<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED NOVEMBER 30, 1999, OR
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO .
------ -------
Commission file number 0-11380
-----------
STAFF BUILDERS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2650500
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1983 MARCUS AVENUE, LAKE SUCCESS, NEW YORK 11042
------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(516) 750-1600
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
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 such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No| |
<PAGE> 2
STAFF BUILDERS, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
PART I FINANCIAL INFORMATION
INTRODUCTORY NOTE 2
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets - 3
November 30, 1999 and February 28, 1999
Condensed Statements of Consolidated Operations - Three and nine 4
months ended November 30, 1999 and 1998
Condensed Statements of Consolidated Cash Flows - Nine months ended 5
November 30, 1999 and 1998
Notes to Condensed Consolidated Financial Statements 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 10-11
RESULTS OF OPERATIONS
</TABLE>
<PAGE> 3
INTRODUCTORY NOTE
This amendment on Form 10-Q/A amends the registrant's Quarterly Report on Form
10-Q filed by Staff Builders, Inc. (the "Company") on January 19, 2000 and is
being filed to amend Item 1 and Item 2 to reflect the restatement of the
Company's Consolidated Balance Sheet, Results of Operations, Statement of Cash
Flows, Notes to the financial statements, and Management's Discussion and
Analysis of Financial Condition and Results of Operations. The Company amended
the presentation regarding the September 1999 sale of Chelsea Computer
Consultants ("Chelsea"), and its results of operations to separately report
Chelsea as discontinued operations. This required the Company to reallocate
certain assets, liabilities, and expenses to discontinued operations which
impacted the operating results of both continuing and discontinued operations as
well as the loss on sale of discontinued operations.
2
<PAGE> 4
PART I. FINANCIAL INFORMATION
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
NOVEMBER 30,
1999 FEBRUARY 28,
(UNAUDITED) 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 436 $ 197
Accounts receivable, net of allowance
for doubtful accounts of $2,402 and
$1,877, respectively 25,108 26,270
Prepaid expenses and other current assets 229 184
Net short term assets of discontinued operations -- 4,225
-------- --------
Total current assets 25,773 30,876
FIXED ASSETS, net of accumulated
depreciation of $1,200 and
$827, respectively 3,195 1,539
INTANGIBLE ASSETS, net of accumulated
amortization of $2,009 and
$1,843, respectively 8,829 8,995
OTHER ASSETS 100 132
NET LONG TERM ASSETS OF DISCONTINUED OPERATIONS -- 3,462
-------- --------
TOTAL $ 37,897 $ 45,004
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,334 $ 2,660
Accrued expenses 6,475 3,567
Accrued payroll and payroll related expenses 5,344 2,174
Current portion of long-term debt -- 43
Due under secured credit facility 13,921 23,220
-------- --------
Total current liabilities 27,074 31,664
OTHER LIABILITIES 25 25
-------- --------
TOTAL LIABILITIES 27,099 31,689
-------- --------
STOCKHOLDERS' EQUITY:
Class A Common Stock - $.01 par value;
50,000,000 shares authorized; 23,324,351
and 23,307,129 outstanding at November 30,
1999 and February 28, 1999, respectively 233 233
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 307,443 and
312,251 outstanding at November 30, 1999 and
February 28, 1999, respectively 3 3
Additional paid-in capital 13,522 12,904
Retained earnings (2,960) 175
-------- --------
Total stockholders' equity 10,798 13,315
-------- --------
TOTAL $ 37,897 $ 45,004
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CONTINUING OPERATIONS:
REVENUES:
Service revenues $ 27,878 $ 24,235 $ 86,416 $ 68,678
Sales of franchises and fees, net -- 43 -- 176
-------- -------- -------- --------
Total Revenues 27,878 24,278 86,416 68,854
OPERATING EXPENSES:
Service costs 22,124 18,965 67,178 53,973
General and administrative expenses 7,322 4,167 18,204 11,790
Depreciation and amortization 147 138 539 408
Interest expense, (net) 446 318 810 859
Other (income) expense, net 837 137 844 212
Relocation expenses 250 -- 250 --
-------- -------- -------- --------
Total operating expenses 31,126 23,725 87,825 67,242
-------- -------- -------- --------
OPERATING INCOME (LOSS) (3,248) 553 (1,409) 1,612
OTHER EXPENSES:
Non-recurring spin-off and financing costs 1,071 -- 1,071 --
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (4,319) 553 (2,480) 1,612
PROVISION FOR INCOME TAXES 98 275 98 805
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS (4,417) 278 (2,578) 807
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(net of income tax) 462 (110) 580 (433)
LOSS ON SALE OF DISCONTINUED OPERATIONS (1,137) -- (1,137) --
-------- -------- -------- --------
NET INCOME (LOSS) $ (5,092) $ 168 $ (3,135) $ 374
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE - BASIC:
(Loss) income from continuing operations $ (.19) $ .01 $ (.11) $ .03
(Loss) from discontinued operations (.03) .00 (.02) (.01)
-------- -------- -------- --------
Net (loss) income $ (.22) $ .01 $ (.13) $ .02
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE - DILUTED:
(Loss) income from continuing operations $ (.19) $ .01 $ (.11) $ .03
(Loss)from discontinued operations (.03) .00 (.02) (.01)
-------- -------- -------- --------
Net (loss) income $ (.22) $ .01 $ (.13) $ .02
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER COMMON SHARES
Basic 23,632 23,458 23,632 23,420
======== ======== ======== ========
Diluted 23,632 23,458 23,632 23,420
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 6
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
November 30,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,135) $ 374
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Depreciation and amortization 539 408
Provision for doubtful accounts 525 186
Deferred income taxes -- 1,494
Goodwill from acquisitions -- (666)
Change in operating assets and liabilities:
Accounts receivable 637 (9,884)
Prepaid expenses and other current assets (45) (253)
Accounts payable and accrued expenses 4,752 2,416
Other assets 32 8
-------- --------
Net cash provided by (used in)
operating activities 3,305 (5,917)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net short term assets of discontinued operations (5,497) (4,823)
Net long term assets of discontinued operations 13,184 (3,462)
Contribution of Chelsea by TLCS -- 6,747
Acquisitions, net of cash required -- (225)
Purchases of fixed assets (2,029) (385)
-------- --------
Net cash provided by (used in)
investing activities 5,658 (2,148)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in bank debt (43) (361)
Increase (decrease) in borrowings under
secured credit facility (8,681) 7,876
-------- --------
Net cash provided by (used in)
financing activities (8,724) 7,515
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
CASH EQUIVALENTS 239 (550)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 197 892
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 436 $ 342
======== ========
SUPPLEMENTAL DATA:
Cash paid for:
Interest $ 1,754 $ 1,079
======== ========
Income taxes 40 200
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 7
STAFF BUILDERS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($ IN THOUSANDS, EXCEPT WHERE NOTED)
1. SPIN-OFF TRANSACTION AND FINANCIAL STATEMENTS -The Company separated
its home health care business from its existing medical staffing
business during October 1999. To accomplish this separation of its
businesses, the Company's Board of Directors established a new,
wholly-owned subsidiary, Tender Loving Care Health Care Services, Inc.
("TLCS"), which acquired 100% of the outstanding capital stock of the
Company's subsidiaries engaged in the home health care business (the
"Spin-Off"). The Spin-Off was effected through a pro rata distribution
to the Company's stockholders of all the shares of common stock of TLCS
owned by the Company ("the Distribution"). The Distribution was made by
issuing one share of TLCS common stock for every two shares of the
Company's Class A and Class B common stock outstanding on October 12,
1999 ("the Record Date"). Based upon the 23,619,388 shares of the
Company's common stock which was outstanding on the Record Date,
11,809,694 shares of TLCS common stock was distributed to holders of
the Company's Class A and Class B common stock on or about October 20,
1999. The medical staffing business remained with the Company.
On October 13, 1999, the Company received notice from the Securities
and Exchange Commission that its Registration Statement on Form 10
relating to the Spin-Off was cleared from further comments. Further on
October 20, 1999, the Company received consent from its current lending
institution to complete the Spin-Off. Because TLCS owned a majority of
the operations, employees and assets of the historical business of the
Company, the Distribution was treated as a "reverse spin-off" for
financial reporting purposes under generally accepted accounting
principles. Accordingly, the consolidated financial statements
contained in this quarterly report have been restated from those
previously reported by the Company to reflect a change in the reporting
entity. The financial position and results of operations include only
the medical staffing business, the Company's subsidiary, ATC Healthcare
Services, Inc. ("ATC") and the Company's majority owned subsidiary,
Chelsea Computer Consultants, Inc. ("Chelsea"), an information
technology staffing business, through September 17, 1999 (the date
Chelsea was sold).
6. DISCONTINUED OPERATIONS - On September 17, 1999, prior to the Spin-Off,
the Company sold its entire interest in Chelsea for total
consideration of $17,500. The cash received of $17,500 was used to pay
off approximately $8,400 of borrowings under the Company's acquisition
line of credit, approximately $4,000 of borrowings under the Company's
revolving line of credit and $500 paid to a former principal of
Chelsea. The remaining $4,600 of cash was used to pay down TLCS's
revolving line of credit. The Company's interest in Chelsea was sold at
a loss of $1,100.
7. RESTATEMENT OF THE NOVEMBER 30, 1999 FINANCIAL STATEMENTS - The
November 30, 1999 consolidated balance sheet of the Company as well as
the results from operations for the three and nine months ended
November 30, 1999 and the cash flows for the nine months ended November
30, 1999 have been restated to present Chelsea as discontinued
operations including both the operating results and sale of Chelsea.
6
<PAGE> 8
A summary of the effects of the restatement are as follows:
BALANCE SHEET
<TABLE>
<CAPTION>
November 30, 1999
------------------------
As
Previously
Reported As Restated
---------- -----------
<S> <C> <C>
Prepaid expenses and other
current assets 869 229
Intangible assets 11,571 8,829
Other assets 201 100
Total liabilities 27,368 27,099
Additional paid in capital 13,559 13,522
Retained earnings 217 (2,960)
</TABLE>
RESULTS FROM OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, 1999 November 30, 1999
---------------------------- ----------------------------
As As
Previously As Previously As
Stated Restated Stated Restated
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
CONTINUING OPERATIONS:
REVENUES:
Service revenues $ 27,870 $ 27,878 $ 86,403 $ 86,416
Medical staffing 1,330 -- 18,399 --
Sales of franchises and fees, net -- -- 13 --
--------- --------- --------- ---------
Total Revenues 29,200 27,878 104,815 86,416
OPERATING EXPENSES:
Service costs 23,078 22,124 81,461 67,178
General and administrative expenses 7,478 7,322 20,203 18,204
Depreciation and amortization 388 147 439 539
Interest expense, (net) 448 446 1,741 810
Other (income) expense, net (37) 837 162 844
Relocation expenses 250 250 250 250
Spin-off related expenses 1 ,071 -- 1,071 --
--------- --------- --------- ---------
Total operating expenses 32,676 31,126 105,327 87,825
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (3,476) (3,248) (512) (1,409)
OTHER EXPENSES:
Non-recurring spin-off and financing
costs -- 1,071 -- 1,071
--------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (3,476) (4,319) (512) (2,480)
BENEFIT (PROVISION) FOR INCOME TAXES 1,071 (98) (40) (98)
--------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS (2,405) (4,417) (552) (2,578)
INCOME FROM DISCONTINUED OPERATIONS
(net of income tax) -- 462 -- 580
LOSS ON SALE OF DISCONTINUED OPERATIONS -- (1,137) -- (1,137)
--------- --------- --------- ---------
NET INCOME (LOSS) $ (2,405) $ (5,092) $ (552) $ (3,135)
========= ========= ========= =========
</TABLE>
7
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, 1999 November 30, 1999
---------------------------- ----------------------------
As As
Previously As Previously As
Stated Restated Stated Restated
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Note(7) continued
NET INCOME (LOSS) PER COMMON SHARE - BASIC:
(Loss) income from continuing operations (.10) $ (.19) $ (.02) $ (.11)
(Loss) from discontinued operations -- (.03) -- (.02)
--------- --------- --------- ---------
Net (loss) income (.10) $ (.22) $ (.02) $ (.13)
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE - DILUTED:
(Loss) income from continuing operations $ (.10) $ (.19) $ (.02) $ (.11)
(Loss)from discontinued operations -- (.03) -- (.02)
--------- --------- --------- ---------
Net (loss) income $ (.10) $ (.22) $ (.02) $ (.13)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER COMMON SHARES
Basic 23,632 23,632 23,632 23,632
========= ========= ========= =========
Diluted 23,632 23,632 23,632 23,632
========= ========= ========= =========
</TABLE>
CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
November 30, 1999
--------------------------
As
Previously As
Stated Restated
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (552) $ (3,135)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Depreciation and amortization 666 539
Provision for doubtful accounts 524 525
Change in operating assets and liabilities:
Accounts receivable 646 637
Prepaid expenses and other current assets 235 (45)
Accounts payable and accrued expenses 623 4,752
Other assets -- 32
-------- --------
Net cash provided by (used in)
operating activities 2,142 3,305
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net short term assets of discontinued operations -- (5,497)
Net long term assets of discontinued operations -- 13,184
Sale of Chelsea - Goodwill, net 12,369 --
Sale of Chelsea - A\R and other assets, net 4,185 --
Purchases of fixed assets (1,909) (2,029)
-------- --------
Net cash provided by (used in)
investing activities 14,645 5,658
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in bank debt (12,380) (43)
Decrease in note payable (56) --
(Decrease)\increase in intercompany loan (4,600) --
Increase (decrease) in borrowings under
secured credit facility -- (8,681)
-------- --------
Net cash provided by (used in)
financing activities (17,036) (8,724)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
CASH EQUIVALENTS (249) 239
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 685 197
--------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 436 $ 436
======== ========
</TABLE>
8
<PAGE> 10
<TABLE>
<CAPTION>
Nine Months Ended
November 30, 1999
--------------------------
As
Previously As
Stated Restated
---------- --------
<S> <C> <C>
Note (7) continued
SUPPLEMENTAL DATA:
Cash paid for:
Interest $ 1,754 $ 1,754
======== ========
Income taxes 40 40
======== ========
Decrease in additional paid in capital from
assumption of liabilities as a result of
the spin-off 4,153 --
======== ========
</TABLE>
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT WHERE NOTED)
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Condensed Consolidated Financial Statements appearing in
Item 1. All amounts referred to in this section are stated in thousands unless
otherwise indicated.
RESULTS OF OPERATIONS
Total revenues increased by $3,600 or 14.8% for the three months ended November
30, 1999 to $27,900 from $24,300 for the three months ended November 30, 1998.
The increase in total revenues for the three months ended November 30, 1999 was
a result of the internal growth of the Company at November 30, 1999 from
November 30, 1998. Also, during the three months ended November 30, 1999,
management recorded a $1,000 charge to revenue for potential sales allowances.
For the nine months ended November 30, 1999, total revenues increased by $17,562
or 25.5% to $86,416 from $68,854 for the nine months ended November 30, 1998.
The increase in total revenues for the nine months ended November 30, 1999 was
primarily due to internal growth.
Service costs (the direct costs of providing services) were 79.4% and 78.1% of
total revenues for the three months ended November 30, 1999 and 1998, and 77.7%
and 78.4% for the nine months ended November 30, 1999 and 1998, respectively.
General and administrative expenses increased by $3,155, or 75.7%, to $7,322 for
the three months ended November 30, 1999 from $4,167 for the three months ended
November 30, 1998. For the nine months ended November 30, 1999, general and
administrative expenses increased by $6,414, or 54.4%, to $18,204 from $11,790
for the nine months ended November 30, 1998. The increase in general and
administrative expenses for the three and nine months ended November 30, 1999 as
compared to the same periods in the prior year is primarily a result of the
expansion of the Company and increased royalty expenses in conjunction with
increased revenues. The increase is also due to the Company hiring additional
personnel because of its relocation of its corporate headquarters from Atlanta,
Georgia to Lake Success, New York. Also, during the three months ended November
30, 1999 management recorded $1,000 in additional bad debt expense.
Interest expense was approximately $446 and $318 for the three months ended
November 30, 1999 and 1998, and $810 and $859 for the nine months ended November
30, 1999 and 1998, respectively. The $128 increase in interest expense for the
three months ended November 30, 1999 and 1998 respectively, is due to increased
borrowings under the secured revolving lines of credit, together with higher
interest rates on such borrowings. The $49 decrease in interest for the nine
months ended November 30, 1999 and 1998, respectively, is due to the Company
carrying less debt during the nine months ended November 30, 1999.
Spin-Off related expenses were $1,071 for the three months ended November 30,
1999 and consist principally of legal, professional and bank fees. Relocation
expenses of $250 were also recorded in the three months ended November 30, 1999
and represent costs incurred and estimated to move the Company's headquarters
from Atlanta, Georgia to Lake Success, New York.
10
<PAGE> 12
The provision for income taxes for the periods have been computed using the
effective rate for income taxes as if the Company filed tax returns on a stand
alone basis. The actual historical tax returns of the Company which were filed
for the fiscal year ended February 28, 1999 included losses generated by TLCS
and only minimal state tax liabilities were incurred. Additionally, the tax
return of the Company which will be filed for the fiscal year ending February
29, 2000 will also include TLCS losses through October 20, 1999 (the date of the
spin-off) and these losses will be sufficient to eliminate any federal taxable
income generated by the Company.
LIQUIDITY AND CAPITAL RESOURCES
On September 24, 1999, the Company entered into an amended and restated loan and
security agreement with a bank ("Loan Agreement") which expires on February 29,
2000. The Loan Agreement permits the Company to borrow up to 75% of eligible
accounts receivable, up to the maximum amount of $15,000. The borrowings under
the credit facility bear interest at 2.0% over the prevailing prime lending rate
(such rate being 8.5% as of January 17, 2000). In addition, the Company is
required to pay a monthly collateral management fee of $3 and .375% per annum of
the daily unused portion of the credit facility. The Company paid bank fees of
$170 in connection with the execution of the Loan Agreement and facility fees of
$131 on November 30, 1999. The Company is required to pay an additional $206 of
facility fees by January 31, 2000.
On September 17, 1999, prior to the spin-off of TLCS, the Company sold its
entire interest in Chelsea for total cash consideration of $17,500. The cash
received of $17,500 was used to pay off approximately $8,400 of borrowings under
the Company's acquisition line of credit, approximately $4,000 of borrowings
under the Company's revolving line of credit and $500 paid to a former principal
of Chelsea. The remaining $4,600 of cash was used to pay down TLCS's revolving
line of credit. The Company's interest in Chelsea was sold at a loss of $1,100.
The Company is currently negotiating with its existing lender to increase the
maximum amount of its credit facility and/or increase the borrowing base
percentage of eligible receivables as well as extend the terms of the agreement.
The Company is also exploring additional financing alternatives with several
other lenders. However, there can be no assurance that the Company's lender will
increase amounts available for borrowing under its existing credit facility
and/or extend the term. Also, there can be no assurance that alternate financing
sources can be obtained on terms satisfactory to the Company. Although the
Company currently has a working capital deficiency of approximately $1,196 at
November 30, 1999, such deficiency is a result of the classification of its bank
indebtedness as current. Currently, the Company has been able to meet its
obligations as they become due and believes it will continue to do so in the
near future. However, if the Company is required to pay any material amounts as
a result of its being contingently liable for leases and other agreements in
connection with the Spin-Off, this will have a material adverse effect on the
Company. The Company has been indemnified by TLCS in connection with these
contingent liabilities as part of the Spin-Off.
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
----------------------------------
Stephen Savitsky
Chairman of the Board
and Chief Executive Officer
Dated: December 26, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEPHEN SAVITSKY Chairman of the Board
-------------------- and Chief Executive Officer December 26, 2000
Stephen Savitsky and Director
/s/ DAVID SAVITSKY President, Secretary December 26, 2000
------------------ and Director
David Savitsky
/s/ ALAN LEVY Senior - Vice President, Finance,
------------- Chief Financial Officer and December 26, 2000
Alan Levy Treasurer
</TABLE>
12
