential clients in order to determine their overall needs. In
order to attract client employees which match the needs of the potential client
employers, the Company will place advertising in local area newspapers in Palm
Beach County. In the event the Company requires additional capital during this
phase, Mr. Adams has committed to fund the operation until such time as
additional capital is available. The Company believes that it will require three
(3) to six (6) months in order to determine the market demand potential and the
availability of qualified employees.
Due to the limited capital available to the Company, the principal risks
during this phase are that the Company is dependent upon Ms. Garrett, that Mr.
Adams lacks experience, that the Company will not be able to establish a client
employer base and or that the Company will not be able to find qualified client
employees to fill the needs of the employers at such time as the request for
placement is made and that Ms. Garrett may have a conflict of interest in
dividing her time between her current business and the Company's business. (See
Part I, Item 1. "Description of Business," (b) "Business of Issuer - Risk
Factors.")
The Company believes that in order to be able to expand its initial
operations, it must rent offices in Palm Beach County, hire clerical staff and
acquire through purchase or lease equipment for client employee testing,
scheduling and accounting purposes. The Company believes that there is adequate
and affordable rental space available in Palm Beach County and sufficiently
trained personnel to provide such clerical services at affordable rates.
Further, the Company believes that the type of equipment necessary for the
operation is readily accessible at competitive rates.
<PAGE>
To implement such plan, also during this initial phase, the Company intends
to initiate a self-directed private placement under Rule 506 in order to raise
an additional $100,000. In the event such placement is successful, the Company
believes that it will have sufficient operating capital to meet the initial
expansion goals and operating costs for a period of one (1) year. In the event
the Company is not successful in raising such funds, the Company believes that
it will not be able to continue operations past a period of three (3) to nine
(9) months.
Even if the Company is successful at raising this additional money, there
can be no assurance that the implementation of the expansion of the initial plan
will increase the number of potential client employers or attract sufficient
client employees to fill the needs of such employers at the time a request for
placement is made. By expanding, the Company may face unforeseen costs
associated with entry into the flexible staffing market. The Company still will
be largely dependent upon Ms. Garrett and to a limited extent upon Mr. Adams to
find suitable client employees on a profitable and timely basis. Additionally,
Ms. Garrett may have a conflict between the time demands of an expanding
business and the time requirements of her existing business. Further, additional
client employees can increase the risk of increased employer costs and
potentially higher Workers' Compensation and employment related claims. The
Company believes that it will be adequately covered by insurance against such
risks; however, there can be no assurance that claims will not be made directly
against the Company. If such claims were to be made, they could have an adverse
effect upon the Company's financial well being. Also, due to the lack of a
working capital funding source, the Company may not have sufficient operating
capital since most client employees pay 30 to 45 days after billing. Although
the Company believes the $100,000 is sufficient to cover operations for
approximately an additional twelve (12) months, there can be no assurance that
such funding can cover the additional risks associated with expansion. (See Part
I, Item 1. "Description of Business," (b) "Business of Issuer - Risk Factors.")
If the Company is able to generate enough revenue during the initial phase
to support the first location, in the medium term, the Company plans to open one
(1) additional office each quarter until such time as it has four (4) offices
operating. The Company intends to open the first expansion office outside of
Palm Beach County in Orlando since Ms. Garrett already has an operation in that
area and is familiar with the employment environment there. The Company
anticipates that it will require an additional $100,000 to fund one (1) year of
operations at this second location, acquisition of offices space and equipment
and wages for clerical staff. The Company also believes that Mr. Adams will be
capable of managing the Palm Beach County operation at this time, while Ms.
Garrett will oversee Orlando and generally oversee the Palm Beach County
operation. As with Palm Beach County, the Company believes that there is
adequate and affordable rental space and clerical support staff available. To
fund this additional expansion, the Company intends to initiate another
self-directed Rule 506 offering to raise $100,000. If the Company is not
successful in raising such additional funds, the Company believes that it will
not be able to operate the second location without creating a financial drain on
the first location. Even if it is successful, there can be no assurance that the
Company will achieve any acceptance in the Orlando marketplace and may find
neither sufficient client employers nor qualified client employees to make the
venture viable.
During the first quarter in which Orlando office is operating, the Company
intends to seek funding through an additional Rule 506 offering, seeking an
additional $300,000. Such funds will be utilized to open the third and fourth
office during the next two quarters. While office space, clerical help,
equipment costs and operations for a one (1) year period are not anticipated to
exceed $100,000 for each office, the Company believes that both Mr. Adams and
Ms. Garrett should be placed on an annual salary and that advertising and
promotional costs must be increased in order to increase the accessability to a
broader range of potential client employers and an increased selection of client
employees. Also, in order to be competitive with other temporary staffing
agencies, the Company must implement an employee benefit program. he Company
believes that the additional $100,000 of the planned offering should be
sufficient to cover these increased costs. The Company plans to open its third
office in Broward County since that is immediately contiguous to Palm Beach
County and its fourth office in Dade County.
The Company feels that by covering these three (3) contiguous counties in
South Florida that it will have access to a broader range of potential client
employers and a larger pool of potential client employees. Further, it believes
that operations in the three (3) contiguous counties will lead to economies of
scale which will increase the potential profitability of the Company. Areas in
which the Company believes it will have the benefit of the greatest economies of
scale are advertising and availability of a larger labor pool which can cover
each of the three (3) counties. Rental space, clerical staff and equipment is
readily available in each of these areas.
<PAGE>
The principal risks of these expanded operations would be unforeseen costs
associated with entry into the expanded market, increased costs associated with
a larger employee base, liability from Workers' Compensation and employee
related claims associated with a larger work force, inability to find a presence
in the expanded market place, increased competition and increased risk
associated with the lapse between billing and payment by client employers.
Should the Company incur any large liabilities because of its operations, which
risk increases as the employee pool increases, such liabilities could have a
substantially detrimental affect upon the Company's financial condition.
Further, should the Company be unable to secure the financing required for the
additional expansion, the anticipated revenues from a reduced operation, while
potentially able to meet the operating needs of the Company, would impede the
likelihood of incremental revenue increases necessary for the long term
financial success of the Company. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer - Risk Factors.")
The Company plans to monitor closely its medium term operations for
approximately two (2) years. At this time the Company intends to expand into the
PEO market by adding such services to its existing facilities. At such time, the
Company will be required to comply with the PEO requirements of the State of
Florida. (See Part I, Item 1. "Description of Business - (b) Business of Issuer
- - Industry Regulation - PEO Licensing Requirements.") If it has been successful
in securing the necessary financing and if each of the operations is capable of
sustaining itself, the Company intends to seek additional financing in the form
of Rule 506, conventional bank financing, small business administration
financing, venture capital or the private placement of corporate debt for a
total of approximately $1,000,000. There can be no assurance that any of these
financing sources will be available to the Company. If the Company's plan to
seek additional financing is successful, the Company intends to open additional
offices which compliment the Orlando operation, beginning in Tampa, then
expanding into Sarasota and Fort Meyers and to add a regional manager to oversee
these operations. The Company believes that such expansion will achieve similar
economies of scale as those which are anticipated by the Palm Beach, Broward and
Dade County expansion. Further, the Company believes that such expansion will
place the Company in a position to be a major force in the temporary industrial
staffing industry in the State of Florida. If such expansion is implemented, Mr.
Adams and Ms. Garrett believe that they will be able to oversee the operation
with the addition of the manager.
The Company has not sought as of yet any debt financing since it believes
that any qualified venture capital firm will not loan any funds to the Company
until such time as it is fully reporting and has completed at least two years of
profitable operations. Once it has met those criteria, the Company intends to
seek out funds from licensed venture capital firms and to negotiate terms which
will fit the financial capabilities of the Company. Since the Company does not
intend to seek debt financing until such time as it has several locations
operating successfully, it believes that it can negotiate appropriate placement
and repayment terms for such borrowings. However, there can be no assurance that
such funds will be available to it or that suitable terms which are most
advantageous to the Company can be negotiated. In addition, the Company does
not, at this time, anticipate that it will require substantial leverage to fund
the expanded operations. However, in the event the Company did receive debt
financing and in the event the Company were not successful in sustaining
operations or meeting such debt and defaulted in its payments on the debt, then
such debt financing could foreclose upon the Company's interests to the
detriment of its shareholders.
Although the Company is authorized to borrow funds, as discussed, it does
not intend to do so until such time as it has been operating for a given period
of time. At such time as the Company seeks borrowed funds, it does not intend to
use the proceeds to make payments to the Company's promoters, management (except
as reasonable salaries, benefits and out of pocket expenses) or their respective
affiliates or associates. Except for the $100 paid to Mr. Adams each month, the
Company does not intend to pay any money to any officer or director until such
time as it secures financing. The Company has no present intention of acquiring
any assets or other property owned by any promoter, management or their
respective affiliates or associates or acquiring or merging with a business or
company in which the Company's promoters, management or their respective
affiliates or associates directly or indirectly have an ownership interest.
Existing conflict of interest provisions are set forth in the Amended Articles
of Incorporation for the Company. Management is not aware of any circumstances
under which this policy, through their own initiative, may be changed. Although
there is no present potential for a related party transaction, in the event that
any payments are to be made to promoters and management such will be disclosed
to the security holders and no such payments will be made in breach of the
fiduciary duty such related persons have to the Company.
<PAGE>
There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. There are no arrangements, agreements or
understandings under which non-management shareholders will exercise their
voting rights to continue to elect the current directors to the Company's Board
of Directors.
In the event the Company is successful in securing the additional financing
for its long term expansion, it plans to seek acquisitions and grant franchises
to qualified companies which the Company believes will compliment its overall
strategy inside and outside of the State of Florida. The Company will seek
acquisitions of flexible industrial staffing companies and expand itsoperations
into the area of PEO's. At such time as the Company enters the PEO market
outside the State of Florida, the Company will be required to comply with
applicable state regulations regarding PEO's. (See Part I, Item 1. "Description
of Business," (b) "Business of Issuer - Industry Regulations - PEO Licensing
Requirements; and (b) "Business of Issuer - Risk Factors.")
Such increased expansion may increase greatly the risks associated with the
Company's operations. The Company will continue to be dependent upon recruiting
qualified client employees and establishing a sufficient client employer base.
Increased operations and expansion into the areas of PEO's expose the Company to
the potential of unfavorable interpretation of government regulations. The
larger the work force, the greater the chance of increased employee costs,
liability for Workers' Compensation and employer related claims. Expansion will
expose the Company to competition from larger and more established flexible
industrial staffing firms, many of whom have greater resources than the Company.
The Company anticipates that revenues from such expanded operations may result
in greater fluctuation in revenues as a result of seasonal variations in
staffing needs. Also, the Company will be required to pay wages to a larger
staff while still experiencing a 30 to 45 day delays in payments received from
client employers. Once the Company expands into the PEO market, there is a risk
that termination of a portion of the PEO contracts could occur at the same time,
thereby causing an adverse impact upon the Company. In addition, with expansion
and implementation of an employee benefit plan which is necessary in order to be
competitive for qualified client employees, in the event such plan were to be
disallowed, loss of qualified status could have an adverse effect upon the
Company. Finally, as a larger Company, it could face possible adverse affects
from fluctuations in the general economy and business of its client employers.
(See Part I, Item 1. "Description of Business," (b) "Business of Issuer - Risk
Factors.")
Another avenue available to the Company to aid its ability to expand is to
seek a reverse merger with a larger, public company. While the Company has no
present intention to seek such a merger, in the event that an appropriate
vehicle were to become known to the Company, the Board of JSBW would evaluate
the relative risks and merits of such a merger to the overall plans for the
Company. The Company may also seek to expand by acquisitions of unrelated
companies which engage in related services such as temporary clerical staffing
and full employment agencies.
As a reporting company, the Company isrequired to file quarterly on Form
10-QSB and annually on Form 10-KSB and in each case, is required to provide the
financial and other information specified in such forms. In addition, the
Company would be required to file on Form 8-K in the event there was a change of
control, if the Company acquires or disposes of assets, if there is a bankruptcy
or receivership, if the Company changes its certified accountants, upon the
occurrence of other events which may be pertinent to the security holders, and
after certain resignations of directors. Being subject to such reporting
requirements reduces the pool of potential acquisitions or merger candidates for
the Company since such transactions require that certified financials must be
provided for the acquiring, acquired or merging candidate within a specified
period of time. That is why the Company intends to expand through internal
operations through the short and medium term. At such time as the Company will
seek acquisitions or mergers, it will limit itself to companies which either
already have certified financial statements or companies whose operations lend
themselves to review for a certified audit within the required time.
<PAGE>
The staffing industry consists of companies which provide four basic
services to clients: flexible staffing, professional employer organization
("PEO"), placement and search and out-placement. Based on information provided
by the National Association of Temporary and Staffing Services ("NATSS"), the
National Association of Professional Employers Organizations ("NAPEO"), and the
Staffing Industry Analysts, Inc. ("SIAI"), 1997 staffing industry revenues were
approximately $50.3 billion. According to industry sources, approximately 7,000
flexible staffing firms and 2,000 PEO firms employed approximately 2.5 million
people per day, or approximately 4% of the entire United States work force in
1997. Over the last five years, the staffing industry has experienced
significant growth due largely to the utilization of temporary help across a
broader range of industries as well as the emergence of the PEO sector.
According to NATSS, flexible industrial staffing currently represents 34.4%
of the estimated $50.3 billion in 1997 flexible staffing revenues. The Company
believes that the flexible staffing market is highly fragmented and that in
excess of 75% of flexible industrial staffing industry revenues are generated by
small local and regional companies. According to NATSS, the flexible industrial
staffing sector grew from $5.6 billion in 1991 to $17.3 billion in 1997,
representing a compound annual growth rate of approximately 16%. The Company's
goal is to target opportunity in this fragmented, rapidly growing market which
has to date been under-served by full service staffing companies.
Business Strategy
The Company's business strategy, which is dependent upon its obtaining
sufficient financing with which to implement its business plan (of which there
is no assurance), is to provide human resource services focusing on the flexible
industry staffing market. The Company's revenues will be based upon the salaries
and wages of employees assigned to work at client company locations (sometimes
referred to as " worksite employees"). The Company's fee structure will be based
on the gross payroll of each employee, the estimated costs of employment related
taxes, health benefits, Workers' Compensation benefits, insurance and other
services to be offered by the Company plus a negotiated mark-up. The Company's
revenues are dependent on the number of clients enrolled, the resulting number
of employees and the gross payroll of such employees.
The Company's primary direct costs will be (i) salaries and wages of
worksite employees (payroll cost), (ii) employment related taxes, (iii) health
benefits and (iv) Workers' Compensation benefits and insurance. (See Part I,
Item 1, "Description of Business," (b) "Business of Issuer - Risk Management
Program - Workers' Compensation.") Employment related taxes consist of the
employer's portion of payroll taxes required under the Federal Income
Contribution Act ("FICA"), which includes Social Security and Medicare, and
federal and state unemployment taxes. The federal tax rates are defined by the
appropriate federal regulations. State of Florida unemployment tax rates are
affected by claims experience, of which the Company has none at this time.
Health benefits are comprised primarily of medical insurance costs, but also
include costs of other employee benefits such as prescription coverage, vision
care, disability insurance and employee assistance plans.
Flexible staffing and related costs of wages, salaries, employmen taxes and
benefits related to worksite employees will be recognized in the period in which
those employees perform the flexible staffing services. Because the Company will
be at risk for all of its direct costs, independently of whether payment is
received from its clients, and consistent with industry practice, all amounts
billed to clients for gross salaries and wages, related employment taxes, health
benefits and Workers' Compensation coverage will be recognized by the Company,
net of credits and allowances.
The Company's gross profit margin will be determined in part by its ability
to estimate and control direct costs and its ability to incorporate such costs
in the service fees charged to clients. The Company will attempt to reflect
changes in primary direct costs through adjustments in service fees charged to
clients, subject to contractual arrangements.
The Company's objective is to become a dominant provider of industrial
flexible staffing services in select geographic areas, beginning in Palm Beach
County, Florida, expanding to contiguous counties in South Florida then
throughout the State of Florida and thereafter into selected areas nationwide.
To achieve this objective, and assuming that sufficient operating capital
becomes available, the Company intends to: (i) provide a comprehensive package
of single-source human resource services; (ii) focus on Palm Beach County which
has been under-served although it has high grow opportunities; (iii) at the time
of expansion, cluster offices to achieve regional market leadership; (iv)
maximize operating efficiencies through integrated technology and back office,
support; and (v) commit to the permanent employment over time of its flexible
industrial staffing so as to become their "guardian employer".
<PAGE>
Management expects, in the event JSBW achieves commercial success
initially, to increase the Company's market penetration through internal
expansion and thereafter through selected acquisitions. Such acquisitions could
include both flexible industrial staffing providers and PEO providers.
Management believes that in the current flexible staffing market, expansion into
markets beyond the State of Florida could be especially attractive because it is
believed that the internal structuring of a successful operation in Florida can
be replicated in other selected geographic areas with high grow opportunities.
However, such expansion beyond Florida presents certain challenges and risks and
there could be no assurance that JSBW, even if it were successful in
establishing markets in other states, could be expected to be successful in
profitably penetrating these potential markets.
Proposed Company Staffing and Client Services
Ms. Garrett, the Executive Vice President of the Company, has been employed
in the temporary staffing and permanent placement industry for approximately
fourteen (14) years and has managed her own employment agency for the last three
(3) years, one and one-half (1.5) years as a sole proprietor and one and
one-half years as a corporation. Under her direction, the Company plans to offer
clients a full array of staffing services; to serve as the employer of record
with respect to flexible staffing services; and to operate a recruiting and
training center which will initially be staffed by the executive officers.It is
anticipated, and subject to the availability of additional funding, that the
Company will employ a manager, recruiting coordinators, staffing consultants, an
office administrator and clerical assistants. The number of people employed in
each position will vary by the size of the recruiting and training center and
the degree of penetration into the initial and subsequent territories.
The Company believes that its initial success will be due in part to the
familiarity of Ms. Garrett with the businesses of its potential clients. She
will visit client jobs regularly to become familiar with the skills required by
the client's business, conduct job site safety inspections and insure that
employees are properly equipped for the job. To insure client satisfaction, Ms.
Garrett will play an active role in the daily work assignments. Ms. Garrett also
will attempt to become familiar with the Company's pool of industrial employees.
The Company intends to subject each employee to a two-day screening process that
evaluates skills, abilities, and attitudes. This not only will permit the
Company to institute appropriate training programs and assign its workers, but
also help the Company retain desirable employees.
Management is unable at this time to forecast with any degree of certainty
the acceptance of the Company's services or the salaries of its employees;
however, JSBW intends to market its services and recruit its staff so that its
pricing policies are considered competitive in the Company's target markets.
Sales and Marketing
The Company plans to market its flexible industrial staffing through a
combination of marketing channels including direct sales, franchising and
strategic alliances. The Company believes that this multi-channel approach will
allow the Company quickly to access a pool of skilled employees, develop
regional awareness and ultimately become a market leader. Of the three marketing
channels intended to be employed by the Company, direct sales and franchising
are common in the flexible industrial staffing business, while strategic
alliances have most commonly been used in the PEO business. There can be no
assurance that any of these techniques will be successful. The Company intends
to compete, assuming that it is successful in obtaining sufficient financing,
with other companies in its target markets who are currently providing flexible
staffing services.
The Company anticipates that its initial marketing efforts will be in the
area of direct sales. Good quality staff and professional follow-up with the
clients will be essential to the Company's success. Initially, Ms. Garrett will
secure the Company's client base. However, the Company anticipates that it will
employ qualified sales personnel to establish new customer accounts. The Company
believes that by employing its own sales personnel it will be able to penetrate
additional markets at a minimal cost since sales associates receive compensation
in the form of commissions based upon a client's use of the Company's services.
This commission based compensation program will reduce the overhead costs for
the Company.
<PAGE>
The Company's ability to develop markets through the services of its
Executive Vice President and eventually a sales force is, of course dependent
upon managements ability to obtain necessary financing, of which there can be no
assurance. Assuming the availability of adequate funding, JSBW intends to stay
abreast of changes in the marketplace by ensuring that its staff experience and
pricing policies are competitive. JSBW does not anticipate obtaining long-term
contracts with clients since such contracts are not common in the flexible
staffing industry; however, management believes that the loyalty of such clients
can be maintained through good staffing and good servicing of the accounts.
The Company will attempt to maintain diversity within its client base in
order to decrease its exposure to downturns or volatility in any particular
industry. As part of this client selection strategy, the Company intends to
offer its services only to those businesses which operate in certain industries,
eliminating industries that it believes present a higher risk of employee
injury. Where feasible, the Company intends to evaluate each client's Workers'
Compensation risk, credit worthiness, unemployment history and operating
stability.
Risk Management Program - Workers' Compensation
The Company believes that careful client selection, pro-active prevention
programs and aggressive control of claims will result in reduced Workers'
Compensation costs. JSBW will seek to prevent workplace injuries by implementing
a variety of training, safety and mandatory drug-free workplace programs
(including pre-employment screening, random testing and post-accident drug
monitoring) to ensure that safety awareness is heightened at the sites to which
the Company sends its workers. Further, the Company will insist that clients
adhere to ongoing safety practices at the clients' worksites as a necessary
condition to a continued business relationship.
The Company believes that it can secure adequate Workers' Compensation
insurance at sufficient deductible per accident levels so as to cover the
intended risk management objectives.
Competition
The staffing market is highly fragmented, characterized by many small
providers, in addition to several large public companies. There are limited
barriers to entry and new competitors frequently enter the market. Although a
large percentage of flexible staffing providers are locally operated with fewer
than five offices, many of the large public companies have significantly greater
marketing, financial and other resources than the Company. However, unlike the
Company, a majority of these companies do not focus primarily on the supply of
temporary industrial personnel. The Company believes that by focusing primarily
on the placement of temporary industrial personnel, it will enjoy a competitive
advantage over many of its competitors who attempt to provide a broader base of
temporary employees.
The Company also believes that by targeting emerging companies, rather than
larger companies that are generally being pursued by its competitors, it can
also gain certain competitive advantages. The Company believes that there are
several factors that must be met in order to obtain and retain clients in the
flexible staffing market. These factors include an adequate number of well
located offices, an understanding of clients' specific job requirements, the
ability to reliably provide the correct number of employees on time, the ability
to monitor job performance, and the ability to offer competitive prices.
To attract qualified industrial candidates for flexible employment
assignments, companies must offer competitive wages, vacations and holiday pay,
positive work environments, flexibility of work schedules and an adequate number
of available work hours. Initially, the Company intends to establish one office
in the Palm Beach County area; however, the Company believes that it can be
highly competitive in the other areas and, subject to the availability of
additional funding which cannot be assured, will be in a position to open
additional offices in a relatively short period of time.
Industry Regulation
Overview
As an employer, the Company is subject to all federal, state and local
statutes and regulations governing its relationship with its employees and
affecting businesses generally, including its client employees.
<PAGE>
Uncertainty as to the Employer Relationship
By entering into the co-employment relationship with client employees, the
Company will be assuming certain obligations and responsibilities of an employer
under federal and state laws. Many of these federal and state laws were enacted
prior to the development of nontraditional employment relationships such as
temporary employment. Whether certain laws apply to the Company depends in many
cases upon whether the Company is deemed to be an "employer" for purposes of the
law. The definition of "employer" under these laws is not uniform and,
therefore, the application of these laws to the Company's intended business is
not always certain. In many cases, a person's status as an "employer" is
determined by application of a common law test involving the examination of
several factors to determine an employer/employee relationship. Uncertainty as
to the application of certain laws governing "employer" relationships will be
particularly important to the Company in federal tax and employee benefit
matters.
Federal and State Employment Taxes. The Company will assume the sole
responsibility and liability for the payment of federal and state employment
taxes with respect to wages and salaries to be paid to its employees, including
client employees. To date, the Internal Revenue Service ("IRS") has relied
extensively on the common law test of employment in determining employer status
and the resulting liability for failure to withhold.
The Company intends to expand its operations into the PEO market. The IRS
has formed an examination division market segment specialization program for the
purpose of examining selected PEO's. If the Company enters the PEO market and if
it were to be examined, it is possible that the IRS may determine that a PEO is
not an employer of the client employees under the Internal Revenue Code of 1986,
as amended (the "Code"), provisions applicable to federal employment taxes and,
consequently, that the client companies are exclusively responsible for payment
of employment taxes on wages and salaries paid to such employees.
A determination by the IRS that the Company is not an employer of the
client employees may impact the Company's ability to report employment
taxes on its own account rather than for the accounts of its clients and would
increase administrative burdens on the Company's payroll service function. In
addition, while the Company believes that it can contractually assume the client
company's withholding obligations, in the event the Company fails to meet these
obligations, the client company may be held jointly and severally liable
therefore. Assuming that proper funding is available, the Company's management
believes that the economic strength and reputation of the Company will prevent
this potential liability from discouraging prospective clients.
Employee Benefit Plans. The Company intends to offer various benefit plans
to its client employees. It is intended that the Company will offer a retirement
plan, a group health insurance plan, a group life insurance plan, a group
disability insurance plan and an employee assistance plan. Generally, employee
benefit plans are subject to provisions of both the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In order to
qualify for favorable tax treatment under the Code, the plans must be
established and maintained by the employer for the exclusive benefit of the
Company's employees. An IRS examination of the Company and/or a client company
may determine that the Company is not an employer of client employees under Code
provisions applicable to employee benefit plans. Consequently, the Company may
not be able to offer client employees benefit plans that qualify for favorable
tax treatment. If the IRS were to conclude that the Company is not an employer
of its client employees for plan purposes, client employees would not be able to
continue to make tax favored contributions to the Company's intended retirement
plan. The Company believes that, although unfavorable to the Company, a
prospective application by the IRS of an adverse conclusion would not have a
material adverse effect on its financial position and results of operations. If
such conclusion were applied retroactively, employees' vested account balances
may become taxable immediately, the Company would then lose its tax deduction to
the extent the contributions were not vested, the plan trust would become a
taxable trust and penalties could be assessed. In such a scenario, the Company
would face the risk of client dissatisfaction, as well as potential litigation.
A retroactive application by the IRS of an adverse conclusion could have a
material adverse effect on the Company's financial position, results of
operations and liquidity. While the Company believes that a retroactive
disqualification is unlikely, there can be no assurance as to the ultimate
resolution of these issues.
<PAGE>
Employee pension and welfare plans also are governed by ERISA. The United
States Supreme Court has held that the common law test of employment must be
applied to determine whether an individual is an employee or an independent
contractor under ERISA. A definitive judicial interpretation of employer in the
context of a PEO arrangement has not been established. If there were an adverse
finding against the Company as a PEO employer, the result of such finding would
be that the Company and its plans would not enjoy the preemption of state law
provided by ERISA and could be subject to varying state laws and regulations, as
well as to claims based upon state common laws.
Workers' Compensation
Workers' Compensation is a state mandated, comprehensive insurance program
that requires employers to fund medical expenses, lost wages and other costs
resulting from work-related injuries and illnesses. In exchange for providing
Workers' Compensation coverage for employees, employers are generally immune
from any liability for benefits in excess of those provided by the relevant
state statutes. In most states, the extensive benefits coverage for both medical
costs and lost wages is provided through the purchase of commercial insurance
from private insurance companies, participation in state-run insurance funds,
self insurance funds or, if permitted by the state, employer self-insurance.
Workers' compensation benefits and arrangements vary on a state-by-state basis
and are often highly complex.
PEO Licensing Requirements
Approximately one-third of the states, including Florida, have passed laws
that have licensing or registration requirements for PEO's and several
additional states are considering regulation. Such laws vary from state to state
but generally provide for monitoring the fiscal responsibility of PEO's. State
regulation assists in screening insufficiently capitalized PEO operations and,
in the Company's view, has the effect of legitimizing the PEO industry generally
by resolving interpretative issues concerning employee status for specific
purposes under applicable state law. Existing regulations are relatively new
and, therefore, limited interpretive or enforcement guidance is available.
Assuming funding is available, the Company plans to establish an initial
PEO operation in Florida. Under Florida law, the Company's intended PEO
operation will require licensing under the Florida Employee Leasing Licensing
Act of 1991 (the "Florida Licensing Act"). Among other things, the Florida
Licensing Act requires PEO's and their controlling persons to be licensed,
mandates reporting requirements, allocates several employer responsibilities and
requires the payment of an annual licensing fee based upon gross payroll
amounts. The Florida Licensing Act also requires licensed PEO's to: (i) reserve
the right of direction and control over leased employees, (ii) enter into
written agreements with their clients, (iii) pay wages to leased employees, (iv)
pay and collect payroll taxes, (v) maintain authority to hire, terminate,
discipline and reassign employees, and (vi) reserve the right to direct and
control the management of safety, risk and hazard control at the worksite,
including the right to perform safety inspections, to promulgate and administer
employment and safety policies, and to manage Workers' Compensation claims,
claims filings, and related procedures.
Seasonality
The Company believes that its results of operations will reflect the
seasonality of higher client demand for flexible industrial staffing services in
the last two quarters of the year, compared to the first two quarters. Even
though there may be a seasonal reduction of flexible industrial staffing
revenues in the first quarter of a year as compared to the fourth quarter of a
prior year, the Company intends not to reduce the related core personnel and
other operating expenses since the infrastructure, once established, is needed
to support anticipated increased revenues in subsequent quarters. The Company
further believes that once it establishes the PEO operation, that the reduction
in flexible industrial staffing revenues in the first quarter of the year will
be substantially offset by increased PEO revenues which are generally not
subject to seasonality.
<PAGE>
Employees and Consultants
The Company has had no employees since its organization. Except for lump
sum consulting fees received by Mr. Adams and Ms. Garrett, JSBW's executive
officers and directors, have served in those positions without compensation
through the date hereof. Mr. Adams was compensated for specialized services,
including the preparation of a business plan and the performance of certain
financial consulting services, commonly performed by outside consultants,
despite his position as executive officer and director of JSBW, because the
Company does not presently have the financial capability to pay management
salaries or retain outside consultants on an ongoing basis. Ms. Garrett was
compensated for management consulting services relating to the operations of an
employment agency, despite her position as an executive officer of JSBW, because
the Company does not presently have the financial capability to pay management
salaries or retain outside consultants on an ongoing basis. It is anticipated
that at such time, if ever, as the Company's financial position permits,
assuming that JSBW is successful in raising adequate funding through equity
and/or debt financing and/or generating a sufficient level of revenue from
operations, Mr. Adams and Ms. Garrett and any other executive officers the
Company may employ, will receive appropriate compensation, in addition to
salaries, which may include bonuses, coverage under medical and life insurance
benefit plans and participation in stock option and/or other profit sharing or
pension plans, for services as executive officers of the Company.
Facilities
The Company maintains its office rent free at the home of Mr. Adams at 219
Almeria, West Palm Beach, Florida 33405. Its telephone number is (561) 804-
9744. The Company anticipates that it will have continued use of this office on
a rent-free basis for the foreseeable future and that this arrangement will be
adequate for the Company's needs while it is in the development stage. Assuming
that JSBW obtains the necessary additional financing and is successful in
implementing its business plan, no assurance of which can be made, the Company
will require its own commercial facility for the first flexible staffing office
location in Palm Beach County, including sufficient space to establish the
intended training program. In such event, management believes that JSBW would be
able to locate adequate facilities at reasonable rental rates in Palm Beach
County, suitable for its future needs.
Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
1. Development Stage Company. JSBW was only recently organized on October
20, 1997, and accordingly, is in the early form of development stage and must be
considered promotional. Management's efforts, since inception, have been
allocated primarily to organizational and fund raising activities and the
ability of the Company to establish itself as a going concern is dependent upon
the receipt of additional funds from operations or other sources to continue
those activities. Potential investors should be aware of the difficulties
normally encountered by a new enterprise in its development stage, including
under-capitalization, cash shortages, limitations with respect to personnel,
technological, financial and other resources and lack of a client base and
market recognition, most of which are beyond the Company's control. The
likelihood that the Company will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
competitive environment in which the Company will operate. The Company's success
depends to a large extent on establishing a strong client base and hiring,
training and placing client employees for placement with its clients. There is
no guarantee that the Company's proposed activities will attain the level of
recognition and acceptance necessary for the Company to find a niche in the
flexible staffing market. There are numerous flexible staffing firms in Palm
Beach County, the State of Florida and nationwide, several of which are large
public companies, which are already positioned in the business and which are
better financed than the Company. There can be no assurance that the Company,
with its very limited capitalization, will be able to compete with these
companies and achieve profitability. (See Part I, Item 1. "Description of
Business.")
<PAGE>
2. No Operating History, Revenues or Earnings. As of the date hereof, the
Company has not yet commenced operations and, accordingly, has received no
operating revenues or earnings. Since its inception, most of the time and
resources of JSBW's management have been spent in organizing the Company,
obtaining interim financing and developing a business plan. The Company's
success is dependent upon its obtaining additional financing from intended
operations, from placement of its equity or debt or from third party funding
sources. The Company's success in the business of flexible staffing is dependent
upon the receipt of profits from operations, which are not expected for the
foreseeable future, and/or additional financing to enable the Company to
continue in operation. There is no assurance that JSBW will be able to obtain
additional debt or equity financing from any source. The Company, during the
development stage of its operations, can be expected to sustain substantial
operating expenses without generating any operating revenues or the operating
revenues generated can be expected to be insufficient to cover expenses. Thus,
for the foreseeable future, unless the Company attains profitable operations,
which is not anticipated, the Company's financial statements will show an
increasing net operating loss. (See Part I, Item 1. "Description of Business.")
3. Minimal Assets, Working Capital and Net Worth. As of September 30, 1998,
the Company's total assets in the amount of $10,642, consisted, principally, of
the sum of $10,263 in a note receivable. As a result of its minimal assets
and a net loss from operations, in the amount of $12,193, as of September 30,
1998, the Company has very minimal net worth presently. Further, JSBW's working
capital is presently minimal and there can be no assurance that the Company's
financial condition will improve. The Company is expected to continue to have
minimal working capital or a working capital deficit as a result of current
liabilities. Mr. Adams, executive officer and director of JSBW contributed
services valued by him at $160.10 in consideration for 1,601,000 shares of the
Company's Common Stock received by him at inception. Ms. Garret, Executive Vice
President, contributed services valued by her at $2475.00 in consideration for
49,500 shares of the Company's Common Stock received by her. Even though
management believes, without assurance, that it will obtain sufficient capital
with which to implement its business plan on a limited scale, the Company is not
expected to continue in operation without an infusion of capital. In order to
obtain additional equity financing, management may be required to dilute the
interest of existing shareholders or forego a substantial interest of its
revenues, if any. (See Part I, Item 1. "Description of Business")
4. Need for Additional Capital: Going Concern Qualification Expressed by
Auditor. Without an infusion of capital or profits from operations, the Company
is not expected to continue in operation after the expiration of the period of
three to nine months from the date hereof. Accordingly, the Company is not
expected to become a viable business entity unless additional equity and/or debt
financing is obtained. JSBW's independent certified public accountant has
expressed this as a "going concern" qualification to the opinion of Durland and
Company, CPA's P.A. on the Company's financial statements. The Company does not
anticipate the receipt of operating revenues until management successfully
implements its business plan, which is not assured. Further, JSBW may incur
significant unanticipated expenditures which deplete its capital at a more rapid
rate because of among other things, the development stage of its business, its
limited personnel and other resources and its lack of a client base and market
recognition. Because of these and other factors, management is presently unable
to predict what additional costs might be incurred by the Company beyond those
currently contemplated to obtain additional financing and achieve market
penetration on a commercial scale in its proposed line of business, i.e.
flexible temporary staffing. JSBW has no identified sources of funds, and there
can be no assurance that resources will be available to the Company when needed.
5. Dependence on Management: Director's Lack of Experience in Flexible
Staffing Business. The possible success of the Company is expected to be largely
dependent on the continued services of its Executive Vice President, Ms.
Garrett, because neither Mr. Adams, a director and executive officer of JSBW nor
the other director and executive officer have any experience or expertise in the
flexible temporary staffing business. Virtually all decisions concerning the
recruitment, training and placement of client employees and the establishment of
a client base with whom to place the client employees by the Company will be
made or significantly influenced by Ms. Garrett. She is presently serving as
manager of her own employment agency and she is required to devote a significant
amount of her time to the conduct of that company's business. Ms. Garrett and
Mr. Adams are expected to devote only such time and effort to the business and
affairs of the Company as may be necessary to perform their responsibilities as
executive officers and director of JSBW. The loss of the services of Ms. Garrett
would adversely affect the conduct of the Company's business and its prospects
for the future. The Company presently holds no key-man life insurance on the
lives of, and has no employment contract or other agreement with Ms. Garrett or
Mr. Adams.
<PAGE>
6. No Qualified Client Employees or Client Base. The Company was only
recently organized. While JSBW intends to engage in the flexible temporary
staffing business, the Company currently has no qualified client employees to
place with clients and no clients with whom to place such qualified employees.
Further, the very limited funding currently available to the Company will not
permit it to commence business operations in the flexible temporary staffing
industry except on a very limited scale. There can be no assurance that the debt
and/or equity financing, which is expected to be required by the Company in
order for JSBW to continue in business after the expiration of the next three to
nine months, will be available. The Company has no clients presently and there
can be no assurance that it will be successful in obtaining clients in its
initial prospective marketing area encompassing Palm Beach County. JSBW does not
expect to have long-term contracts with any clients; thus, management believes
that the Company must, in order to survive, ultimately obtain the loyalty of a
large volume of clients. The Company expects to be limited in the number of
client employees and training and support personnel it is capable of employing
as a result of its limited operating capital. Thus, the Company could be
expected to experience substantial difficulty in attracting the high volume of
clients in the prospective target market which would enable JSBW to achieve
commercial viability. The Company will be dependent upon its Executive Vice
President Ms. Garrett, who has approximately fourteen (14) years of experience
in employment agency business. (See Part I, Item 1. "Description of Business,"
(b) "Business of Issuer - Business Strategy; - Proposed Company Staffing and
Client Services; and - Sales and Marketing.")
7. No Placement Organization: Limited Placement Capability. The Company's
success depends in large part upon its ability to identify and adequately
penetrate the markets for its potential staffing services and its ability to
recruit qualified client employees for temporary placement. As compared to JSBW,
which lacks the financial, personnel and other resources required to compete
with its larger, better-financed competitors, virtually all of the Company's
competitors have much larger budgets for securing clients, recruiting client
employees and training. Except for its Executive Vice President, JSBW presently
has no temporary staffing or client enrollment personnel whatsoever and,
accordingly, management expects that the Company's services will be marketed
initially, for the most part, through contacts and previous clients of Ms.
Garrett. Depending upon the level of funding obtained by the Company, management
believes, without assurance, that it will be possible for JSBW to attract
qualified client employees, staff personnel and clients. However, in the event
that only limited funds are obtained, the Company anticipates that its limited
finances and other resources may be a determinative factor in the decision of
any prospective employee as to whether to become employed by JSBW. Until such
time, if ever, as the Company is successful in attracting and employing capable
sales staff to secure and service a larger client base and capable training and
recruitment staff to qualify potential client employee candidates, it intends to
rely upon the judgment and conclusions of its Executive Vice President, based
upon her knowledge and experience gained in managing her own employment agency,
relative to the Company's needs for securing clients and recruiting and training
client employees. However, the fact that Mr. Adams, executive officer and
director of JSBW has no specific experience in the flexible temporary staffing
industry may adversely impact the Company's chances for success. (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer - Sales and
Marketing.")
8. High Risks and Unforeseen Costs Associated with JSBW's Entry into the
Flexible Temporary Staffing Industry. There can be no assurance that the costs
for the establishment of a client base or for the recruiting and training of
qualified client employees incurred by JSBW will not be significantly greater
than those estimated by Company management. Therefore, the Company may expend
significant unanticipated funds or significant funds may be expended by JSBW
without development of a commercially viable flexible temporary staffing
business. There can be no assurance that cost overruns will not occur or that
such cost overruns will not adversely affect the Company. Further, unfavorable
general economic conditions and/or a downturn in client confidence has in the
past had, and could be expected in the future to have, an adverse affect on
client placements which could, in turn, adversely affect the Company's business.
Additionally, competitive pressures and changes in client mix, among other
things, which management expects the Company to experience in the uncertain
event that it achieves commercial viability, could reduce the Company's gross
profit margin from time to time. Accordingly, there can be no assurance that
JSBW will be capable of establishing itself in a commercially viable position in
local, state and nationwide temporary placement markets. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer.")
<PAGE>
9. Dependency on Recruiting Qualified Client Employees and Establishing a
Sufficient Client Base. The Company's ability to provide qualified client
employees on a profitable and timely basis depends, at least initially, upon the
availability of qualified candidates and the ability to quickly train them to
the level of competency necessary for placement. Further, the Company's ability
to establish a sufficient client base with whom qualified client employees may
be placed depends, at least initially, upon vacancies in the temporary staffing
market. There can be no assurance that qualified candidates or sufficient
vacancies will exist at the levels which management believes are possible.
Further, even if the Company receives sufficient proceeds from equity and/or
debt financing or third party funding sources, thus enabling it to employ sales
and staff personnel, to actively recruit qualified candidates and to establish a
sufficient client base needed to implement its business plan, it will
nevertheless be dependent upon the availability of qualified candidates and
vacancies in the temporary staffing market Although management believes that
initially Palm Beach County and thereafter the State of Florida and nationwide
have available adequate qualified candidates and sufficient client employers
with temporary vacancy positions, there can be no assurance that this will be
so. The insufficiency of qualified candidates and/or the insufficiency of client
employers may adversely affect JSBW's ability to be profitable in the flexible
temporary staffing market. The Company does not anticipate that it will have
long-term contracts with its prospective client employers. (See Part I, Item 1.
"Description of Business," (b) Business of Issuer - Sales and Marketing.")
10. Conflict of Interest. There are existing and potential conflicts of
interest, including time, effort and corporate opportunity, involved in the
participation by the Company's executive officers and director in other business
entities and transactions. Ms. Garrett, the Company's Executive Vice President
and manager of her own employment agency, which by virtue of her relation to the
Company is an affiliate of the Company, will divide her time and effort between
the Company, her existing employment agency and her other business obligations.
Accordingly, Ms. Garrett and/or other members of management of the Company may
be subject to direct conflicts of interest and the corporate opportunities
doctrine with respect to business opportunities in the temporary staffing
business which come to their attention. The Company's Amended Articles of
Incorporation provide that any related party contract or transaction must be
authorized, approved or ratified at a meeting of the Board of Directors by
sufficient vote thereon by directors not interested therein or the transaction
must be fair and reasonable to the Company. Ms. Garrett, who is not presently a
director of JSBW, has agreed, in the event that she is elected to serve as a
director of the Company in the future, that she would abstain from voting on any
related party contract or transaction involving her existing employment agency.
Nevertheless, assuming Ms. Garrett's future election to JSBW's Board of
Directors and her abstention from voting on any related party contract or
transaction in accordance with her agreement, it would still be possible for the
Board of Directors of the Company, by a vote of a sufficient number of
disinterested directors, to authorize, approve or ratify such a contract or
transaction with Ms. Garrett's existing employment agency or any other affiliate
even if the terms were unfair to the Company and unreasonable.
Because of the existing and/or potential future associations of the
Company's executive officers and directors in various capacities with other
firms involved in a range of business activities and because of the limited or
minimal amount of time and effort which is expected to be devoted to the Company
by such persons, there are existing and potential conflicts of interest in their
acting as executive officers and directors of the Company. None of the executive
officers or the directors of the Company will be able to devote a significant
amount of time or effort to the business and affairs of the Company because of
their simultaneous participation in, employment by and/or commitments to other
firms involved in a range of business activities. In addition, all of such
persons are or may become, in their individual capacities, officers, directors,
controlling shareholders and/or partners of other entities (in addition to Ms.
Garrett's existing employment agency) involved in a variety of businesses which
are engaged, or may in the future engage, in various transactions, or compete
directly, with the Company. Conflicts of interest and transactions which are not
at arm's-length may arise in the future because the Company's executive officers
and/or directors are involved in the management of any company which transacts
business, or competes directly with, the Company. (See Part I, Item 1.
"Description of Business," (b) Business of Issuer General.")
<PAGE>
11. Potential for Unfavorable Interpretation of Government Regulation. As
an employer, the Company is subject to all federal, state and local statutes and
regulations governing its relationships with its employees and affecting
business generally, including its worksite employees. Although the Company will
not be subject to additional regulation by virtue of its flexible staffing
operations, as a result of its potential PEO operations, the Company will be
affected by specifically applicable licensing and other regulatory requirements
and by the uncertainty of the application of numerous federal and state laws
relating to labor, tax and employment matters. Because many such laws were
enacted prior to the development of alternative employment arrangements, such as
those provided by PEO's and other staffing business, many of these laws do not
specifically address the obligations and responsibilities of non-traditional
employers. Interpretive issues concerning such relationships have arisen and
remain unsettled. Uncertainties arising under the Code include, but are not
limited to, the qualified tax status and favorable tax status of certain benefit
plans intended to be provided by the Company and provided by other alternative
employers. The unfavorable resolution of these unsettled issued could have a
material adverse effect on the Company's results of operations, financial
condition and liquidity. In addition, the IRS is conducting an examination
division market segment specialization program to examine PEO's throughout the
United States. (See - 15. "Potential Legal Liability" and - 20. " Risk of Loss
of Qualified Status for Certain Tax Purposes.")
While many states do not explicitly regulate PEO's, approximately one-third
of the states (including Florida) have passed laws that mandate licensing or
registration requirements for PEO's and several additional states are
considering such regulation. Such laws vary from state to state but generally
provide, among other things, for monitoring the fiscal responsibility of PEO's
and specify some of the employer responsibilities assumed by PEO's. The length
of time required to obtain regulatory approval to begin such operations will
vary from state to state, and there can be no assurance that the Company will be
able to satisfy the licensing requirements or other applicable regulations of
any particular state in which it intends to operate, that it will be able to
provide the full range of services currently anticipated to be offered, or that
it will be able to operate profitably within the regulatory environment of any
state in which it does obtain regulatory approval. The Company is not presently
licensed in any state, has not submitted applications to any state and does not
intend to apply in any state at the current time. However, should the Company
wish to operate in any state which requires licensing, the absence of the
required license in such state would prohibit the Company from providing PEO
services in such state, until such time as such license is acquired, if ever.
(See Part I, Item 1. "Description of Business," (b) "Business of Issuer Industry
Regulation.")
12. Increased Employee Costs. The Company will be required to pay a number
of federal, state and local payroll taxes and related payroll costs, including
unemployment taxes, Workers' Compensation insurance premiums and claims, Social
Security and Medicare, among others, for its employees (including its worksite
employees) and will incur certain costs related to the provision of such
benefits, such as insurance premiums for health care. Health insurance premiums,
unemployment taxes and Workers' Compensation insurance premiums and costs can be
significant to the Company's operating results, and will be determined in part
by the Company's claims experience, of which it has none at this time.
Accordingly, the Company plans to employ extensive procedures in an attempt to
control such costs. The Company's projected costs could increase as a result of
proposed health care reforms. Recent federal and certain state legislative
proposals have included provisions extending health insurance benefits to
employees who do not presently receive such benefits. There can be no assurance
that the Company will be able to increase the fees charged to its clients in a
timely manner and sufficient amount to cover increased costs related to Workers'
Compensation, unemployment insurance or health insurance benefits which may be
extended to worksite employees.
<PAGE>
13. Liability for Workers' Compensation Claims. The Company has not yet
acquired Workers' Compensation insurance, however, initial estimates, and
subject to the availability of additional funding, indicate that the Company
expects to provide for a $250,000 deductible per accident or industrial illness
with an aggregate annual dollar limit on the Company's potential liability for
deductible payments of 2.2% of aggregate annual payroll. Subject to the
availability of additional funding, the Company may be required to acquire such
insurance without an aggregate maximum dollar limit, or in exchange for a lower
excess insurance premium rate, or the Company may be required to accept the
responsibility for losses exceeding the $250,000 policy deductible per accident
or industrial illness on a dollar-for-dollar basis, but only to the extent such
losses cumulatively exceed 85% of the excess insurance premium (excluding the
profit and administration component), subject to a maximum additional premium
amount. If this last option were to be elected, the Company would pay
substantially all of the Workers' Compensation claims of its employees. To the
extent the Company is not successful in managing the severity of Workers'
Compensation claims, the costs incurred by the Company could have a material
adverse effect on the Company's financial condition, results of operations and
liquidity. In addition, if the Company's aggregate liability for deductible
payments are not limited, the adverse development of any claims involving
significant dollar amounts also could have a material adverse effect on the
Company's financial condition and results of operations (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Risk Management Program -
Workers' Compensation".)
14. Ability to Grow. The Company expects to grow through acquisitions,
internal growth and by granting franchises. The Company plans to expand its
business from its current location and by entry into other markets. There can be
no assurance that the Company will be able to create a market presence, or if
such market is created, to expand its market presence or successfully enter
other markets. The ability of the Company to grow will depend on a number of
factors, including the availability of working capital to support such growth,
existing and emerging competition and the Company's ability to maintain
sufficient profit margins in the face of pricing pressures. The Company must
also manage costs in a changing regulatory environment, adapt its infrastructure
and systems to accommodate growth and recruit and train qualified personnel.
The Company also plans to expand its business, in part, through
acquisitions primarily of flexible industrial staffing companies and PEO's.
Although the Company will continuously review potential acquisition candidates,
it has not entered into any agreement, understanding or commitment with respect
to any acquisitions at this time. There can be no assurance that the Company
will be able to successfully identify suitable acquisition candidates, complete
acquisitions on favorable terms, or at all, or integrate acquired businesses
into its operations. Moreover, there can be no assurance that acquisitions will
not have a material adverse effect on the Company's operating results,
particularly in the fiscal quarters immediately following the consummation of
such transactions, while the operations of the acquired business are being
integrated into the Company's operations. Once integrated, acquisitions may not
achieve comparable levels of revenues, profitability or productivity as at then
existing Company-owned locations or otherwise perform as expected. The Company
is unable to predict whether or when any prospective acquisition candidate will
become available or the likelihood that any acquisitions will be completed. The
Company will be competing for acquisition and expansion opportunities with
entities that have substantially greater resources than the Company. In
addition, acquisitions involve a number of special risks, such as diversion of
management's attention, difficulties in the integration of acquired operations
and retention of personnel, unanticipated problems or legal liabilities, and tax
and accounting issues, some of all of which could have a material adverse effect
on the Company's results of operations and financial condition.
Franchise growth poses the additional risk of the inability of the Company
to control the quality of services provided by its franchise associates.
Moreover, the failure of any franchise associate to pay royalties due to the
Company could have a material adverse effect on the Company's financial
condition and results of operations (See Part I, Item 1. "Description of
Business (b) "Business Strategy.")
15. Potential Legal Liability. Providers of staffing services may be
subject to claims relating to the actions of their employees (including their
worksite employees), including possible claims of discrimination and harassment,
theft of client property, misuse of client proprietary information, other
criminal actions or torts and other claims. Management intends to adopt and
implement policies and guidelines to reduce its exposure to these risks.
However, the failure of any Company employee to follow these policies and
guidelines may result in negative publicity, injunctive relief and the payment
by the Company of money damages or fines. There can be no assurance that the
Company will not experience such problems.
<PAGE>
As an employer, the Company may be subject to a wide variety of
employment-related claims such as claims for injuries, wrongful death,
harassment, discrimination, wage and hour violations and other matters. In
addition, a number of legal issues remain unresolved with respect to co-
employment arrangements among PEO's, their clients and worksite employees,
including questions concerning ultimate liability for violations of employment
and discrimination laws. At such time as the Company enters the PEO sector, the
Company plans to have a standard PEO client service agreement which establishes
a contractual division of responsibilities between the Company and each client
for various human resource matters, including compliance with and liability
under various governmental regulations. However, as a result of the Company's
status as co-employer, the Company may be subject to liability for violations of
these and other laws despite these contractual provisions and even if it does
not participate in such violations. Although such client service agreements are
expected to provide that the client is to indemnify the Company for any
liability attributable to the client's failure to comply with its contractual
obligations and the requirements imposed by law, the Company may not be able to
collect on such contractual obligation claims and thus may be responsible for
satisfying such liabilities. Subject to the availability of additional
financing, the Company intends to carry liability insurance, but there can be no
assurance that any such insurance will be sufficient to cover any judgments,
settlements or costs relating to any future claims, suits or complaints or that
sufficient insurance will be available to the Company or such providers in the
future on satisfactory terms, if at all. If insurance is not sufficient to cover
any judgements, settlements or costs relating to any claims, suits or
complaints, the Company's business, financial condition, results of operations
and liquidity could be materially adversely affected. (See - 11. "Potential for
Unfavorable Interpretation of Government Regulations" and Part I, Item 1.
"Description of Business" (b) "Business of Issuer-Industry Regulation.")
At such time as the Company enters into franchise agreements, the Company
may be subject to claims asserting that it is vicariously liable for the damages
allegedly caused by the franchisees. Generally, franchisor liability for the
acts or inactions of its franchisees are based on agency concepts. The Company
intends for its franchise agreements to state that the parties are not agents
and that the franchisees control the day-to-day operations of their businesses.
Furthermore, it is intended that the franchise agreements will require the
franchisees to undertake certain efforts to inform the public that they are not
agents of the Company and that they are independently owned and operated.
Moreover, the Company will take certain additional steps to insulate its
potential liability based on claims from the franchisee's conduct including
requiring the franchisees to indemnify the franchisor for such claims and
mandating that the franchisees carry certain insurance coverage naming the
Company as an additional insured. Despite these efforts to minimize the risk of
vicarious liability, there can be no assurance that a claim will not be made
against the Company, nor that the indemnification requirements and insurance
coverage will be sufficient to cover any judgments, settlements or costs
relating to such a claim.
16. Competition. The staffing industry is highly competitive, with
approximately 7,000 companies providing flexible staffing services through
approximately 17,000 locations and approximately 2,000 companies providing PEO
services. The Company will be competing with larger full-service and specialized
flexible staffing and PEO competitors in national, regional and local markets.
In addition, the Company may encounter substantial competition from new market
entrants. Many of the Company's competitors have significantly greater name
recognition and have greater marketing, financial and other resources than the
Company. The Company expects that there will be significant consolidation in the
staffing industry in the future, resulting in increased competition from larger
national and regional companies. There can be no assurance that the Company will
be able to complete effectively against such competitors in the future. (See
Part I. Item 1. "Description of Business," (b) "Business of
Issuer-Competition.")
17. Seasonal Variations in Results. The Company expects to experience
higher revenues in its third and fourth quarters because of increased demand for
temporary industrial personnel during this time. Demand is high during these two
quarters because most flexible staffing clients are increasing production in
preparation for the end of the year holiday season. The Company expects that its
quarterly operating results also will fluctuate as a result of a number of
timing factors, including the effect of employment tax limits. In addition, the
Company expects to experience lower revenues in the first quarter due to
unfavorable weather conditions and lower overall economic activity. (See Part I,
Item 1. "Description of Business", (b) "Business of Issuer - Seasonality.")
<PAGE>
18. Financial Conditions of Clients. The Company will be obligated to pay
the wages and salaries of its worksite employees regardless of whether the
Company's clients pay the Company on a timely basis or at all. The Company also
may be required to make advances to certain flexible staffing franchise
associates to fund payroll for temporary personnel provided by franchise
associates to their clients. To the extent that a client or flexible staffing
franchise associate experiences financial difficulty, or is otherwise unable to
meet its obligations as they become due, the Company's financial condition,
results of operations and liquidity could be materially adversely affected.
19. Duration of PEO Services Agreement. The Company intends to have a
standard PEO service agreement and that such will be subject to termination by
the Company or the client at any time upon 30 to 45 days' prior written notice.
At such time as such agreements are completed, a significant number of
terminations could have a material adverse effect on the Company's financial
condition, results of operations and liquidity. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Sales and Marketing.")
20. Risk of Loss of Qualified Status for Certain Tax Purposes. The Company
intends to treat worksite employees as the employees of the Company. It is
possible that in connection with an examination by the IRS of a client company
and/or the Company, the IRS may determine that the Company is not the employer
of the worksite employees. The IRS is conducting an examination division market
segment specialization program, coordinated through its Houston, Texas district
office, to examine PEO'S throughout the United States. If the Company is
determined to not be the employer of the worksite employees, the qualified tax
status of the Company may be revoked and the Company may lose its ability to
assume a client company's federal employment tax withholding obligations.
At such time as the Company has sufficient funds (of which there is no
assurance), the Company intends to adopt an employer retirement plan (the
"Plan"). If the loss of qualified tax status for the Company's Plan is applied
retroactively, employees' vested account balances may become taxable immediately
to the employees, the Company would lose its tax deduction to the extent the
contributions were not vested, the Plan trust would lose its status and become a
taxable trust and penalties could be assessed. A retroactive application by the
IRS of an adverse conclusion could have a material effect on the Company's
financial position, results of operations and liquidity. In such a scenario, the
Company also would face the risk of client dissatisfaction as well as potential
litigation. In addition, if the Company were to be required to report and pay
employment taxes for the separate accounts of its clients rather than for its
own account as a single employer, the Company could incur increased
administrative burdens. The Company is unable to predict the timing or nature of
the findings of an IRS examination. (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer - Industry Regulation.")
21. Possible Adverse Affect of Fluctuations in the General Economy and
Business of Clients. Historically, the general level of economic activity has
significantly affected the demand for temporary personnel. As economic activity
has slowed, the use of temporary employees often has been curtailed before core
employees have been laid off. There can be no assurance that an economic
downturn would not adversely affect the demand for temporary personnel. During
periods of increased economic activity and generally higher levels of
employment, the competition among flexible staffing firms for qualified
temporary personnel is intense. There can be no assurance, however, that the
Company's intended operations will not be adversely affected by decreases in
economic activity. Staffing providers also are affected by fluctuations and
interruptions in the business of their clients.
22. Lack of Working Capital Funding Source. Flexible industrial staffing
employees will be paid by the Company on a daily or weekly basis and PEO
employees will be paid by the Company on a weekly, bi-weekly, semi-monthly or
monthly basis. The Company, however, expects to receive payment for these
services from all its flexible industrial staffing customers and its PEO
customers, on average, 35 to 45 days from the date of invoice. As new offices
are established or acquired, or as the existing office is expanded, there will
be increasing requirements for cash to fund these payroll obligations. The
Company has no current source of working capital funds, and should the Company
be unable to secure additional financing on acceptable terms, its business,
financial condition, results of operations and liquidity would be materially
adversely affected.
<PAGE>
23. Absence of Public Market for Shares. The Company's shares of Common
Stock are not registered with the U.S. Securities and Exchange Commission under
the Act. There is no public market for the shares of Common Stock and no
assurance that one will develop. Of such shares, 646,000 thereof are "free-
trading" because of their issuance to persons unaffiliated with JSBW pursuant to
an exemption from registration provided by Rule 504 of Regulation D promulgated
under Section 3(b) of the Act, and the balance of 1,650,500 of such shares are
"restricted securities." Rule 144 of the Act provides, in essence, that holders
of restricted securities, for a period of one year after the acquisition thereof
from the Company or an affiliate of the Company, may, every three months, sell
to a market maker or in ordinary brokerage transactions an amount equal to one
percent of the Company's then outstanding securities. Non-affiliates of the
Company who hold restricted securities for a period of two years may sell their
securities without regard to volume limitations or other restrictions. Resales
of the free-trading shares of Common Stock by "affiliates, control persons
and/or underwriters" of JSBW, as those terms are defined in the Act, will be
subject to the volume limitations, described in paragraph (e) of Rule 144. Any
transfer or resale of the shares of JSBW's Common Stock will be subject, in
addition to the Federal securities laws, to the "blue sky" laws of each state in
which such transfer or resale occurs. A total of 1,601,000 shares and 49,500
shares of the Company's Common Stock will be available for resale under Rule 144
commencing on October 20, 1998 and April 29, 1999 respectively. Sales of shares
of Common Stock under Rule 144 may have a depressive effect on the market price
of the Company's Common Stock, should a public market develop for such stock.
Such sales also might impede future financing by the Company. (See Part III,
Item 11. "Security Ownership of Certain Beneficial Owners and Management.")
24. No Dividends. While payments of dividends on the Common Stock rests
with the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever be paid. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions and other factors
which cannot now be predicted. It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future.
25. No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third of the Company's outstanding Common Stock constitute a quorum,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company.
26. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. (See Part III, Item 11. "Security Ownership of Certain
Beneficial Owners and Management.")
27. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. Potential Anti-Takeover and
Other Effects of Issuance of Preferred Stock May Be Detrimental to Common
Shareholders. The Company is authorized to issue up to 10,000,000 shares of
preferred stock. $.0001 par value per share (hereinafter referred to as the
"Preferred Stock"); none of which shares has been issued. The issuance of
Preferred Stock does not require approval by the shareholders of the Company's
Common Stock. The Board of Directors, in its sole discretion, has the power to
issue shares of Preferred Stock in one or more series and to establish the
dividend rates and preferences, liquidation preferences, voting rights,
redemption and conversion terms and conditions and any other relative rights and
preferences with respect to any series of Preferred Stock. Holders of Preferred
Stock may have the right to receive dividends, certain preferences in
liquidation and conversion and other rights; any of which rights and preferences
may operate to the detriment of the shareholders of the Company's Common Stock.
Further, the issuance of any shares of Preferred Stock having rights superior to
those of the Company's Common Stock may result in a decrease in the value of
market price of the Common Stock provided a market exists, and additionally,
could be used by the Board of Directors as an anti-takeover measure or device to
prevent a change in control of the Company.
<PAGE>
28. No Secondary Trading Exemption. In the event a market develops in the
Company's shares, of which there can be no assurance, secondary trading in the
Common Stock will not be possible in each state until the shares of Common Stock
are qualified for sale under the applicable securities laws of the state or the
Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
29. Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in any Secondary Market. In the event a market develops in the
Company's shares, of which there can be no assurance, then if a secondary
trading market develops in the shares of Common Stock of the Company, of which
there can be no assurance, the Common Stock is expected to come within the
meaning of the term "penny stock" under 17 CAR 240.3a51-1 because such shares
are issued by a small company; are low-priced (under five dollars); and are not
traded on NASDAQ or on a national stock exchange. The Securities and Exchange
Commission has established risk disclosure requirements for broker-dealers
participating in penny stock transactions as part of a system of disclosure and
regulatory oversight for the operation of the penny stock market. Rule 15g-9
under the Securities Exchange Act of 1934, as amended, obligates a broker-dealer
to satisfy special sales practice requirements, including a requirement that it
make an individualized written suitability determination of the purchaser and
receive the purchaser's written consent prior to the transaction. Further, the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990 require a
broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure instrument that provides information about penny
stocks and the risks in the penny stock market. Additionally, the customer must
be provided by the broker-dealer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and the salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. For so long as the Company's Common
Stock is considered penny stock, the penny stock regulations can be expected to
have an adverse effect on the liquidity of the Common Stock in the secondary
market, if any, which develops.
Item 2. Description of Property:
The Company's executive offices are located at 219 Almeria, West Palm
Beach, Florida 33405. Its telephone number is (561) 804-9744. The Company pays
no rent for this space. The Company owns no real or personal property.
Item 3. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year ended
September 30, 1998, covered by this report to a vote of the Company's
shareholders, through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information.
There has been no established public trading market for the Common Stock
since the Company's inception on October 20,1997.
(b) Holders.
As of December 29, 1998, the Company had twenty-one shareholders of record
of its 2,296,500 outstanding shares of Common Stock.
<PAGE>
(c) Dividends.
The Company has never paid or declared any dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since its inception, the Company has conducted no business operations
except for organizational and capital raising activities. For the period from
inception (October 20, 1997) through September 30, 1998, the Company had no
income from operations and operating expenses aggregating $12,456. The Company
proposes to engage in the business of providing human resource services in the
flexible industrial staffing market.
Ms. Garrett, Executive Vice President of JSBW, agreed to develop the
flexible staffing business for the Company for the following, among other,
reasons: (i) because of her belief that a public company could exploit its
talents, services and business reputation to commercial advantage and (ii) to
observe directly whether the perceived advantages of a public company,
including, among others, greater ease in raising capital, liquidity of
securities holdings and availability of current public information, would
translate into greater profitability for a public, as compared to a
locally-owned employment service company.
If the Company is unable to generate sufficient revenue from operations to
implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. Depending upon the amount of revenue,
if any, generated by the Company, management anticipates that it will be able to
satisfy its cash requirements for the next approximately three (3) to nine (9)
months without raising funds via debt and/or equity financing or from third
party funding sources. Accordingly, management expects that it will be necessary
for JSBW to raise additional funds in the next twelve (12) months, commencing
approximately three (3) months form the date hereof, in the event that the
Company is unable to generate any revenue from operations and commencing six (6)
to nine (9) months from the date hereof, if only a minimal level of revenue is
generated in accordance with management's expectations. Ms. Garrett, at least
initially, will be solely responsible for developing JSBW's flexible staffing
business. However, at such time, if ever, as sufficient operating capital
becomes available, management expects to employ additional staffing and
marketing personnel. In addition, the Company expects to continuously engage in
market research in order to monitor new market trends, seasonality factors and
other critical information deemed relevant to JSBW's business through the
development of a sophisticated computerized system.
At least initially, the Company intends to operate out of the home of Mr.
Adams. Thus, it is not anticipated that JSBW will lease or purchase office space
or computer equipment in the foreseeable future. JSBW may in the future
establish its own facilities and/or acquire computer equipment if the necessary
capital becomes available; however, the Company's financial condition does not
permit management to consider the acquisition of office space or equipment at
this time.
Financial Condition, Capital Resources and Liquidity
At September 30, 1998, the Company had assets totaling $10,642 and
liabilities of $4,500 attributable to accrued accounting fees. Since the
Company's inception, it has received $20,200 in cash contributed as
consideration for the issuance of shares of Common Stock. In May 1998, the
Company paid a lump sum consulting fee in the amount of $1,000 to Mr. Adams,
executive officer and director of JSBW in consideration for certain specialized
services performed for the Company by him. These services included the
preparation of a business plan for the Company and the performance of certain
financial consulting services. In May 1998, the Company paid Mintmire &
Associates, a law firm of which Donald F. Mintmire, Esq. is the sole proprietor,
the sum of $5,000.00 in consideration for the performance of certain legal
services, including but not limited to passing upon the legality of the Common
Stock and certain other matters in connection with this Registration Statement
on Form 10-SB. Commencing May 1, 1998, the Company agreed to pay a fee in the
amount of $100.00 per month to Adams, Inc., a company owned by Mr. Adams in
consideration for certain administrative services to be performed and costs to
be incurred by said firm on behalf of JSBW. After an initial monthly payment,
Mr. Adams subsequently agreed to suspend such monthly fee until such time as the
Company was in a stronger financial position. In May 1998, the Company paid a
lump sum consulting fee in the amount of $1,000 to Ms. Garrett, Executive Vice
President of JSBW in consideration of certain specialized services performed and
to be performed for the Company by her through December 31, 1998.
<PAGE>
Mr. Adams and Ms. Garrett own of record and beneficially 1,601,000 and
49,500 shares respectively, representing approximately 69.71% and 2.16%
respectively, of the outstanding shares of the Company's Common Stock. (See Part
III, Item 11. "Security Ownership of Certain Beneficial Owners and Management"
and Part III, Item 12. "Certain Relationships and Related Transactions.")
The Company has no potential capital resources from any outside sources at
the current time. In its initial phase, the Company will operate out of the
facility provided by Mr. Adams. Ms. Garrett will begin by finding client
employers and client employees for the Company and instructing Mr. Adams in the
operation of a temporary industrial staffing agency. To attract client
employers, Ms. Garrett and Mr. Adams will visit potential clients in order to
determine their overall needs. In order to attract client employees which match
the needs of the potential client employers, the Company will place advertising
in local area newspapers in Palm Beach County. In the event the Company requires
additional capital during this phase, Mr. Adams has committed to fund the
operation until such time as additional capital is available. The Company
believes that it will require three (3) to six (6) months in order to determine
the market demand potential and the availability of qualified employees.
The ability of the Company to continue as a going concern is dependent upon
increasing placements and obtaining additional capital and financing. The
Company believes that in order to be able to expand its initial operations, it
must rent offices in Palm Beach County, hire clerical staff and acquire through
purchase or lease equipment for client employee testing, scheduling and
accounting purposes. The Company believes that there is adequate and affordable
rental space available in Palm Beach County and sufficiently trained personnel
to provide such clerical services at affordable rates. Further, the Company
believes that the type of equipment necessary for the operation is readily
accessible at competitive rates.
To implement such plan, also during this initial phase, the Company intends
to initiate a self-directed private placement under Rule 506 in order to raise
an additional $100,000. In the event such placement is successful, the Company
believes that it will have sufficient operating capital to meet the initial
expansion goals and operating costs for a period of one (1) year. In the event
the Company is not successful in raising such funds, the Company believes that
it will not be able to continue operations past a period of three (3) to nine
(9) months.
Year-2000 Compliance
The Company is currently in the process of evaluating its information for
Year 2000 compliance. The Company does not expect that the cost to modify its
information technology infrastucture to be Year 2000 compliant will be material
to its financial condition or results of operations. the Company does not
anticipate any material disruption in its operations as a result of any failure
by the Company to be in compliance.
Forward-Looking Statements
This Form 10-KSB includes "Forward-Looking statements" within the meaning
of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securitiies Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-KSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), wells to
be drilled or reworked, oil and gas prices and demand, exploitation and
exploration prospects, development and infill potential, drilling prospects,
expansion and other development trends of the oil and gas industry, business
strategy, production of oil and gas reserves, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. these statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conforn with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws and regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in the Form 10-KSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
<PAGE>
Item 7. Financial Statements.
The Financial Statements of JS Business Works, Inc., and Notes to Financial
Statements together with the Independent Auditor's Report of Durland and
Company, CPA's, P.A., required by this Item 7 commence on page F-1 hereof and
are incorporated herein by this reference. The Financial Statements filed as
part of this Annual Report on Form 10-KSB are listed in the Index to Financial
Statements below:
Page
----
Independent Auditor's Report F-2
Balance Sheet, as of September 30, 1998 F-3
Statement of Operations for the Period
October 20, 1997 (Inception), to September 30,1998 F-4
Statement of Stockholders' Equity for the Period
October 20, 1997 (Inception), to September 30., 1998 F-5
Statement of Cash Flows for the Period October 20, 1997
(Inception), to September 30, 1998 F-6
Notes to Financial Statements F-7
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
Because the Company has been generally inactive since its inception, it has
had no independent accountant until the retention in March 1998 of Durland and
Company, CPA's, P.A., 340 Royal Palm Way, Suite 204, Palm Beach, Florida 33480.
There has been no change in the Company's independent accountant during the
period commencing with the Company's retention of Durland and Company, CPA's,
P.A. through the date hereof.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report.............................................F-2
Balance Sheet............................................................F-3
Statement of Loss....................................................... F-4
Statement of Changes in Stockholders' Equity............................ F-5
Statement of Cash Flows..................................................F-6
Notes to Financial Statements............................................F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
TO: The Board of Directors
JS Business Works, Inc.
Palm Beach, Florida
We have audited the accompanying balance sheet of JS Business Works, Inc.,
a development stage enterprise, as of September 30, 1998 and the related
statements of loss, changes in stockholders' equity and cash flows from October
20, 1997 (Inception) through September 30, 1998. 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 audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of September
30, 1998 and the results of its operations and its cash flows from October 20,
1997 (Inception) through September 30, 1998 in conformity with 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 7 to the
financial statements, the Company has experienced operating losses since
inception. The Company's financial position and operating results raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 7. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/Durland & Company, CPAs, P.A.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
January 7, 1999
F-2
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Balance Sheet
ASSETS September 30, 1998
-------------------------
CURRENT ASSETS
Cash $ 379
Note receivable 10,263
-------------------------
Total current assets 10,642
-------------------------
Total Assets $ 10,642
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 4,500
-------------------------
Total current liabilities 4,500
-------------------------
Total Liabilities 4,500
-------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value,
authorized 10,000,000 shares,
0 issued and outstanding 0
Common stock, $0.0001 par value, authorized
50,000,000 shares, 2,296,500 issued and
outstanding 230
Additional paid-in capital 18,105
Deficit accumulated during the development stage (12,193)
-------------------------
Total Stockholders' Equity 6,142
-------------------------
Total Liabilities and Stockholders' Equity $ 10,642
=========================
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Statement of Loss
From October 20, 1997 (Inception) through September 30, 1998
September 30, 1998
-----------------------
Revenues $ 0
-----------------------
Bank charges 13
Consultant expenses 2,100
Office expenses 118
Organization expenses 130
Professional fees 9,635
Taxes, licenses and fees 441
Miscellaneous expenses 19
-----------------------
Total expenses 12,456
-----------------------
Loss from operations (12,456)
Other income (expense)
Interest income 263
-----------------------
Net loss $ (12,193)
=======================
Basic net loss per weighted average share $ (0.0006)
=======================
Weighted average number of shares 1,971,559
=======================
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Statement of Changes in Stockholders' Equity
From October 20, 1997 (Inception) through September 30, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Number Additional Stock During the Total
of Common Paid-in Subscription Development Stockholders'
Shares Stock Capital Receivable Stage Equity
----------- ----------- ------------ -------------- --------------- ---------------
BEGINNING BALANCE,
October 20, 1997 (inception) 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 21, 1997 - services ($0.0001/sh) 1,601,000 160 0 0 0 160
April 19, 1998 - cash ($0.01/sh) 302,500 30 2,995 0 0 3,025
April 29, 1998 - cash ($0.05/sh) 343,500 35 17,140 0 0 17,175
April 30, 1998 - services ($0.05/sh) 49,500 5 2,470 0 0 2,475
May 15, 1998 - offering costs 0 0 (4,500) 0 0 (4,500)
May 22, 1998 - cash 0 0 0 (200) 0 (200)
June 1, 1998 - cash 0 0 0 200 0 200
Net loss 0 0 0 0 (12,193) (12,193)
----------- ----------- ------------ -------------- --------------- ---------------
BALANCE, September 30, 1998 2,296,500 $ 230 $ 18,105 $ 0 $ (12,193)$ 6,142
=========== =========== ============ ============== =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
From October 20, 1997 (Inception) through September 30, 1998
From October 20, 1997
(Inception) through
September 30, 1998
-------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (12,193)
Adjustments to reconcile net loss to net cash
used for operating activities:
Interest accrued on note receivable (263)
Stock issued for services 2,635
Increase in accrued liabilities 4,500
-------------------------------
Net cash used for operating activities (5,321)
-------------------------------
CASH FLOW FROM INVESTING ACTIVITIES :
Issuance of note receivable (10,000)
-------------------------------
Net cash used by investing activities (10,000)
-------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 15,700
-------------------------------
Net cash provided by financing activities 15,700
-------------------------------
Net increase in cash and equivalents 379
CASH and equivalents, beginning of period 0
-------------------------------
CASH and equivalents, end of period $ 379
===============================
The accompanying notes are an integral part of the financial statements
F-6
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(1) The Company JS Business Works, Inc., is a Florida chartered development
stage corporation which conducts business from its headquarters in Palm Beach,
Florida. The Company was incorporated on October 20, 1997 and has selected
September 30 as its fiscal year end.
The Company has not yet engaged in its expected operations. The Company's
future operations include plans to become a full-service flexible staffing
service to recruit, train and deploy temporary personnel to companies in a wide
range of industries. Current activities include raising additional equity and
negotiating with potential key personnel and facilities.
The Company is in the development stage and has not yet acquired the
necessary operating assets, nor has it begun any part of its proposed business.
While the Company is negotiating with prospective personnel and potential
customer distribution channels, there is no assurance that any benefit will
result from such activities. The Company will not receive any operating revenues
until the commencement of operations, but will nevertheless continue to incur
expenses until then.
(2) Summary of Significant Accounting Principles
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Operating facilities The Company is seeking to lease office space in the
Palm Beach area. It is not expected that the Company will purchase facilities in
the near future.
b) Use of estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
statements of financial condition and revenues and expenses for the year then
ended. Actual results may differ significantly from those estimates.
c) Cash equivalents The Company considers all highly liquid debt
instruments with an original maturity of three months or less to be cash
equivalents.
d) Start-Up costs Costs of start-up activities, including organization
costs, should be expensed as incurred, as stated, in Statement of Position (SOP)
98-5, which has been cleared by the Financial Accounting Standards Board (FASB).
This SOP sets forth the generally accepted accounting principles for costs of
start-up activities as it applies to development stage entities. Accordingly,
the Company expects to expense any organizational costs.
e) Net loss per share Basic is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period.
f) Compensation for services rendered with stock The Company exchanges
shares of common stock, in lieu of cash, for the fair market value of services
rendered. The cost of the services has been charged to operations.
(3) Note Receivable The note receivable bears interest at 9.0% interest per
annum and is due on demand. Accrued interest at September 30, 1998 is $263. The
Company expects repayment of the note and accrued interest in February 1999.
(4) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock. The Company had 2,296,500 shares of common stock
issued and outstanding at May 31, 1998. On October 21, 1997, the Company issued
1,601,000 shares to its President for the fair market value of services rendered
at $160. The Board of Directors approved an offering of 302,500 shares at $0.01
for $3,025 in cash on April 19, 1998. The Board of Directors also approved an
offering of 343,500 shares at $0.05 for $17,175 in cash on April 29, 1998. On
April 30, 1998, the Company issued 49,500 shares, to its Executive Vice
president for the fair market value of services rendered at $2,475. The Company
had $4,500 of legal expenses for offering costs that were paid on May 15, 1998.
A $200 stock subscription receivable was incurred on May 22, 1998 for a
non-sufficient funds item from one of the shareholders. On June 1, 1998, the
$200 stock subscription receivable was received by the Company.
In addition, the Company has authorized 10,000,000 shares of $0.0001 par
value preferred stock. The Company had issued none of its shares of preferred
stock at September 30, 1998.
F-7
<PAGE>
JS Business Works, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(5) Income Taxes Deferred income taxes are provided on elements of income
which are recognized for financial accounting purposes in periods different than
such items are recognized for income tax purposes. Deferred income tax benefits
are provided on elements of expense which are recognized for financial
accounting purposes in periods different than such items are recognized for
income tax purposes. The Company had net operating loss carry-forwards for
income tax purposes of approximately $12,193 expiring at September 30, 2013.
The amount recorded as deferred tax assets as of September 30, 1998 is
$2,339, which represents the amounts of tax benefits of loss carry-forwards. The
Company has established a valuation allowance against this deferred tax asset,
as the Company has no history of profitable operations.
(6) Related Parties The Company had entered into an agreement to pay $100
per month to Adams, Inc. to cover general office expenses. Adams, Inc. is a
company controlled by the president of the Company. After the first month, the
president chose to suspend this agreement until the Company is sufficiently
capitalized.
(7) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $12,193 from October 20, 1997 (Inception) through
September 30, 1998. The ability of the Company to continue as a going concern is
dependent upon increasing sales and obtaining additional capital and financing.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern. The Company is
currently seeking financing to allow it to begin its planned operations.
F-8
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- - ---- --- ------------------------
Charles Adams 33 President, Treasurer
and Director (2)
Lyn Garrett 46 Executive Vice President
Mercedes Travis 56 Secretary and Director
(1) Except for Ms. Garrett and Ms. Travis; who had no role in
founding or organizing the Company, the above-named persons may
be deemed to be "promoters" and "parents" of the Company, as
those terms are defined under the Rules and Regulations
promulgated under the Act.
(2) As such Mr. Adams acts as the CEO, CFO and Principal Accounting
Officer of the Company.
All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Director. Mr. Adams, Ms. Garrett and Ms.
Travis will devote such time and effort to the business and affairs of the
Company as may be necessary to perform their responsibilities as executive
officers and/or directors of the Company.
Aside from the above officers and directors, there are no other persons
whose activities will be material to the operations of the Company at this time.
Mr. Adams is the sole "promoter" of the Company as such term is defined under
the Act.
Family Relationships
There are no family relationships between or among the executive officers
and director of the Company.
Business Experience
Charles Adams has served as the President, Treasurer and a Director of the
Company since its inception on October 21, 1997. As such he acts as the CEO, CFO
and Principal Accounting Officer.
Since October 1988, Mr. Adams has engaged in private business ventures,
mostly in the area of finance. Through his company, Adams Inc., which was formed
in October, 1997, he is currently providing consulting services and commercial
equipment leasing. Mr. Adams specializes in financing equipment which is placed
with end users. From October 1997 until the present, Mr. Adams has been employed
by Carcorp, Inc. which is one of only two lenders who provide commercial paper
for Bombardier, Inc., under operating leases for lear jets and other major
aviation equipment. Mr. Adams is the Director of Finance of Carcorp, Inc. and
has a staff of eight (8) working under him. In this capacity, Mr. Adams arranges
the operating leases for rolling stock, large commercial equipment, aviation and
commercial marine end users. From 1995 through October 1997, Mr. Adams was
independently engaged in commercial leasing of limousines and limousine fleets.
From 1996 through October 1997, he also was employed by Ed Morse as the Fleet
Manager for the Jeep operations. From 1993 through 1995, Mr. Adams was employed
by Palm Beach Lincoln Mercury in sales. Prior to relocating to Florida, from
1991 through 1993 Mr. Adams was employed by Alpha Zeta Trust in California,
where he was responsible for the acquisition of commercial real estate,
including negotiations of sale and arrangement of bridge financing. During Mr.
Adams employment, Alpha Zeta Trust acquired two large loan pools from the Real
Estate Investment Trust. The profitable part of these pools were sold at a
substantial profit, while the non performing loans were foreclosed. From 1988
through 1991, Mr. Adams independently engaged in the acquisition of real estate.
During the same period he was employed by Porsche, Audi, Ferrari in Woodland
Hills, California as a salesman.
<PAGE>
In this capacity, Mr. Adams was
responsible for all aspects of the automobile acquisition, including arranging
the purchase financing. Mr. Adams attended Los Angeles Valley College for two
(2) years and took marketing and sales extension courses at the University of
California Los Angeles.
Lyn Garrett has served as the Executive Vice President of the Company since
April 30, 1998.
Since February 1997, Ms. Garrett has operated her own employment agency
under the Lyn Garrett & Associates, Inc. For the one and one-half years (1.5)
prior to that, Ms. Garrett operated the agency as a sole proprietorship. At the
current time, Ms. Garrett operates two (2) offices, one in West Palm Beach,
Florida and the other in Orlando, Florida. This agency principally engages in
the placement of temporary and permanent staff to the financial and mortgage
banking community. Its major client is Ocwen Federal Bank, an institution which
is involved primarily in mortgage banking and manages a extensive mortgage
portfolio. Ms. Garrett's agency fills approximately half of all of Ocwen's
temporary and permanent staffing positions. The West Palm Beach office has two
(2) employees in addition to Ms. Garrett, while the Orlando office has a staff
of two (2). From 1994 until the beginning of 1998, Ms. Garrett served on the
Board of Florida Staffing Association. She is certified by Personnel Decisions,
Inc. as a trainer in behavior description interviewing. From 1992 until 1994,
Ms. Garret was employed by Office Specialists as a placement representative.
From 1988 through 1991, Ms. Garrett was employed by Drake International in the
United States in temporary staffing placement and had previously been employed
by the same company in Toronto, Canada from 1970 through 1976. From 1976 through
1988, Ms. Garrett was employed as an accounting comptroller for J.P. Morgan,
originally in New York and then in West Palm Beach. Ms. Garrett holds a
Bachelors of Science in Accounting from the University of Toronto, Canada.
Mercedes Travis has served as Secretary and a Director of the Company since
June 4, 1998.
Since December 1980, Ms. Travis has been engaged in the private practice of
law and is licensed to practice in the States of Florida, New York and New
Jersey. She is Of Counsel to the firm of Mintmire & Associates, which acts as
counsel to the Company. During her period of practice, Ms. Travis has advised
numerous companies in matters relating to securities and finance. She has
structured and authored public and private offerings involving real estate,
technology, pharmaceuticals, oil and gas and equipment leasing. She has
structured and implemented secured and unsecured financing arrangements with
major international insurance companies and banks for individual and corporate
borrowers and participated in the acquisition and going private of an American
Stock Exchange company. From 1983 to 1991, Ms. Travis was an NASD Registered
Representative with a Series 7 and 63 license. From 1981 to 1992, Ms. Travis
held a New York State license as a Real Estate Broker. During the 1980's, Ms.
Travis lectured several NASD firms on Regulation D offerings and private
offering marketing issues. Ms. Travis holds a Bachelors of Arts in English from
Temple University, Philadelphia, Pennsylvania; a Masters of Business
Administration (with honors) from Widener University, Chester, Pennsylvania; and
a Juris Doctorate (with honors) from Delaware Law School, now known as Widener
University School of Law, Wilmington, Delaware.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership, of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, Mr. Adams, Ms. Garrett and Ms. Travis
comprising all of the Company's executive officers, directors and greater than
10% beneficial owners of its common Stock, have complied with Section 16(a)
filing requirements applicable to them during the Company's fiscal year ended
September 30, 1998.
<PAGE>
Item 10. Executive Compensation.
Except for certain shares of the Company's Common Stock issued and sold to
two (2) executive officers and/or directors of the Company in consideration for
various services performed for the Company by each of them, a lump-sum
consulting fee in the amount of $1,000.00 paid to Mr. Adams and a fee in the
amount of $100.00 paid by the Company to Adams, Inc. for administrative services
performed and costs incurred by Mr. Adams on behalf of JSBW and a lump sum
consulting fee in the amount of $1,000.00 paid to Ms. Garrett, no cash or
non-cash compensation was awarded to, earned by or paid to any executive officer
or director of the Company for all services rendered in all capacities to the
Company since its inception on October 20, 1997. Although it was anticipated
that Adams, Inc. would receive a monthly fee equal to $100, Mr. Adams agreed to
suspend that fee for the present time. On October 21, 1997, the Company issued
and sold 1,601,000 shares of Common Stock, representing approximately 69.71% of
the total number of shares of Common Stock of the Company outstanding on the
date hereof, to Mr. Adams, for services in connection with the organization of
the Corporation. Ms. Garrett, on April 30, 1998 received a total of 49,500
shares of Common Stock, representing approximately 2.16% of the total number of
outstanding shares of the Company's Common Stock as of the date hereof, in
consideration for certain business consulting services related to employment
agency operations performed by her for the Company. Except for the
above-described compensation, it is not anticipated that any executive officer
of the Company will receive any cash or non-cash compensation for his or her
services in all capacities to the Company until such time as the Company
commences business operations. At such time as JSBW commences operations, it is
expected that the Board of Directors will approve the payment of salaries in a
reasonable amount to each of its officers for their services in the positions of
President/Treasurer, Executive Vice President and Secretary respectively, of the
Company. At such time, the Board of Directors may, in its discretion, approve
the payment of additional cash or non-cash compensation to the foregoing for
their services to the Company.
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors of
the Company for their attendance at meetings of the Board of Directors.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of December 29, 1998,
regarding the ownership of the Company's Common Stock by each shareholder known
by the Company to be the beneficial owner of more than five per cent of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group. Except as otherwise indicated, each of the shareholders
has sole voting and investment power with respect to the shares of Common Stock
beneficially owned.
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class (1)
---------------- ----- ---------
Charles Adams (2)(3) 1,601,000 69.71%
219 Almeria
West Palm Beach, Florida 33405
Lyn Garrett (2)(3) 49,500 2.16%
835 Flamingo Drive
West Palm Beach, Florida 33401
Mercedes Travis (2)(3) 0 0%
219 B Chilian Avenue
Palm Beach, Florida 33480
All Executive Officers and Directors 1,650,500 71.87%
as a Group (three persons)
- - ------------------
(1) Based upon 2,296,500 shares of the Company's Common Stock issued and
outstanding as of December 29, 1998.
<PAGE>
(2) Executive officer of the Company.
(3) Member of the Board of Directors of the Company.
Item 12. Certain Relationships and Related Transactions.
On October 21, 1997, the Company issued and sold 1,601,000 shares of the
Common Stock to Mr. Adams, the President and Treasurer of the Company and record
and beneficial owner of approximately 69.71% of the Company's outstanding Common
Stock, in consideration and exchange therefore for services in connection with
the organization of JSBW valued at $106.10 performed for the Company by him.
On April 30, 1998, the Company issued and sold a total of 49,500 shares of
Common Stock to Ms. Garrett, the Executive Vice President of the Company, and
the record and beneficial owner of approximately 2.16% of the Company's
outstanding Common Stock, as consideration for certain business consulting
services performed for the Company relating to, among other things, the flexible
staffing business and marketing, valued at $2475.00.
Commencing May 1, 1998 the Company's agreed to pay a monthly fee in the
amount of $100.00 to Adams, Inc. in consideration for administrative services to
be performed and costs to be incurred by such company on behalf of JSBW. One
payment was made, then Mr. Adams agreed to suspend such payments for the current
time. Management believes that the administrative fees paid or to be paid by the
Company to Mr. Adams' company are comparable to those fees which would be
payable by the Company to unaffiliated third parties for comparable services in
the Palm Beach, Florida area.
At the current time, the Company has no provision to issue any additional
securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued Common Stock and Preferred Stock which may be issued
without further shareholder approval or notice, the Company intends to reserve
such stock for the Rule 506 offerings contemplated to implement continued
expansion, for acquisitions and for properly approved employee compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer.")
Item 13. Exhibits and Reports on Form 8-K.
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- -------------------------------------------------------------------------------
2.1 Articles of Incorporation of JS Business Works, Inc.
filed October 20, 1997 (1)
2.2 Articles of Amendment to the Articles of
Incorporation of JS Business Works, Inc. filed May 4,
1998 (1)
2.3 Bylaws of JS Business Works, Inc. (1)
- - ------------------
(1) Incorporated herein by reference to the Registration Statement on
Form 10-SB of JS Business Works, Inc. (File No. 0-24551), filed
with the U.S. Securities and Exchange Commission.
(b) No Reports on Form 8-K were filed during the last quarter of the
fiscal year ended September 30, 1997, covered by this Annual Report on
Form 10-KSB.
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
<PAGE>
JS BUSINESS WORKS, INC.
(Registrant)
Date: January 13, 1999 By: /s/ Charles Adams
-----------------------------------
Charles Adams, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
January 13, 1999 By: /s/ Charles Adams President and Director
-----------------------
Charles Adams
January 13, 1999 By: /s/ Mercedes Travis Secretary and Director
-----------------------
Mercedes Travis
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF JS BUSINESS WORKS, INC. FOR SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 1061822
<NAME> JS Business Works, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-20-1997
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 379
<SECURITIES> 10,263
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,642
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,642
<CURRENT-LIABILITIES> 4,500
<BONDS> 0
0
0
<COMMON> 230
<OTHER-SE> 5,912
<TOTAL-LIABILITY-AND-EQUITY> 10,642
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 12,456
<OTHER-EXPENSES> (263)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,193)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,193)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,193)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
