UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended - September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-25881
NetStaff, Inc.
(Name of Small Business Issuer in its charter)
Indiana 35-2065470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
168 South Park Street, San Francisco, California 94107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 908-1000
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 par value per share
(Title or class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(D) of the securities Exchange Act
of 1934 during the preceding 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 [ ]
As of September 30, 1999, the Registrant has outstanding 13,500,000 shares
of Common Stock.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
GHIRARDO CPA
7200 Redwood Blvd, Suite 403, Novato, California 94945
www.ghirardocpa.com
Telephone: (415) 897-5678 (415) 897-5030 facsimile
To the shareholders of NetStaff, Inc.
We have compiled the accompanying balance sheet of NetStaff, Inc. (a
development stage company) at September 30, 1999, and the statement of
operations for the nine month period then ended, the three month period
then ended, the three month period ended September 30, 1998, and the
period from June 21, 1996 (inception) to September 30, 1999, the statement
of shareholders' equity (deficiency) for the nine month period ended
September 30, 1999, and the statement of cash flows for the nine months
ended September 30, 1999 and the period from June 21, 1996 (inception) to
September 30, 1999, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accounts.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
The accompanying compiled financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the statements, information and
footnotes required by generally accepted accounting principles for complete
financial statements.
/s/ Ghirardo
Ghirardo CPA
November 27, 1999
NETSTAFF, INC.
(a development stage company)
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C>
Cash $ (499)
Loans to officers 36,351
Prepaid expenses 9,000
-----------------
Total current assets 44,852
-----------------
FIXED ASSETS
Computer equipment 43,800
Proprietary software 132,609
Furniture and equipment 15,141
Leasehold improvements 7,774
-----------------
199,324
Accumulated depreciation (16,943)
-----------------
182,381
ORGANIZATIONAL COSTS, net of amortization 33
TRADEMARKS, net of amortization 15,433
-----------------
TOTAL ASSETS $ 242,699
=================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other liabilities $ 223,123
Short-term notes payable 115,100
-----------------
Total current liabilities 338,223
SHAREHOLDERS' EQUITY
Common stock $.001 par value, authorized
100,000,000 shares 13,500,000 issued
and outstanding 831,256
Retained Earnings (accumulated deficit) (926,780)
-----------------
(95,524)
-----------------
TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY $ 242,699
=================
</TABLE>
<PAGE>
NETSTAFF, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Nine months Three months Three months Inception
ended ended ended through
Sept. 30, 1999 Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999
<S> <C> <C> <C> <C>
INCOME $5,000 $15,600
EXPENSES
Payroll and
payroll taxes $ 2,376 $2,376 7,979 282,882
Advertising and
Promotional 22,326 22,325 1,250 80,352
Communications 17,689 11,249 1,378 76,496
Consulting/advisors 57,917 7,417 2,000 90,339
Corporate taxes 157 157 0 1,692
Depreciation and
amortization 8,203 2,742 2,293 17,840
Equipment 1,756 246 1,231 27,931
Insurance (207) (207) 0 2,609
Office and other
expenses 1,381 (2,362) 473 50,701
Professional fees 64,281 73,415 6,657 148,358
Rent 25,996 11,603 0 164,719
Travel and
entertainment 27,414 27,414 4,650 53,035
-------------- ----------- ----------- -----------
Total Expenses 229,289 156,375 27,911 996,954
-------------- ----------- ----------- -----------
Loss before
other income
(expense) (229,289) (156,375) (22,911) (981,354)
OTHER INCOME (EXPENSE)
Office sublease income 54,630 24,240 0 76,313
Forgiveness of debt 5,000 0 0 5,000
Interest expense (14,163) (6,492) (3,200) -26,739
--------------- ------------ ----------- -----------
Total other
income (expense) 45,467 17,748 (3,200) 54,574
--------------- ------------ ----------- -----------
NET LOSS ($183,822) ($138,627) ($26,111) ($926,780)
=============== =========== =========== ===========
Weighted Average Common Shares Outstanding 7,842,887
=========
Net Loss Per Common Share Outstanding ($0.02)
=========
</TABLE>
See accountants' compilation report
<PAGE>
NETSTAFF, INC.
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Preferred stock Common stock
--------------- ---------------
Shares Shares
Issued Amount Issued Amount Deficit
-------- ------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Pre-Merger "Absorbed" NetStaff
Activity
Balance, January 1, 1999 35,000 $35,000 1,449,745 $560,256 ($742,892)
Common stock issued 50,593 75,000
Notes payable conversion 134,167 161,000
Preferred stock conversion (35,000) (35,000) 35,000 35,000
-------- -------- ------ ------
Balance Immediately Before Merger 0 $0 1,669,505 $831,256
======== ========= ========= ========
Surviving Company Activity
Balance, January 1, 1999
(66)
Conversion of pre-merger NetStaff
shares for 5.0943 shares each of Surviving
NetStaff company stock 8,505,000 $831,256
Additional common stock issued 4,995,000
Net loss for the nine months
ended September 30, 1999 ($183,822)
---------- -------- ----------
Balance, September 30, 1999 13,500,000 $831,256 ($926,780)
========== ======== ==========
</TABLE>
See accountants' compilation report
<PAGE>
NETSTAFF, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Nine months Inception
ended through
September 30, 1999 September 30, 1999
<S> <C> <C>
Cash flows from
operating activities:
Net loss ($183,822) ($926,780)
Adjustments to reconcile
net loss to net cash
used in operating activities:
Depreciation and amortization 8,203 17,840
(Increase) in prepaid expenses 0 (9,000)
Issuance of stock for services 38,000 38,000
Increase in accounts payable 23,646 213,109
-------- ----------
Total adjustments 69,849 259,949
-------- ----------
Net cash used in
operating activities (113,973) (666,831)
-------- ----------
Cash flows from investing activities:
Acquisition of fixed assets (2,525) (199,324)
Acquisition of trademark asset 0 (6,269)
Gross organization costs (80) (80)
--------- ----------
Net cash used in
investing activities (2,605) (205,673)
--------- ----------
Cash flows from financing activities:
(Increase) in officer note receivable (36,351) (36,351)
Increase in notes and loans payable 115,100 115,100
Long term debt conversion to common stock 0 161,000
Preferred stock conversion to common stock 0 35,000
Additional paid in capital
converted to common stock 0 560,256
Issuance of common stock 37,000 37,000
------- -------
Net cash provided by
financing activities 115,749 872,005
------- -------
Net decrease in cash and cash equivalents (829) (499)
Cash and cash equivalents at beginning of year 330 0
------- -------
Cash and cash equivalents at end of year ($499) ($499)
======== =======
Supplemental disclosures:
Interest paid $1,446 $5,322
======= =======
Income taxes paid $157 $1,692
======= =======
</TABLE>
See accountants' compilation report
<PAGE>
NETSTAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
Summary of significant accounting policies:
Business activity:
NetStaff, Inc. (the Company) is engaged in the business of providing an
Internet-based multiple listing service for the professional staffing industry.
Cash and equivalents:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with an original maturity of three months or
less to be cash equivalents.
Equipment and improvements:
Equipment and improvements are carried at cost. Depreciation is computed
under straight-line methods principally over seven years. Expenditures for
major improvements that extend the useful lives of property and equipment
are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred.
The Company has capitalized software development costs totaling $132,609.
The Company will start to amortize these costs once operation has commenced.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Income taxes:
The Company may have available net operating loss carry forwards of
approximately $930,000 for tax purposes to offset future taxable income.
Estimated deferred tax assets relating to these net operating losses have
been fully reserved by valuation allowances because of the uncertainty of
realization through future income and the change in ownership which, under
the Internal Revenue Code, could limit these carry forwards or disallow
them entirely.
<PAGE>
NETSTAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
Commitment:
The Company is obligated under a net lease for its office location. The
lease expires May 31, 2002.
The minimum lease payments under the above lease are as follows: $49,400
for the year ended December 31, 1999, $51,800 for the year 2000, $54,200
for the year 2001, $23,000 for the year 2002.
Rent and related expenses amounted to $25,996 for the nine months ended
September 30, 1999.
The Company has sublet a portion of the premises to an outside non-related
company. The lease expires December 31, 1999. The annual rental
approximates $97,200. The sub-rental income for the nine months ended
September 30, 1999 is $54,630.
Legal proceedings:
One of the Company's officers and one of its directors have been named as
defendants in a breach of contract action, seeking $21,000 plus punitive
damages. The individuals have answered the complaint and made cross-claims
against the plaintiff. A default judgment has been entered against the
individual defendants who intend to seek a court order to set aside the
default. Although the Company is also a named defendant and has answered
the complaint, the action has not proceeded further with respect to the
Company. The Company has not accrued any amounts in its financial
statements at September 30, 1999 relating to the action.
Debt:
The Company is obligated under various notes payable for $115,100 at various
interest rates of between 6% and 12%. These notes all are due within one
year. Interest has been accrued through September 30, 1999.
Prior to the merger (discussed below), $161,000 of long term debt was
converted into common stock. The accrued interest payable remains payable
to the lenders, and is considered a current obligation.
<PAGE>
NETSTAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
Stockholders' equity:
Prior to the merger (discussed below), two shareholders purchased 2,118
shares each of Company stock at $10,000, each. The Company holds a right
of first refusal to purchase these shares before sale or transfer to an
outside party. In addition, three shareholders were issued a total of
36,000 shares of pre merger common stock for services provided to the
Company.
On September 15, 1999, the Company entered into a stock exchange agreement
with MAS Acquisition VIII Corp., an Indiana Corporation (MAS), whereby the
Old Company agreed to merge into MAS, pursuant to a tax free reorganization.
MAS became the surviving corporation and changed its name to NetStaff, Inc.
(New Company). Pursuant to the terms of the agreement, each common share
of the Old Company was converted into 5.0943 common shares of New Company.
A total of 1,669,505 shares of common stock of the Old Company was
converted into 8,505,000 common shares of New Company. At the closing,
there were 13,500,000 shares of the common stock of New Company issued and
outstanding. The common shares of New Company issued in connection with
the conversion have not been registered under the Securities Act of 1933,
as amended.
Prior to the merger, the MAS Articles of Amendment of the Articles of
Incorporation were approved and filed on September 1, 1999 increasing the
number of authorized shares of common stock from 80,000,000 to 100,000,000
shares.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITIONS.
The following discussion should be read in conjunction with the accompanying
Compiled Financial Statements and related notes thereto.
Forward Looking Information.
The Private Securities Litigation Reform Act of 1995 (the "Reform Act')
provides a "safe harbor" for forward-looking statements to encourage
companies to provide prospective information about their companies, so
long as those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying important
factors that would cause actual results to differ materially from those
discussed in the statement. The Company desires to take advantage of the
"safe harbor" provisions of the Reform Act. Except for the historical
information contained herein, the matters discussed in this Form 10-QSB
quarterly report are forward-looking statements that involve risks and
uncertainties. Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be achieved.
Important factors that can cause actual results to differ materially from
the Company's expectations are disclosed in conjunction with the forward-
looking statements or elsewhere herein.
Financials.
The following discussion should be read in conjunction with the Financial
Statements appearing elsewhere in this filing. The financial statements,
as of September 30, 1999, and for the nine months then ended, are
unaudited and are not necessarily indicative of theresults that may be
expected for the year ended December 31, 1999. In the opinion of
management, the financial statements include all adjustments, consisting
of normal recurring accruals necessary for a fair presentation of the
Company's financial position and results of operations. These unaudited
financial statements should be read in conjunction with the financial
statements for the year ended December 31, 1998.
MAS Acquisition VIII Corp. (which is referred to in this filing as the
"Company") was substantially inactive in the year ended December 31, 1998
and the period ended June 30, 1999, and became active upon its merger on
September 15, 1999, with NetStaff, Inc., when it began to operate NetStaff,
Inc.'s business. Accordingly, the information which follows reflects the
business and operations of NetStaff, Inc. for the period from its inception
until its merger into the Company on September 15, 1999. Information
provided for any period after September 15, 1999, including information
with respect to the nine months ended September 30, 1999, is provided on
a pro forma basis as if the Company's merger with NetStaff, Inc. had
occurred as of January 1, 1999.
General Overview.
The Company is in the business of providing an Internet-based multiple
listing service for the professional staffing industry. The Company brings
together the resources of the staffing industry with the needs of the
corporate human resources community. Its products, including NetStaff MLS,
NetStaff SCOnline for staffing companies and NetStaff HROnline for HR
professionals, all focus on linking forward thinking staffing companies with
the fast-paced, growing companies that need them. The Company's web
portal www.netstaff.com offers content and links relevant to the needs of
the staffing industry professional. The Company believes that its products
and services will transform the way the staffing industry operates.
Capital Resources.
The Company has incurred significant net losses and negative cash flows
from its inception as a development stage company, as a result of the
development of its NetStaff business model and operations. The Company has
funded these losses primarily from cash investment by the Company's founders
with repayment by the issuance of common stock to the Company's founders
and loans by third parties. The Company expects to conclude, in the fourth
quarter 1999, a limited license agreement, granting the exclusive
territorial rights for the multiple listing service of the Company in a
foreign country, pursuant to which the licensee which will pay a fee of
US$2,000,000 over the term of the license. The Company anticipates
receiving the first installment of the fee upon conclusion of the license
in December 1999. The Company believes that this license fee together with
income from operations will be sufficient to carry on its business through
September 2000. The Company will be dependent in the foreseeable future on
raising capital on a debt or equity basis to meet its operating expenses
and propel its strategic sales and marketing plans. The Company anticipates
that it will be able to continue to obtain working capital through the
proceeds of equity or debt financing on a private basis, and may also
consider exploring the availability of equity financing through a public
offering.
Operations.
The Company's revenues increased from $5,000 for the three months ended
September 30, 1998, to $15,600 for the three months ended September 30,
1999, as a result of the Company's initial marketing efforts.
Total expenses for the three months ended September 30, 1999 came to
$154,375, as compared to $27,911 incurred during the comparable time frame
in 1998 (see the Statement of Operations in the accountant's compilation
report). The major increase in expenses is mainly attributable to
increases in professional fees ($66,758 increase), advertising/promotional
($21,075 increase), rent ($11,603 increase), and travel/entertainment
($22,764). These increased expenses of the Company resulted primarily
from employment of third party professionals and independent contractors
to meet the company's development, technical and financial demands on a
timely basis, as well as associated costs relating to the launch and
initial implementation of its sales and marketing strategies. The travel/
entertainment expense increase is due to participation in trade shows and
conventions for the staffing industry.
Year 2000 Compliance.
Year 2000 ("Y2K") issues relate to the ability of computer hardware and
software to respond to the problems posed by the fact that computer programs
have traditionally been written using two digits rather than four to define
the applicable year. As a consequence, unless modified, computer programs
and systems will not be able to differentiate between the year 2000 and 1900.
The failure to address the problem could result in system failures and the
generation of erroneous data.
The Company has assessed the potential impact of Y2K issues on the
processing of date-sensitive information by the Company's information
systems, operational systems and other ancillary systems. While there can
be no assurance that all Y2K issues will be satisfactorily identified and
resolved, the Company currently believes, based on internal evaluations
and discussions with its information systems vendors, that Y2K issues will
not have a material adverse effect on the Company or on the results of its
operations.
The major Y2K risk may come from the Company's usage of third-party products.
The Company's system is based on Microsoft Windows NT operating system
running a Microsoft SQL database being driven by Borland's Delphi software.
These third-parties vendors claim their products to be Y2K compliant, and,
the Company has no reason to question this claim.
To date, the Company has not incurred any material costs historically and
does not expect to incur any material costs in the future with respect to
becoming Y2K compliant. However, the Company cannot predict the effect of
Y2K issues on entities with which the Company transacts business (including
its customers, financial institutions and vendors), and there can be no
assurance that the effects of the Y2K issue on such entities will not have
a material adverse effect on the Company's business, financial condition
or results of operations.
The Company plans to confirm the Y2K readiness of its financial
institutions, customers and vendors during the current fiscal year, to
minimize the risk associated with Y2K issues. If the Company's current
customers, financial institutions or vendors are unable to confirm Y2K
compliance, then the Company shall use its best efforts to seek parties
which can confirm Y2K compliance with which to transact business.
The above information is based on the Company's current best estimates,
which were derived using numerous assumptions of future events, including
the availability and future costs of certain technological and other
resources, third party modification actions and other factors. Given the
complexity of these issues and possible as yet unidentified risks, actual
results may vary materially from those anticipated and discussed above.
Specific factors that might cause such differences include, among others,
the availability and costs of personnel trained in this area, the ability
to locate and correct all affected computer codes, the timing and success
of remedial efforts of the Company's third party suppliers and customers
and similar uncertainties.
<PAGE>
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed a current report on Form 8-K dated September 16, 1999
during the quarter ended September 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NetStaff, Inc.
Date: November 30, 1999
By: /s/ Patrick Rylee
----------------------------------
Patrick Rylee, President, CEO
and Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at September 30, 1999 (unaudited) and the Statement of
Operations for the three months ended September 30, 1999 (unaudited) and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 36,351
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 445,852
<PP&E> 199,324
<DEPRECIATION> (16,943)
<TOTAL-ASSETS> 242,699
<CURRENT-LIABILITIES> 338,223
<BONDS> 0
0
0
<COMMON> 831,256
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 242,699
<SALES> 5,000
<TOTAL-REVENUES> 5,000
<CGS> 0
<TOTAL-COSTS> 26,111
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,111)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,111)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
