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EX-2.2 - EXHIBIT 2.2 - FIRST RATE STAFFING Corpv328253_ex2-2.htm
EX-2.1 - EXHIBIT 2.1 - FIRST RATE STAFFING Corpv328253_ex2-1.htm
EX-23.1 - EXHIBIT 23.1 - FIRST RATE STAFFING Corpv328253_ex23-1.htm

 

As filed with the Securities and Exchange Commission                          on Registration No. ___________________

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

 

FIRST RATE STAFFING CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   7380   46-0708635
State or other jurisdiction   Primary Standard Industrial   (I.R.S. Employer
incorporation or organization   Classification Code Number)   Identification Number)

 

2775 West Thomas Road

Suite 107

Phoenix, Arizona 85018

(602) 442-5277

(Address, including zip code, and telephone number, including area code

of registrant’s principal executive offices)

 

Devon Galpin

12150 Bloomfield Avenue

Unit B

Santa Fe Springs, CA 90670

(562) 863-9564

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

with copies to

Lee W. Cassidy, Esq.

Anthony A. Patel, Esq.

Cassidy & Associates

9454 Wilshire Boulevard

Beverly Hills, California 90212

(202) 387-5400 (949) 673-4525 (fax)

 

Approximate Date of Commencement

of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions “large accelerated filer,”“accelerated file,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filed ¨
Non-accelerated filed ¨ Smaller reporting company x

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine.

 

CALCULATION OF REGISTRATION FEE

 

      Proposed   Proposed     
   Amount  Maximum   Maximum   Amount of 
Title of Each Class of  to be  Offering Price   Aggregate   Registration 
Securities to be Registered  Registered  Per Unit (1)   Offering Price   Fee 
                
Common Stock held by                  
Selling Shareholders  1,600,000 shares  $2.00   $3,200,000   $437 

 

(1)        There is no current market for the securities and the price at which the Shares are being offered has been arbitrarily determined by the Company and used for the purpose of computing the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended.

 

EXPLANATORY NOTE

 

This registration statement and the prospectus therein covers the registration of 1,600,000 shares of common stock offered by the holders thereof.

 

 
 

 

The information contained in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission and these securities may not be sold until that registration statement becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PROSPECTUS Subject to Completion, Dated ______, 2012

 

FIRST RATE STAFFING CORPORATION

1,600,000 shares of Common Stock offered by selling shareholders at $2.00 per share

 

This prospectus relates to the offer and sale of 1,600,000 shares of common stock (the “Shares”) of First Rate Staffing Corporation (the “Company”), $0.0001 par value per share, offered by the holders thereof (the “Selling Shareholder Shares”), who are deemed to be statutory underwriters. The selling shareholders will offer their shares at a price of $2.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale.

 

The maximum number of Shares that can be sold pursuant to the terms of this offering by the selling shareholders is (in aggregate) 1,600,000. Funds received by the selling shareholders will be immediately available to such selling shareholders for use by them. The Company will not receive any proceeds from the sale of the Selling Shareholder Shares.

 

The offering will terminate twenty-four (24) months from the date that the registration statement relating to the Shares is declared effective, unless earlier fully subscribed or terminated by the Company. The Company intends to maintain the current status and accuracy of this prospectus and to allow selling shareholders to offer and sell the Shares for a period of up to two (2) years, unless earlier completely sold, pursuant to Rule 415 of the General Rules and Regulations of the Securities and Exchange Commission. All costs incurred in the registration of the Shares are being borne by the Company.

 

Prior to this offering, there has been no public market for the Company’s common stock. No assurances can be given that a public market will develop following completion of this offering or that, if a market does develop, it will be sustained. The offering price for the Shares has been arbitrarily determined by the Company and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company. The Shares will become tradable on the effective date of the registration statement of which this prospectus is a part.

 

Neither the Company nor any selling shareholders has any current arrangements nor entered into any agreements with any underwriters, broker-dealers or selling agents for the sale of the Shares. If the Company or selling shareholders can locate and enter into any such arrangement(s), the Shares will be sold through such licensed underwriter(s), broker-dealer(s) and/or selling agent(s).

 

  Assumed Price
  To Public
Per Common Stock  
Share Offered $2.00 per share

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

These securities involve a high degree of risk. See “RISK FACTORS” contained in this prospectus beginning on page 7.

 

First Rate Staffing Corporation

2775 West Thomas Road

Suite 107

Phoenix, Arizona 85018

(602) 442-5277

 

Prospectus dated __________________, 2012

 

2
 

 

TABLE OF CONTENTS

 

Prospectus Summary 4
Risk Factors 7
Forward-Looking Statements 15
Determination of Offering Price 15
Dividend Policy 15
Selling Shareholders Sales 15
Plan of Distribution 15
Description of Securities 16
The Business 18
The Company 24
Plan of Operation 28
Management's Discussion and Analysis of Financial Condition and Results of Operations 28
Management 30
Executive Compensation 31
Security Ownership of Certain Beneficial Owners and Management 32
Certain Relationships and Related Transactions 33
Selling Shareholders 33
Shares Eligible for Future Sales 35
Legal Matters 35
Experts 35
Disclosure of Commission Position of Indemnification for Securities Act Liabilities 35
Financial Statements 37

 


 

3
 

 

PROSPECTUS SUMMARY

 

This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including “Risk Factors” and the financial statements and related notes, included elsewhere in this prospectus.

 

The Company

 

History

 

First Rate Staffing Corporation, a Delaware corporation (the “Company”), provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The Company was incorporated in the State of Delaware in April 2011, and was formerly known as Moosewood Acquisition Corporation (“Moosewood” or “Moosewood Acquisition”).

 

In May 2012, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the Company changed its name from Moosewood Acquisition Corporation to First Rate Staffing Corporation.

 

On November 9, 2012, the Company entered into merger agreements with each of First Rate Staffing, LLC, a California limited liability company (“First Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed on November 13, 2012. The purpose of the Mergers was to facilitate and prepare the Company for a registration statement and/or public offering of securities. Prior to the Mergers, First Rate California and First Rate Nevada were under common control of the same group of shareholders.

 

First Rate California was formed in April 2010 in the State of California. Since its inception, First Rate California has provided recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses to clients in California.

 

First Rate Nevada was formed in March 2010 in the State of Nevada and is registered to do conduct business in the State of Arizona. Since its inception, First Rate Nevada has provided recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses to clients in Arizona.

 

Prior to the Mergers, Moosewood had no ongoing business or operations and was established for the purpose of completing a business combination with target companies, such as First Rate California and First Rate Nevada. As a result of the Mergers, each of First Rate California and First Rate Nevada has merged into and become a part of the Company. The Company, as the surviving entity from the Mergers, has taken over the respective operations and business plans of each of both First Rate California and First Rate Nevada.

 

The Company is located at 2775 West Thomas Road, Suite 107, Phoenix, Arizona 85018. The Company’s main phone number is (602) 442-5277.

 

Business

 

The Company provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The Company’s client customization model allows it to integrate its services to its client-specific needs and thereby providing clients with the highest level of customer service. The Company strives to devote adequate time and attention to understand both the needs of its clients and the capabilities of its employees so that the Company can identify the best suitable matches between client needs and employee abilities. The Company is dedicated to achieving a high level of service for all of its clients and considers itself to be a loyal partner to meeting client demands. In this regard, the Company seeks to position itself not only as a pool of employee for its clients, but also as a dedicated business partner that understands its clients’ businesses and needs.

 

Services provided to clients by the Company include recruiting, payroll, all state and federal taxes, worker’s compensation coverage, and screening and managing of clients’ contingent work force. The Company provides comprehensive screening and electronic verification (for federal employment eligibility requirements) for all employees. The Company also conducts reference checks of employees to ensure that the employers receive accurate and useful descriptions of employees’ backgrounds and experiences. The Company also operates a risk management department that helps client mitigate losses by implementing sound and effective risk management procedures at client sites. Clients receive these risk management services at no cost, helping them to reduce their own business risks and expenses.

 

4
 

 

Risks and Uncertainties facing the Company

 

The Company has a limited operating history and may experience losses in the near term. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that profits are consistently achieved. In order to expand the Company’s business, the Company would likely require additional financing. As an early-stage company, management of the Company must continually develop and refine its strategies and goals in order to execute the business plan of the Company on a broad scale and expand the business.

 

One of the biggest challenges facing the Company will be in securing adequate capital to continue to expand its business and build a larger scale and more efficient set of operations. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs of employees at a minimum in order to generate a profit from the revenues that it receives from its clients. Third, in order to expand, the Company will need to continue implementing effective sales, marketing and distribution strategies to reach the intended end customer clients. The Company has devised its initial sales, marketing and advertising strategies, however, the Company will need to continue refinement of these strategies and also skillfully implement these plans in order to achieve ongoing and long-term success in its business. Fourth, the Company must continuously identify, attract, solicit and manage employee talent, which requires the Company to consistently recruit, incent and monitor various employees. High employee turnover or attrition is a significant risk for the Company, as it requires expending substantial resources to locate and train new personnel and also to replace personnel for clients. These tasks require significant time and attention from the Company’s management, and employees may nevertheless become dissatisfied with their respective tenure with the Company.

 

Due to financial constraints and the early stage of the Company’s life, the Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. If the Company were unable to locate such financing and/or later develop strong and reliable sources of potential customers and a means to efficiently reach buyers and customers, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company’s services are consistently met with client satisfaction in the marketplace and exhibit steady success amongst the potential customer base, neither of which is reasonably predictable or guaranteed.

 

Significant uncertainty exists concerning State regulations governing employment matters as these regulations constantly change from year-to-year across many States. Changes in regulations (or the promulgation of new regulations or deletion of previous regulations) in States may have a substantially adverse effect on the Company and its business, including (without limitation) by increasing the costs of hiring, retaining and compensating employees. For example, and without limitation, in California, the State has been unsuccessful in reforming worker’s compensation laws, thereby resulting in ongoing and consistently large increases in the amount of worker’s compensation costs for businesses and employers (such as the Company). These increasing costs hamper the Company’s ability to compete for new clients and maintain existing clients.

 

While the Company has a diverse and wide range of clients, the Company still has heavy customer concentration with just a few of its clients. If the Company were to lose a significant client or if a major client reduced its annual spending with the Company (neither of which the Company could reasonably anticipate or predict), the Company would likely suffer a material adverse effect to its business and operations.

 

The Company will likely be significantly affected by any unforeseen changes in the businesses and operations of its clients. For example, and without limitation, any change in the individual at a client making purchase decisions of the Company’s services or any change of the client department that authorizes such purchases could potentially be very damaging for the Company. In addition, clients may, at any time and for any reason, downsize, reduce, reorganize or restructure their respective workforces, and such changes may potentially reduce or eliminate the need for the Company’s services.

 

Trading Market

 

Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See “RISK FACTORS” and “DESCRIPTION OF SECURITIES”.

 

5
 

 

The Offering

 

The maximum number of Shares that can be sold pursuant to the terms of this offering is 1,600,000. The offering will terminate twenty-four (24) months from the date of this prospectus unless earlier fully subscribed or terminated by the Company.

 

This prospectus relates to the offer and sale by certain shareholders of the Company of up to 1,600,000 Shares (the “Selling Shareholder Shares”). The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $2.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale.

 

Common stock outstanding before the offering   7,000,000(1)
      
Common stock for sale by selling shareholders   1,600,000 
      
Common stock outstanding after the offering   7,000,000 
      
Offering Price  $2.00 per share 
      
Proceeds to the Company  $0 

 

(1) Based on number of shares outstanding as of the date of this prospectus.

 

Summary Financial Information

 

As the Company had no operations or specific business plan until the Mergers, the information presented below is with respect to First Rate California and First Rate Nevada, respectively, each of which was merged into the Company in November 2012 as a result of the Mergers.

 

The statements of operations data for the year ended December 31, 2011 and the period from April 2, 2010 (Inception) through December 31, 2010, and the balance sheet data as of December 31, 2011 and at December 2010, respectively, are derived from the audited financial statements of First Rate California and related notes thereto included elsewhere in this prospectus. The statement of operations data for the six months ended June 30, 2012 provided below is derived from the unaudited financial statements of First Rate California and related notes thereto included elsewhere in this prospectus.

 

   Six months ended   Year ended   April 2, 2010 (Inception) 
   June 30, 2012   December 31, 2011   through December 31, 2010 
   (unaudited)         
Statement of operations data               
Revenue  $2,489,976   $4,774,545   $1,813,577 
Gross profit  $201,297   $418,283   $136,082 
Income (Loss) from operations  $(95,851)  $120,783   $39,295 
Net income (loss)  $(97,185)  $63,518   $15,106 

 

   At June 30, 2012   At December 31, 2011   At December 31, 2010 
   (unaudited)         
Balance sheet data               
Cash  $33,126   $11,796   $2,310 
Other assets  $221,169   $112,451   $67,992 
Total assets  $254,295   $124,247   $70,302 
Total liabilities  $258,511   $21,368   $27,204 
Total members’ equity (deficit)  $(4,216)  $102,879   $43,098 

 

The statements of operations data for the year ended December 31, 2011 and the period from March 24, 2010 (Inception) through December 31, 2010, and the balance sheet data as of December 31, 2011 and at December 2010, respectively, are derived from the audited financial statements of First Rate Nevada and related notes thereto included elsewhere in this prospectus. The statement of operations data for the six months ended June 30, 2012 provided below is derived from the unaudited financial statements of First Rate Nevada and related notes thereto included elsewhere in this prospectus.

 

6
 

 

   Six months ended   Year ended   March 24, 2010 (Inception) 
   June 30, 2012   December 31, 2011   through December 31, 2010 
   (unaudited)         
Statement of operations data               
Revenue  $825,769   $1,324,497   $685,346 
Gross profit  $95,876   $146,736   $69,158 
Income (Loss) from operations  $(16,020)  $(25,227)  $(8,163)
Net income (loss)  $(16,037)  $(42,203)  $(15,681)
                
    At June 30, 2012    At December 31, 2011    At December 31, 2010 
    (unaudited)           
Balance sheet data               
Cash  $17,175   $116   $10,340 
Other assets  $48,018   $17,089   $22,271 
Total assets  $65,193   $17,205   $32,611 
Total liabilities  $91,606   $27,581   $7,622 
Total shareholders’ equity (deficit)  $(26,413)  $(10,376)  $24,989 

 

RISK FACTORS

 

A purchase of any Shares is an investment in the Company’s common stock and involves a high degree of risk. Investors should consider carefully the following information about these risks, together with the other information contained in this prospectus, before the purchase of the Shares. If any of the following risks actually occur, the business, financial condition or results of operations of the Company would likely suffer. In this case, the market price of the common stock could decline, and investors may lose all or part of the money they paid to buy the Shares.

 

The Company has generated revenues, but limited profits, to date.

 

The Company has generated limited profits to date. The business model of the Company involves significant costs of services, resulting in a low gross margin on revenues. Coupling this fact with operating expenses incurred by the Company, the Company has only generated a small amount of total profits in the past. The Company hopes that as its business expands that the scale of the enterprise would result in a higher gross margin and net margin.

 

No assurance of continued market acceptance.

 

There is no assurance that the Company’s services or solutions will continued to meet with market acceptance. Moreover, there is no assurance that these services and solutions will continue to have any competitive advantages. Also, there is no assurance that the market reception will be positive.

 

The Company is an early-stage company with a limited operating history, and as such, any prospective investor may have difficulty in assessing the Company’s profitability or performance.

 

Because the Company is an early-stage company with a limited operating history, it could be difficult for any investor to assess the performance of the Company or to determine whether the Company will meet its projected business plan. The Company has limited financial results upon which an investor may judge its potential. As a company still in the early stages of its life, the Company may in the future experience under-capitalization, shortages, setbacks and many of the problems, delays and expenses encountered by any early-stage business. An investor will be required to make an investment decision based solely on the Company management’s history, its projected operations in light of the risks, the limited operations and financial results of the Company to date, and any expenses and uncertainties that may be encountered by one engaging in the Company’s industry.

 

The Company is an early-stage organization and has a correspondingly small financial and accounting organization. Being a public company may strain the Company's resources, divert management’s attention and affect its ability to attract and retain qualified officers and directors.

 

The Company is an early-stage company with no developed finance and accounting organization and the rigorous demands of being a public company require a structured and developed finance and accounting group. As a reporting company, the Company is already subject to the reporting requirements of the Securities Exchange Act of 1934. However, the requirements of these laws and the rules and regulations promulgated thereunder entail significant accounting, legal and financial compliance costs which may be prohibitive to the Company as it develops its business plan, services and scope.. These costs have made, and will continue to make, some activities more difficult, time consuming or costly and may place significant strain on its personnel, systems and resources.

 

7
 

 

The Securities Exchange Act requires, among other things, that companies maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain the requisite disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight are required. As a result, management’s attention may be diverted from other business concerns, which could have a material adverse effect on the development of the Company's business, financial condition and results of operations.

 

These rules and regulations may also make it difficult and expensive for the Company to obtain director and officer liability insurance. If the Company is unable to obtain adequate director and officer insurance, its ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent, will be significantly curtailed.

 

The Company is an early-stage company and has little experience in being a public company.

 

The Company is an early-stage company and as such has little experience in managing a public company. Such lack of experience may result in the Company experiencing difficulty in adequately operating and growing its business. Further, the Company may be hampered by lack of experience in addressing the issues and considerations which are common to growing companies. If the Company’s operating or management abilities consistently perform below expectations, the Company’s business is unlikely to thrive.

 

The Company’s business depends on the ability to attract and retain qualified temporary employees that possess the skills demanded by clients, and intense competition may limit the ability to attract and retain such qualified temporary employees.

 

The success of the Company depends on the ability to attract and retain qualified temporary employees who possess the skills and experience necessary to meet the requirements of clients or to successfully bid for new client projects. The ability to attract and retain qualified temporary employees could be impaired by improvement in economic conditions resulting in lower unemployment, increases in compensation, or increased competition. During periods of economic growth, the Company faces increasing competition from other staffing companies for retaining and recruiting qualified temporary employees, which in turn leads to greater advertising and recruiting costs and increased salary expenses. If the Company cannot attract and retain qualified temporary employees, the quality of its services may deteriorate and the financial condition, business, and results of operations may be materially adversely affected.

 

Any significant or prolonged economic downturn could result in clients using fewer temporary employees and the other services which the Company offers, terminating their relationship with the Company, or becoming unable to pay for services on a timely basis, or at all.

 

Because demand for temporary staffing services is sensitive to changes in the level of economic activity, the Company’s business has in the past and may in the future suffer during economic downturns. Demand for temporary staffing is highly correlated to changes in the level of economic activity and employment. Consequently, as economic activity begins to slow down, it has been the Company’s experience that companies tend to reduce their use of temporary employees, resulting in decreased demand for temporary employees and the other services the Company offers. Significant declines in demand, and thus in revenues, would likely result in lower profit levels. In addition, the Company may experience pricing pressure during economic downturns which could have a negative impact on the results of operations.

 

The deterioration of the financial condition and business prospects of clients could reduce their need for temporary staffing services and result in a significant decrease in the Company’s revenues and earnings derived from these clients. In addition, during economic downturns, companies may slow the rate at which they pay their vendors, seek more flexible payment terms or become unable to pay their debts as they become due

 

State unemployment insurance expense is a direct cost of doing business in the temporary staffing industry. State unemployment tax rates are established based on a company’s specific experience rate of unemployment claims and a state’s required funding formula on covered payroll. Economic downturns have in the past, and may in the future, result in a higher occurrence of unemployment claims resulting in higher state unemployment tax rates. Due to the recent economic downturn, states have increased, and may continue to increase, unemployment tax rates to employers, regardless of the employer’s specific experience. This would result in higher direct costs to us. In addition, many state unemployment funds have been depleted during the recent economic downturn and many states have borrowed from the federal government under the Title XII loan program. Employers in all states receive a credit against their federal unemployment tax liability if the employer’s federal unemployment tax payments are current and the applicable participating state is also current with its Title XII loan program. If a state fails to repay such loans within a specific time period, employers in such states may lose a portion of their tax credit.

 

8
 

 

The Company is exposed to employment-related claims and costs as well as periodic litigation that could materially adversely affect the Company’s financial condition, business, and results of operations.

 

The temporary staffing business entails employing individuals and placing such individuals in clients’ workplaces. The ability to control the workplace environment of clients is limited. As the employer of record of temporary employees, the Company incurs a risk of liability to temporary employees and clients for various workplace events, including:

 

-claims of misconduct or negligence on the part of employees;

 

-discrimination or harassment claims against employees, or claims by employees of discrimination or harassment by clients or the Company;

 

- immigration-related claims;

 

-claims relating to violations of wage, hour, and other workplace regulations;

 

-claims related to wrongful termination or denial of employment;

 

-violation of employment rights related to employment screening or privacy issues;

 

-claims relating to employee benefits, entitlements to employee benefits, or errors in the calculation or administration of such benefits; and

 

-possible claims relating to misuse of clients’ confidential information, misappropriation of assets, or other similar claims.

 

The Company may incur fines and other losses and negative publicity with respect to any of these situations. Some of the claims may result in litigation, which is expensive and distracts attention from the operations of ongoing business.

 

The temporary staffing industry is affected by seasonal fluctuations which make management of working capital more challenging and could adversely impact the Company’s financial position and the market price of its common stock.

 

The business of the Company is seasonal in nature. Client demand for temporary staffing services is highest in the second half of a year, primarily due to demands of the holiday season. Typically, earnings are lower in the first quarter of each year than in other quarters due to reduced seasonal demand for temporary staffing services and due to lower gross margins during such period associated with the front-end loading of certain taxes associated with payroll paid to employees.

 

The Company assumes the obligation to make wage, tax, and regulatory payments for our temporary employees, and, as a result, are exposed to client credit risks.

 

The Company generally assumes responsibility for and manage the risks associated with temporary employees’ payroll obligations, including liability for payment of salaries, wages, and certain taxes. These obligations are fixed, whether or not clients make payments as required by services contracts, which exposes the Company to credit risks of clients.

 

Workers’ compensation costs for temporary employees may rise and reduce our margins and require more liquidity.

 

The Company is responsible for and pays workers’ compensation costs for regular staff and temporary employees. At times, these costs have risen substantially as a result of increased claims and claim trends, general economic conditions, changes in business mix, increases in healthcare costs, and government regulations. Although the Company carries insurance, unexpected changes in claim trends, including the severity and frequency of claims, actuarial estimates, and medical cost inflation could result in costs that are significantly different than initially reported. If future claims-related liabilities increase due to unforeseen circumstances, or if new laws, rules, or regulations are passed, costs could increase significantly. There can be no assurance that the Company will be able to increase the fees charged to clients in a timely manner and in a sufficient amount to cover increased costs as a result of any changes in claims-related liabilities.

 

9
 

 

The failure or inability to perform under client contracts could result in damage to the Company’s reputation and give rise to legal claims against the Company.

 

If clients are not satisfied with the level of performance, the reputation of the Company in the industry may suffer, which could have a material adverse effect on the business, financial condition, results of operations, and cash flows of the Company.

 

The Company may not successfully consummate or initiate acquisitions.

 

The ability of the Company to grow through acquisitions (s planned) will depend on a number of factors, including competition for acquisitions, the availability of capital and other resources to consummate acquisitions, and the ability to successfully integrate and train additional staff, including the staff of an acquired company. There can be no assurance that the Company will continue to be able to establish and expand its market presence or to successfully identify suitable acquisition candidates and complete acquisitions on favorable terms.

 

In addition to facing competition in identifying and consummating successful acquisitions, such acquisitions could involve significant risks, including:

 

-difficulties in the assimilation of the operations, services, and corporate culture of acquired companies, and higher-than-anticipated costs associated with such assimilation;

 

-over-valuation of acquired companies or delays in realizing or a failure to realize the benefits, revenues, cost savings, and synergies that were anticipated;

 

-difficulties in integrating the acquired business into information systems, controls, policies, and procedures;

 

-failure to retain key personnel, business relationships, reputation, or clients of an acquired business;

 

-the potential impairment of acquired assets;

 

-diversion of management’s attention from other business activities;

 

-insufficient indemnification from the selling parties for legal liabilities incurred by the acquired companies prior to acquisition;

 

-the assumption of unknown liabilities and additional risks of the acquired business; and

 

-unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of existing operations.

 

In addition, future acquisitions could materially and adversely affect the Company’s business, financial condition, results of operations, and liquidity. Possible impairment losses on goodwill and intangible assets, or restructuring charges could occur. These risks could have a material adverse effect on the business because they may result in substantial costs to the Company and disrupt its business.

 

The temporary staffing industry is highly competitive with limited barriers to entry, which could limit the Company’s ability to maintain or increase our market share or profitability.

 

The temporary staffing industry is highly competitive with limited barriers to entry. The Company competes in national, regional, and local markets. Price competition in the staffing industry, particularly from our smaller competitors in local and regional markets, is intense, and pricing pressures from competitors and clients are increasing. Pricing pressure in the past has negatively impacted the Company’s results of operations. There are new competitors entering various markets which may further increase pricing pressures.

 

Clients have continued to competitively bid new contracts, and this trend is expected to continue for the foreseeable future. The Company also faces significant competition in attracting and retaining qualified personnel.

 

10
 

 

Client relocation of positions may have a material adverse effect on the financial condition, business, and results of operations of the Company.

 

Many companies have built or moved their operations or outsourced certain functions to other countries that have lower employment costs. If clients relocate positions we filled, this would have a material adverse effect on the financial condition, business, and results of operations of the Company.

 

Reliance on third party agreements and relationships is necessary for development of the Company's business.

 

The Company will need strong third party relationships and partnerships in order to develop and grow its business. The Company will be substantially dependent on these strategic partners and third party relationships.

 

 Improper disclosure of employee and client data could result in liability and harm to the reputation of the Company.

 

The business of the Company involves the use, storage, and transmission of information about employees and clients. It is possible that security controls over personal and other data and practices that the Company follows may not prevent the improper access to, or disclosure of, personally identifiable or otherwise confidential information. Such disclosure could harm the reputation of the Company and subject the Company to liability under contracts and the laws that protect personal data and confidential information, resulting in increased costs or loss of revenue. Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions in which the Company provides services. The failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to the reputation of the Company in the marketplace.

 

The Company expects to incur additional expenses and may ultimately never be profitable.

 

The Company is an early-stage company and has a limited history of its operations. The Company will need to continue generating revenue in order to maintain sustained profitability. Ultimately, in spite of the Company’s best or reasonable efforts, the Company may have difficulty in generating revenues or remaining profitable.

 

The Company’s officers and directors beneficially own and will continue to own a majority of the Company’s common stock and, as a result, can exercise control over stockholder and corporate actions.

 

The officers and directors of the Company currently beneficially own of approximately 86% of the Company’s outstanding common stock and assuming sale of all the Shares, will still own 77% of the Company's then outstanding common stock upon closing of the offering. As such, they will be able to control most matters requiring approval by stockholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control, which in turn could have a material adverse effect on the market price of the Company’s common stock or prevent stockholders from realizing a premium over the market price for their Shares.

 

Executive officers and directors of the Company will retain voting control after the offering, which will allow them to exert substantial influence over major corporate decisions.

 

The Company anticipates that its executive officers and directors will, in the aggregate, beneficially own approximately 77% of its issued and outstanding capital stock following the completion of this offering, assuming the sale of all Shares hereby offered. Accordingly, the present shareholders, by virtue of their percentage share ownership and certain procedures established by the certificate of incorporation and by-laws of the Company for the election of its directors, may effectively control the board of directors and the policies of the Company. As a result, these stockholders will retain substantial control over matters requiring approval by the Company’s stockholders, such as (without limitation) the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control, which in turn could have a material adverse effect on the market price of the Company’s common stock or prevent stockholders from realizing a premium over the market price for their Shares.

 

The Company depends on its management team to manage its business effectively.

 

The Company's future success is dependent in large part upon its ability to understand and develop the business plan and to attract and retain highly skilled management, operational and executive personnel. In particular, due to the relatively early stage of the Company's business, its future success is highly dependent on its officers, to provide the necessary experience and background to execute the Company's business plan. The loss of any officer’s services could impede, particularly initially as the Company builds a record and reputation, its ability to develop its objectives, and as such would negatively impact the Company's possible overall development.

 

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Government regulation could negatively impact the business.

 

The Company’s business segments may be subject to various government regulations in the jurisdictions in which they operate. Due to the potential wide scope of the Company’s operations, the Company could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.

 

A substantial portion of the assets of the Company are pledged as collateral under its factoring agreements.

 

The Company utilizes factoring in its business, and in connection therewith it pledges various assets as collateral. The lenders have a right to proceed against this collateral under certain circumstances. If the creditors were to foreclose on this collateral, such foreclosure could result in significant damage to the Company’s business, operations and relationship with key clients.

 

There has been no prior public market for the Company’s securities and the lack of such a market may make resale of the stock difficult.

 

No prior public market has existed for the Company’s securities and the Company cannot assure any investor that a market will develop subsequent to this offering. An investor must be fully aware of the long-term nature of an investment in the Company. The Company intends to apply for quotation of its common stock on the OTC Bulletin Board as soon as possible which may be while this offering is still in process. However, the Company does not know if it will be successful in such application, how long such application will take, or, that if successful, that a market for the common stock will ever develop or continue on the OTC Bulletin Board. If for any reason the common stock is not listed on the OTC Bulletin Board or a public trading market does not otherwise develop, investors in the offering may have difficulty selling their common stock should they desire to do so. If the Company is not successful in its application for quotation on the OTC Bulletin Board, it will apply to have its securities quoted by the Pink OTC Markets, Inc., real-time quotation service for over-the-counter equities.

 

The Company does not intend to pay dividends to its stockholders, so investors will not receive any return on investment in the Company prior to selling their interest in it.

 

The Company does not project paying dividends but anticipates that it will retain future earnings for funding the Company’s growth and development. Therefore, investors should not expect the Company to pay dividends in the foreseeable future. As a result, investors will not receive any return on their investment prior to selling their Shares in the Company, if and when a market for such Shares develops. Furthermore, even if a market for the Company’s securities does develop, there is no guarantee that the market price for the shares would be equal to or more than the initial per share investment price paid by any investor. There is a possibility that the Shares could lose all or a significant portion of their value from the initial price paid in this offering.

 

The Company’s stock may be considered a penny stock and any investment in the Company’s stock will be considered a high-risk investment and subject to restrictions on marketability.

 

If the Shares commence trading, the trading price of the Company's common stock may be below $5.00 per share. If the price of the common stock is below such level, trading in its common stock would be subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, as amended. These rules require additional disclosure by broker-dealers in connection with any trades generally involving any non-NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith, and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, the broker-dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser’s written consent to the transactions before sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in the Company’s common stock which could impact the liquidity of the Company’s common stock.

 

The Company's election not to opt out of JOBS Act extended accounting transition period may not make its financial statements easily comparable to other companies.

 

Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of the Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.

 

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The recently enacted JOBS Act will also allow the Company to postpone the date by which it must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in reports filed with the SEC.

 

The recently enacted JOBS Act is intended to reduce the regulatory burden on “emerging growth companies. The Company meets the definition of an emerging growth company and so long as it qualifies as an “emerging growth company,” it will, among other things:

 

-be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;

 

-be exempt from the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure requirements of the Dodd- Frank Act relating to compensation of its chief executive officer;

 

-be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a reduced level of disclosure concerning executive compensation; and

 

-be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.

 

Although the Company is still evaluating the JOBS Act, it currently intends to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. The Company has elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.

 

The Company may face significant competition from companies that serve its industries.

 

The Company may face competition from other companies that offer similar solutions. Some of these potential competitors may have longer operating histories, greater brand recognition, larger client bases and significantly greater financial, technical and marketing resources than the Company possesses. These advantages may enable such competitors to respond more quickly to new or emerging trends and changes in customer preferences. These advantages may also allow them to engage in more extensive market research and development, undertake extensive far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners. The Company believes that its current and anticipated solutions are, and will be, sufficiently different from existing competition, and that there is limited to no competition in its local area. However, it is nevertheless possible that potential competitors may have or may rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margin and loss of market share. The Company may not be able to compete successfully, and competitive pressures may adversely affect its business, results of operations and financial condition.

 

No formal market survey has been conducted.

 

No independent marketing survey has been performed to determine the potential demand for the Company’s services over the longer term. The Company has conducted no marketing studies regarding whether its business would continue to be marketable. No assurances can be given that upon marketing, sufficient customer markets and business segments can be developed to sustain the Company's operations on a continued basis.

 

13
 

 

The time devoted by Company management may not be full-time.

 

It is not anticipated that key officers would devote themselves full-time to the business of the Company at the present time. Once the Company obtains additional financing or generates sufficient revenues and profits, officers may then become employed in a full-time capacity.

 

The Company has authorized the issuance of preferred stock with certain preferences.

 

The board of directors of the Company is authorized to issue up to 20,000,000 shares of $0.0001 par value preferred stock. The board of directors has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion terms and privileges with respect to any shares of preferred stock. Any such preferences may operate to the detriment of the rights of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of the Company. No such preferred shares or preferences have been issued to date, but such shares or preferences may be issued at a later time, subject to the sole discretion of the board of directors.

 

The Company does not maintain certain insurance, including errors and omissions and indemnification insurance.

 

The Company has limited capital and, therefore, does not currently have a policy of insurance against liabilities arising out of the negligence of its officers and directors and/or deficiencies in any of its business operations. Even assuming that the Company obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made against the Company, its officers and directors, or its business operations. Any such liability which might arise could be substantial and may exceed the assets of the Company. The certificate of incorporation and by-laws of the Company provide for indemnification of officers and directors to the fullest extent permitted under Delaware law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons, it is the opinion of the Securities and Exchange Commission that such indemnification is against public policy, as expressed in the Act, and is therefore, unenforceable.

 

Intellectual property and/or trade secret protection may be inadequate.

 

The Company has not applied for any intellectual property or trade secret protection on any aspects of its business. The Company has no current plans on attempting to obtain patents, copyright, trademarks and/or service marks on any of its solutions and services. There can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction of substantially similar solutions and services.

 

The Company is subject to the potential factors of market and customer changes.

 

The business of the Company is susceptible to rapidly changing preferences of the marketplace and its customers. The needs of customers are subject to constant change. Although the Company intends to continue to develop and improve its services to meet changing customer needs of the marketplace, there can be no assurance that funds for such expenditures will be available or that the Company's competition will not develop similar or superior capabilities or that the Company will be successful in its internal efforts. The future success of the Company will depend in part on its ability to respond effectively to rapidly changing trends, industry standards and customer requirements by adapting and improving the features and functions of its services.

 

The offering price of the Shares has been arbitrarily determined by the Company and such offering should not be used by an investor as an indicator of the fair market value of the Shares.

 

Currently there is no public market for the Company’s common stock. The offering price for the Shares has been arbitrarily determined by the Company and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company. Thus an investor should be aware that the offering price does not reflect the fair market price of the Shares.

 

The Company may complete a primary public offering (or private placement) for Shares in parallel with or immediately following this offering.

 

The Company may conduct a primary public offering (or private placement) for Shares to raise proceeds for the Company. Such an offering may be conducted in parallel with or immediately following this offering. Sales of additional Shares will dilute the percentage ownership of shareholders in the Company.

 

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Forward-Looking Statements

 

This prospectus contains, in addition to historical information, certain information, assumptions and discussions that may constitute forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially than those projected or anticipated. Actual results could differ materially from those projected in the forward-looking statements. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, the Company cannot assure an investor that the forward-looking statements set out in this prospectus will prove to be accurate. The Company’s businesses can be affected by, without limitation, such things as natural disasters, economic trends, international strife or upheavals, consumer demand patterns, labor relations, existing and new competition, consolidation, and growth patterns within the industries in which the Company competes and any deterioration in the economy may individually or in combination impact future results.

 

DETERMINATION OF OFFERING PRICE

 

There is no public market for the Company’s common stock and the price at which the Shares are being offered has been arbitrarily determined by the Company. This price does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company but represents solely the arbitrary opinion of management of the Company.

 

DIVIDEND POLICY

 

The Company does not anticipate that it will declare dividends in the foreseeable future but rather intends to use any future earnings for the development of its business.

 

SELLING SHAREHOLDER SALES

 

This prospectus relates to the sale of 1,600,000 outstanding shares of the Company’s common stock by the holders of those shares. The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $2.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale.

 

Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection with sales of the common stock. The selling shareholders may from time to time offer their shares through underwriters, brokers-dealers, agents or other intermediaries. The distribution of the common stock by the selling shareholders may be effected in one or more transactions that may take place through customary brokerage channels, in privately negotiated sales; by a combination of these methods; or by other means. The Company will not receive any portion or percentage of any of the proceeds from the sale of the Selling Shareholders’ Shares.

 

PLAN OF DISTRIBUTION

 

The Company and the selling shareholders are seeking an underwriter, broker-dealer or selling agent to sell the Shares. Neither the Company nor the selling shareholders have entered into any arrangements with any underwriter, broker-dealer or selling agent as of the date of this prospectus. At the time of this prospectus, neither the Company nor the selling shareholders has located a broker-dealer or selling agent to sell the Shares.

 

The Company intends to maintain the currency and accuracy of this prospectus and to permit offers and sales of the Shares for a period of up to two (2) years, unless earlier completely sold, pursuant to Rule 415 of the General Rules and Regulations of the Securities and Exchange Commission.

 

Pursuant to the provisions of Rule 3a4-1 of the Securities Exchange Act of 1934, none of the officers or directors offering the Shares is considered to be a broker of such securities as (i) no officer or director is subject to any statutory disqualification, (ii) no officer or director is nor will be compensated by commissions for sales of the securities, (iii) no officer or director is associated with a broker or dealer, (iv) all officers and directors are primarily employed on behalf of the Company in substantial duties and (v) no officer or director participates in offering and selling securities more than once every 12 months.

 

The offering will terminate 24 months following the date of the initial effectiveness of the registration statement to which this prospectus relates, unless earlier closed.

 

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Resales of the Securities under State Securities Laws

 

The National Securities Market Improvement Act of 1996 ("NSMIA") limits the authority of states to impose restrictions upon resales of securities made pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file reports under Sections 13 or 15(d) of the Securities Exchange Act. Resales of the Shares in the secondary market will be made pursuant to Section 4(1) of the Securities Act (sales other than by an issuer, underwriter or broker). The resale of such Shares may be subject to the holding period and other requirements of Rule 144 of the General Rules and Regulations of the Securities and Exchange Commission.

 

Selling Shareholders

 

The selling shareholders will offer their shares at a price of $2.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. The distribution of the Selling Shareholder Shares may be effected in one or more transactions that may take place through customary brokerage channels, in privately-negotiated sales, by a combination of these methods or by other means. The selling shareholders may from time to time offer their shares through underwriters, brokers-dealers, agents or other intermediaries. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection with sales of the Shares. The Company will not receive any portion or percentage of any of the proceeds from the sale of the Selling Shareholders' Shares. Of the 1,600,000 Selling Shareholder Shares included in the registration statement of which this prospectus is a part, no Selling Shareholder Shares are held by officers, affiliates or directors of the Company.

 

DESCRIPTION OF SECURITIES

 

Capitalization

 

The Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001, of which 7,000,000 shares are outstanding as of the date of the registration statement, of which this prospectus is a part. The Company is also authorized to issue 20,000,000 shares of preferred stock, par value $0.0001, of which no shares were outstanding as of the date of the registration statement, of which this prospectus is a part.

 

The following statements relating to the capital stock set forth the material terms of the securities of the Company, however, reference is made to the more detailed provisions of, and such statements are qualified in their entirety by reference to, the certificate of incorporation and the by-laws, copies of which are filed as exhibits to this registration statement.

 

Common Stock

 

The Company is registering up to 1,600,000 shares of common stock for sale to the public by the holders thereof at a price of $2.00 per Share. The Company is not directly offering any Shares for sale.

 

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights.

 

Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds legally available therefor.

 

Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. The Company may issue additional shares of common stock which could dilute its current shareholder's share value.

 

Preferred Stock

 

Shares of preferred stock may be issued from time to time in one or more series as may be determined by the board of directors. The board of directors may fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders of the Company, except that no holder of preferred stock shall have preemptive rights. Any shares of preferred stock so issued would typically have priority over the common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.

 

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At present, the Company has no plans to issue any preferred stock or adopt any series, preferences or other classification of preferred stock. The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the common stock.

 

Although the Company’s board of directors is required to make any determination to issue such preferred stock based on its judgment as to the best interests of the stockholders of the Company, the board of directors could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise required by law or otherwise.

 

Admission to Quotation on the OTC Bulletin Board

 

If the Company meets the qualifications, it intends to apply for quotation of its securities on the OTC Bulletin Board. The OTC Bulletin Board differs from national and regional stock exchanges in that it (1) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers and (2) securities admitted to quotation are offered by one or more broker-dealers rather than the "specialist" common to stock exchanges. To qualify for quotation on the OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. In addition, the Company must make available adequate current public information as required by applicable rules and regulations.

 

In certain cases the Company may elect to have its securities initially quoted in the Pink Sheets published by Pink OTC Markets Inc. In general there is greater liquidity for traded securities on the OTC Bulletin Board, and less through quotation on the Pink Sheets. It is not possible to predict where, if at all, the securities of the Company will be traded following the effectiveness of this registration statement.

 

Transfer Agent

 

It is anticipated that Globex Transfer, LLC of Deltona, Florida will act as transfer agent for the common stock of the Company.

 

Penny Stock Regulation

 

Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on national securities exchanges or listed on the Nasdaq Stock Market, provided that current price and volume information with respect to transactions in such securities are provided by the exchange or system. The penny stock rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prescribed by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Because of these penny stock rules, broker-dealers may be restricted in their ability to sell the Company’s common stock. The foregoing required penny stock restrictions will not apply to the Company’s common stock if such stock reaches and maintains a market price of $5.00 per share or greater.

 

Dividends

 

The Company has not paid any dividends to date. The Company intends to employ all available funds for the growth and development of its business, and accordingly, does not intend to declare or pay any dividends in the foreseeable future.

 

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THE BUSINESS

 

Background

 

First Rate California and First Rate Nevada commenced operations out of a desire of its founders to offer clients a better solution in the staffing industry. Although all employees have extensive experience in the staffing industry, the goal is to bring together only the best employees and clients that create a service unrivaled in the staffing industry.

 

Summary

 

The Company provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The Company’s client customization model allows it to integrate its services to its client-specific needs and thereby providing clients with the highest level of customer service. The Company strives to devote adequate time and attention to understand both the needs of its clients and the capabilities of its employees so that the Company can identify the best suitable matches between client needs and employee abilities. The Company is dedicated to achieving a high level of service for all of its clients and considers itself to be a loyal partner to meeting client demands. In this regard, the Company seeks to position itself not only as a pool of employee for its clients, but also as a dedicated business partner that understands its clients’ businesses and needs.

 

Services provided to clients by the Company include recruiting, payroll, all state and federal taxes, worker’s compensation coverage, and screening and managing of clients’ contingent work force. The Company provides comprehensive screening and electronic verification (for federal employment eligibility requirements) for all employees. The Company also conducts reference checks of employees to ensure that the employers receive accurate and useful descriptions of employees’ backgrounds and experiences. The Company also operates a risk management department that helps client mitigate losses by implementing sound and effective risk management procedures at client sites. Clients receive these risk management services at no cost, helping them to reduce their own business risks and expenses.

 

The Business: Staffing

 

The industry is divided into three major segments: temporary help services (about 50 percent of industry revenue), professional employer organizations (about 40 percent), and placement agencies (about 10 percent). Temporary help services provide workers for customers for limited periods, often to substitute for absent permanent workers or to help during periods of peak demand. These workers, who are employees of the temporary help agency, will generally fill clerical, technical, or industrial positions. Professional employer organizations (PEOs), sometimes known as employee leasing agencies, contract to provide workers to customers for specific functions, often related to human resource management. In many cases, a customers’ employees are hired by a PEO and then leased back to the customer. Placement agencies, sometimes referred to as executive recruiters or headhunters, find workers to fill permanent positions at customer companies. These agencies may specialize in placing senior managers, midlevel managers, technical workers, or clerical and other support workers.

 

Staffing companies identify potential employees through advertising and referrals, and the companies interview, test, and counsel workers before sending them to the customer for approval. Pre-employment screening can include skills assessment, drug tests, and criminal background checks. Most staffing agencies provide some sort of training, often involving data entry and basic computer skills. The personnel staffing industry has been radically changed by the Internet. Many employers list available positions with one or several Internet personnel sites like monster.com or jobs.com, and on their own site. Personnel agencies operate their own sites and often still work as intermediaries by helping employers accurately describe job openings and screening candidates who submit applications.

 

Job growth drives demand for the personnel staffing industry. The profitability of individual companies depends on good marketing and availability of qualified employees. Large companies enjoy economies of scale in marketing and back-office operations. Small companies can compete successfully by specializing in an industry or a job function. The industry is labor-intensive: average annual revenue per worker is about $80,000.

 

To a great extent, client follow the seasonal retail cycles but precede them by 2-3 months. What occurs are two distinct “peak” seasons which fall in August-October, preceding Halloween, Thanksgiving, and Christmas. The second is April-May, preceding the summer season. Both provide extended spikes to the baseline revenue average of companies in the sector.

 

Major end-use customers include businesses from a wide range of industries. Nine of 10 large US businesses have used a staffing agency, according to the American Staffing Association. Wholesale, retail, and service industries are most likely to use temporary help services. Marketing involves direct sales presentations, referrals from existing clients, and advertising. Agencies compete both for customers and workers. Depending on market supply and demand at any given time, agencies may allocate more resources either to finding potential employers or potential workers. Permanent placement agencies work either on a retainer or a contingency basis, often 30 percent of annual salary. Clients may retain an agency for a specific job search or on contract for a specific period. Temporary help services charge customers a fixed price per hour or a standard markup on prevailing hourly rates. When a temporary employee is hired for a regular position within a company, the customer pays

 

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For many staffing companies, demand is lower late in the fourth quarter and early in the first quarter, partly because of holidays, and higher during the rest of the year. Staffing companies may have high receivables from customers. Temp agencies and PEOs must manage a high cash flow and may maintain high cash balances because they funnel payroll payments from employers. Agencies invest periodically in computer systems. Large agencies may lease substantial amounts of office space.

 

Staffing companies are regulated by the US Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC), and often by state authorities. At issue is the relationship between the agency and the temporary employees, or employee candidates. Many federal anti-discrimination rules regulate the type of information that employment firms can request from candidates or provide to customers about candidates. PEOs are often considered co-employers along with the client, but the PEO is responsible for employee wages, taxes, and benefits. State regulation aims to ensure that PEOs provide the benefits they promise to workers.

 

Demand for personnel staffing services is strongest in areas with strong employment growth, and geographic location can determine an agency's success in attracting employees and employers. Customers generally prefer a staffing service that can provide workers for all of their office locations. Temporary employee candidates are often unwilling to relocate for a position.

 

Average hourly wages for placement agencies are slightly higher than the national average. Wages for PEOs are moderately higher than the national average. Wages for temporary help services workers are moderately lower than the national average, in part because the industry places a large number of workers in clerical and light industrial positions. The injury rate for the personnel staffing industry as a whole is about 40 percent lower than the national average.

 

The revenue of personnel agencies depends on the number of jobs they fill, which in turn depends on economic growth. During economic slowdowns, many client companies stop hiring altogether. In years of good economic growth, the number of jobs in the US economy grows 1 to 2 percent per year. Internet employment sites expand companies' ability to find workers without the help of traditional agencies. Personnel agencies often work as intermediaries, helping employers accurately describe job openings and screen candidates. Increasing the use of sophisticated, automated job description and candidate screening tools could make many traditional functions of personnel agencies obsolete. Free social networking sites such as LinkedIn and Facebook are also becoming a common way for recruiters and employees to connect without the assistance of a staffing agency.

 

To avoid large placement agency fees, big companies may use in-house personnel staff, current employee referrals, or human resources consulting companies to find and hire new personnel. Because placement agencies typically charge a fee based on a percentage of the first year's salary of a new worker, companies with many jobs to fill have a large financial incentive to avoid agencies.

 

Most personnel agencies are small and may depend heavily on a few big customers for a large portion of revenue. Large customers may lead to increased revenues, but also expose agencies to higher risks. When major accounts experience financial hardships, and have less need for temporary employment services, agencies stand to lose large portions of revenue.

 

The loss of a staff member who handles a large volume of business can result in a large loss of revenue for an agency. Individual staff members, rather than the agency itself, usually develop strong relationships with customers. Staff members who move to another agency are often able to move customers with them.

 

Some of the best opportunities for temporary employment are in industries traditionally active in seasonal cycles, such as construction, wholesale, and retail. Demand for staffing services is generally lower in the first and fourth quarters of the year. However, seasonal demand for workers creates cash flow fluctuations throughout the year. Cash flow imbalances also occur because agencies must pay workers even though they haven't been paid by customers.

 

Many personnel firms have been accused of employment discrimination based on age, race, religion, or sex. Age discrimination is the fastest-growing type of employment charge filed with the US EEOC. Allegations of discrimination by temporary workers results in high insurance costs for staffing agencies.

 

Because worker leasing and the large-scale use of temporary workers are relatively new phenomena, federal and state labor laws don’t directly address many of the issues these employer-employee relationships create. However, because clients have used PEOs to evade labor laws in the past, regulations are being tightened. PEOs are regulated in an increasing number of states, including Florida and Texas, where a significant number operate.

 

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Trends in the Staffing Business

 

Startup costs for a personnel agency are very low. Individual offices can be highly profitable, but consolidation is driven mainly by the opportunity for large agencies to develop national relationships with big customers. Some agencies expand by starting new offices in promising markets, but most prefer to buy existing independent offices with proven staff and an existing customer roster.

 

Temporary workers are becoming such a large factor at some companies that personnel agency staff sometimes work at the customer's site to recruit, train, and manage. Onsite training is designed to serve only that customer. Agencies try to match the best qualified employees for the customer's needs, but often provide additional training specific to that company, such as instruction in the use of proprietary software.

 

Some personnel consulting firms and human resource departments are increasingly using psychological tests to evaluate potential job candidates. Psychological, or liability, testing has gained popularity due to fraud scandals. In addition to stiffer background checks, headhunters check the credit of prospective employees.

 

The trends of outsourcing entire departments and dependence on temporary and leased workers will expand opportunities for personnel agencies. Taking advantage of their expertise in assessing worker capabilities, some agencies manage clients’ entire human resource functions. Human resources outsourcing (HRO) may include management of payroll, tax filings, and benefit administration services. HRO may also include recruitment process outsourcing (RPO), where an agency manages all recruitment activities for a client. The US RPO market is estimated to grow about 25 percent in 2011, according to GlobalData.

 

New online technology is improving staffing efficiency. For example, some online applications coordinate workflow for staffing agencies, their clients, and temporary workers, and allow agencies and customers to share work order requests, submit and track candidates, approve timesheets and expenses, and run reports. Interaction between candidates and potential employers is increasingly being handled online. Clients are also increasingly expecting online services on-the-go. Mobility is an important feature of many staffing agency technology solutions.

 

Initially viewed as rivals, some Internet job-search companies and traditional employment agencies are now collaborating. While some Internet sites don't allow agencies to use their services to post jobs or look through resumes, others find that agencies are their biggest customers, earning the sites a large percentage of their revenue. Some staffing companies contract to help client employers find workers online.

 

The Market

 

The output of US employment services is forecast to grow at an annual compounded rate of 4 percent between 2011 and 2016, based on industry data published in October 2011.

 

The global staffing services industry generates about $280 billion in annual revenue, according to the International Confederation of Private Employment Agencies. As the global economy recovers and employment improves, revenue could exceed $320 billion by 2015, according to Global Industry Analysts. Major staffing services providers include Adecco (headquartered in Switzerland), Randstad (the Netherlands), and Manpower (US). Overall, Europe is the largest regional staffing services market, representing about 40 percent of annual revenue. The US and Japan each account for about 20 percent of global revenue. The UK accounts for about 15 percent. There are about 70,000 private employment services agencies in the world, with the top 10 companies accounting for about a third of industry sales, according to the International Confederation of Private Employment Agencies. The industry is growing fastest among nations in the Asia-Pacific region.

 

The US personnel staffing agencies industry includes about 32,000 companies with combined annual revenue of about $215 billion. Major companies include ADP TotalSource, Insperity (formerly Administaff), Kelly Services, Manpower, and the US operations of Adecco. The industry is fragmented: the 50 largest companies generate about 40 percent of industry revenue. The global staffing services industry generates about $280 billion in annual revenue, according to the International Confederation of Private Employment Agencies. Major staffing services providers based outside the US are Adecco (Switzerland) and Randstad (the Netherlands). Large staffing services markets include the EU, the US, Japan, and the UK. US corporate profits, an indicator of corporate demand for staffing services, rose 7.9 percent in the third quarter of 2011 compared to the same period in 2010. US personal income, a measure of overall employment trends, rose 3.9 percent in October 2011 compared to the same month in 2010. Total US revenue for employment services rose 6.5 percent in the third quarter of 2011 compared to the same period in 2010.

 

Government policies often shape the staffing services industry and determine growth potential. In Europe and Asia, employment services providers must register and obtain licenses from government agencies. In the US and the UK, employment service firms are considered the legal employer of temporary and contract workers and must abide by additional regulations. Some countries, such as France, have restrictions on the use of temporary workers.

 

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Rapid growth in the IT industry is benefiting US staffing firms, especially those with an IT focus. Two-thirds of staffing firms say that IT is the most sought after skill set, according to Staffing Industry Both permanent and contingent IT employees are in high demand. Recruiters are having a harder time finding high-skilled workers, such as enterprise architects, cloud architects, and security specialists. As a result, companies are more likely to turn to staffing agencies to find employees. Sixty percent of the fastest growing agencies and most sought after for acquisitions are IT staffing firms. The segment shows no signs of slowing down. IT staffing demand is expected to grow about 12 percent annually in 2011 and 2012, according to Staffing Industry Analysts.

 

Higher wages and employment may indicate recovery for the staffing industry. Employment at staffing agencies increased 7.5 percent in August 2011 compared to August 2010. August employment was the highest monthly employment in the industry since October 2008. Year-over-year wages increased more than 3 percent in August 2011. Top executive salaries are also on the rise. Median executive compensation at the top public staffing agencies increased about 25 percent in 2010 from the previous year, according to a recent report by Equilar. The growth in executive pay is a shift from lower compensation in 2008 and 2009. For the first time since the late 2000s recession began, executive compensation, including salaries, stock options, and bonuses, is on the rise, a trend that is expected to continue, according to industry experts.

 

The Company’s Presence in the Market

 

At present, the Company’s source of revenue is through its contracts with clients. The Company markets itself primarily through business to business relationships. Sales people are utilized to create relationships with the key decision makers at each potential client site so that the company can participate in upcoming RFP, RFQ, or open bidding process. Each client is scrutinized for credit worthiness, reputation, and exposure to potential injuries.

 

The Company matches specifically skilled workers with clients, saving businesses time and money, while providing for its employees with honesty and honor. This requires a high level of communication. It means asking open-ended questions and listening, not talking. This means knowing the local market so that the Company can really serve each client and employee. The Company believes that staffing goes beyond simply providing employees for labor.

 

Based upon metrics taken from the current client base, Company maintains a 95%+ fill and retention rate. This translates into orders filled on time with low incidents of turnover. Success in this area is predicated on stringent screening process and dedication to keeping hard working and high performing employees working. The Company also maintains a ready pool of candidates each day to meet clients’ “asap orders” that need immediate attention. This practice, along with the Company’s 24-hour “on call” access, means every order will be acknowledged, received, and filled when needed.

 

The Company plans to grow organically in this manner as a participant in the broader staffing sector. In the future, the Company also plans to build its business and industry reputation through growth via acquisitions. Growth will be primarily achieved through internal growth and the acquisition strategy. On the organic growths side, the Company currently believes that the majority of the companies that it works with currently only use the Company for only a portion of their temporary staffing needs. Improved relations with these clients along with the increase comfort level that the Company can handle more their needs will stimulate internal growth. With respect to acquisitions, by targeting small to medium size staffing companies, the Company can provide key benefits to the owners of these companies. This includes an operational economy of scale that they would not be able to obtain as a individual operating entity. Centralized processing allowing the acquisition (acquired business owner(s) to concentrate on retaining and adding new clients. Single funding source for all entities provides leverage that lowers funding cost and improves earnings. These value improvements are not normally obtainable by these small companies.

 

Services

 

The Company prides itself on client customization by developing the service around its clients current operating procedures. The Company creates and maintains a fluid work environment between the client and the Company. In addition, the company also provides businesses with a high-caliber of employee available for project or permanent work. The Company listens to individual needs and customizes personnel solutions for both businesses and workers. The Company has designed an extensive service package with an emphasis on recruiting and risk management which is incorporated into its client customization model.

 

The Company does not apply one model to all situations, and instead maintains a fluid environment so that the Company can change as needed. Each team member is highly cross trained in all aspects of staffing. This allows each member to assist clients and employees with any situation. From operations to risk management to payroll, team members can handle client needs. Every employee is “guaranteed” from Company – meaning that if the employee does not meet the quality and/or performance standards of our client, we will refund the cost of that individual up to 8 hours.

 

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Customized recruitments match client specific needs with the pool of available candidates. The Company refreshes this pool weekly, which allows the Company to provide only the best candidates in time effective manner. In addition, the Company attempts to reduce injuries and create a safer and more productive worksite, in that the Company will perform site safety evaluations, implement an early intervention program, perform safety training, OSHA Compliance, case management, claims review, back to work programs, and accident investigation.

 

Among the Company’s human resources services, the Company specifically provides each of the following specific set of services:

-Employees are thoroughly screened and tested to be sure they understand acceptable workplace practices.

-Employees are E-Verified to insure only legal workers are employed.

-Harassment and safe practices training is provided to all employees prior to hire.

-Full harassment trainings as needed by clients are also offered.

-Custom employee handbooks can be issued for specific locations.

-The Company carries out disciplinary action and employee improvement plans for workplace infractions.

 

Risk Management Program

 

The Company designed and created an industry-leading risk management and safety program. This program starts with the initial risk assessment of client sites. The Company’s risk management team will present a risk analysis to a new or potential client showing exposures and recommendations for correction. The Company’s risk management includes in the risk assessment proper training techniques for all employees to follow before being placed at the client site. This training incorporates the Company’s client required training as part of its customization model. Risk management also created a step by step “in case of injury” protocol to be followed which allows the Company to manage the claim from beginning to end to ensure the best possible chance that the claim remains first aid (non-recordable). If the claim does become a recordable injury, this program allows the Company to have the best possible chance to get the employee back to work and avoid litigation. The Early Intervention Nurse Program is one of the Company’s unique services that give the company a competitive edge on the competition. This program allows a medical professional to assist the employee via phone at the client site immediately when the injury occurs. First Rate Risk Management maintains relationships with all treating clinics where employees are seen in an attempt to get the clinic doctors to understand our treating philosophy.

 

Early Intervention Program: The Company contracts with Risk Solutions to provide a unique on call nurse 24 hours a day. This practice allows the Company to diagnose injuries at the site to determine the extent of the injury and if the employee needs further medical treatment. If further medical treatment is needed, the nurse provides the risk management team with valuable information so we can insure that proper treatment is being administered by our contract clinic. The risk management team provides an extensive safety program to clients free of charge. From annual risk analysis to accident investigation, the risk management team is here to support clients.

 

Service Contracts

 

The Company enters into written service contracts with its customers. Among other things, these contracts provide that the Company will have various duties, including the following: (i) recruiting, screening, testing, qualifying, reference checking, and hiring employees; (ii) ensuring that Employment and Eligibility Verification form (I-9) is completed; (iii) maintaining all personnel files and payroll records for its employees; and (iv) withholding, paying, reporting all taxes, and issuing employee W-2 forms at the end of each year with respect to each employee provided to the customer as required by law. The Company also maintains workers’ compensation coverage for each of its employees. The Company also administers all unemployment claims with respect to each employee provided to customers. There are also obligations and requirements upon customers to ensure that the working relationship between the Company and its customers is smooth, efficient and successful.

 

Pricing

 

Pricing for services is dependent on several variables ranging from credit, risk exposure, payment terms, payment methods, volume, and potential for growth. Applicable pricing is specified in customer services agreements. The Company typically charges client by marking up the pay of employees or through other bill rates.

 

Competition

 

The staffing industry is characterized by a large number of competing companies in a fragmented sector. Major competitors also exist across the sector, but as the industry affords low barriers to entry, new entrants are constantly introduced to the marketplace. Currently there are approximately 18,000 staffing companies in the United States.

 

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Currently, direct competitors of the Company include, but are not limited to, Kimco Staffing, Tri-State Staffing, Diamond Staffing, Ascend Staffing, Job Brokers, Select Staffing, Kelly Services, Personnel Plus. There are additional competitors that include any staffing company that would choose to compete in the light industrial arena or clerical business and in the current locations of the Company. The direct competitors listed above are currently servicing many of the same clients that the Company services and rely upon. The criteria for which these companies compete are based on price and service levels.

 

Strategic Partners and Suppliers

 

The Company believes that strategic partnerships will be a major component of the Company’s operating strategy and path to success. The Company hopes to work with several strategic partners in important areas of its business and operations. However, currently, the Company has no such strategic partners.

 

The Company does work with several important suppliers/vendors that are important for its operations and success:

 

Arizona Bio & Safety Supply Co., LLC, located in Glendale, Arizona, provides the Company with personal protective equipment used in the Company’s operations.

 

The Company uses online recruiting sources, among other recruiting tools, including common websites, such as Careerbuilder.com.

 

Insurance is an important part of the Company’s overall operations, and Company maintains insurance for workers’ compensation matters and general liability.

 

The Company relies heavily on its software provider to manage payroll, factoring and other related human resources issues. Currently, the Company relies on Tempworks Software, but in the future, the Company may also consider other suitable software and service options.

 

Customers

 

The Company has a diverse array of customers across sectors. Key customers include the following (each of which comprises at least 5% or more of the Company’s sales): Essentials Packaging; States Logistics; Direct Chassis; Essentials, Inc.; Phillips Industries; and Premier Packaging. The Company also has many other customers, and plans to continue to grow its customer base.

 

Marketing and Sales

 

The Company has conducted limited advertising and marketing to date to reach new clients. To date, advertising and marketing has been centered on reaching potential employees. In all locations, the Company has used multiple resources to drive in potential new temporary employees. These tactics range from advertisements in newspapers, job boards, unemployment assist centers, as well as online advertisements. The Company also utilizes CareerBuilder to recruit for professional placements.

 

The Company has, however, given substantial attention to constructing the marketing strategy and plans that it will use in order to grow its business and expand its customers. The Company eventually anticipates a significant budget and need for marketing activities. The primary focus of marketing campaigns will be designed to help the Company find new customers and to increase awareness of the Company’s services and competitive solutions. A variety of marketing approaches, emphasizing the competitive advantages and key differentiators of the Company’s services, are expected to be used in order to attract new customers and entice existing customers to do larger volumes of business with the Company.

 

The Company expects that its sales team will work closely with the marketing team to convert prospects into new customers. The sales team will be structured to align with target markets based on territory and customer patterns.

 

Operations

 

The Company requires that all potential employment candidates are required to complete an application process which screens for experience and work history. Upon completion, each candidate is interviewed by the Company’s staffing coordinators and is asked a series of questions based on the company’s local clientele's needs. The candidate is then given a sequence of competency testing to complete within an undisclosed timeframe to test for analytical and instruction following skills. At this point, the staffing coordinators make a determination to which client(s) the candidate is best suited based upon the most commonly filled positions. In the continued effort to provide the best candidates to clients, all employees are E-verified for employment eligibility. All employees are also subjected to additional testing (math and competency). The objective is to ensure that only the most qualified candidates fit current clients’ needs so that the Company can provide the highest level of service possible.

 

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Revenues

 

The Company has posted revenues from operations based on its billings to, and services for, customers. Based on a combination of First Rate California and First Rate Nevada, the Company posted revenues of approximately $2.5 million during the partial-year 2010, approximately $6.1 million in the full-year 2011 and approximately $3.3 million for the first half of 2012.

 

Equipment Financing

 

The Company has no existing equipment financing arrangements.

 

THE COMPANY

 

Change of Control

 

The Company was incorporated in the State of Delaware in April 2011, and was formerly known as Moosewood Acquisition Corporation. In May 2012, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the Company changed its name from Moosewood Acquisition Corporation to First Rate Staffing Corporation.

 

Mergers

 

On November 9, 2012, the Company entered into merger agreements with each of First Rate Staffing, LLC, a California limited liability company (“First Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed on November 13, 2012. The purpose of the Mergers was to facilitate and prepare the Company for a registration statement and/or public offering of securities. Prior to the Mergers, First Rate California and First Rate Nevada were under common control of the same group of shareholders.

 

The Mergers were effected by the Company through the exchange of (i) all of the outstanding membership interests of First Rate California for 2,000,000 shares of common stock of the Company, and (ii) all of the outstanding shares of First Rate Nevada for 2,000,000 shares of common stock of the Company. Accordingly, a total of 4,000,000 shares were issued in the Mergers.

 

Prior to the Mergers, Moosewood had no ongoing business or operations and was established for the purpose of completing a business combination with target companies, such as First Rate California and First Rate Nevada. As a result of the Mergers, each of First Rate California and First Rate Nevada has merged into and become a part of the Company. The Company, as the surviving entity from the Mergers, has taken over the respective operations and business plans of each of both First Rate California and First Rate Nevada.

 

Relationship with Tiber Creek Corporation

 

In April 2012, the Company (through First Rate Staffing) entered into an engagement agreement with Tiber Creek Corporation, a Delaware corporation (“Tiber Creek”), whereby Tiber Creek would provide assistance to the Company in effecting transactions for the Company to combine with a public reporting company, including: transferring control of such reporting company to First Rate Staffing; preparing the business combination agreement; effecting the business combination; causing the preparation and filing of forms, including a registration statement, with the Securities and Exchange Commission; assist in listing its securities on a trading exchange; and assist in establishing and maintaining relationships with market makers and broker-dealers.

 

Tiber Creek received cash fees from the Company of $45,000 and will receive an additional $20,000 at such time when the securities of the Company begin trading on the market. In addition, the Company’s then-current shareholders, Tiber Creek and MB Americus, LLC, a California limited liability company (“MB Americus”), were permitted to retain the aggregate total of 500,000 shares. The engagement agreement also provides that the shares held by Tiber Creek and MB Americus shall be included in the registration statement (i.e. this registration statement) to be filed by the Company. The engagement agreement further provides that the Company will not at any time take or allow any action (whether by reverse stock split or otherwise) which would have the effect of reducing the absolute number of Shares held by Tiber Creek and MB Americus.

 

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In general, Tiber Creek holds interests in inactive Delaware corporations which may be used by issuers (such as the Company) to reincorporate their business in the State of Delaware and capitalize the issuer at a level and in a manner (i.e. the number of authorized shares and rights and preferences of shareholders) that is appropriate for a public company. Otherwise, these corporations, such as Moosewood Acquisition, are inactive, and Tiber Creek does not conduct any business in such corporations.

 

James Cassidy and James McKillop (who is the sole owner of MB Americus, an affiliate of Tiber Creek) serve only as interim officers and directors of these corporations (such as Moosewood Acquisition) until such time as the changes of control in such corporations are effectuated to the ultimate registering issuers. As the role of Tiber Creek is essentially limited to preparing the corporate structure and organizing the Company for becoming a public company, the roles of Mr. Cassidy and Mr. McKillop are generally limited to facilitating such change of control and securities registration transactions.

 

Promissory Notes

 

The Company has promissory notes outstanding of $110,600. These notes consist of monies advanced by Mr. Cliff Blake, an officer and director of the Company, to the Company, as follows:

 

·Three-year Promissory Note, as of March 2012, for $50,000, at 6.00% simple interest rate, maturing in March 2015.
·Three-year Promissory Note, as of March 2012, for $45,000, at 6.00% simple interest rate, maturing in March 2015.
·Three-year Promissory Note, as of April 2012, for $10,600, at 6.00% simple interest rate, maturing in April 2015.

 

Factoring Facilities

 

The Company uses factoring of accounts receivables in its business, and in conjunction with such factoring facilities, the Company pledges assets as collateral. Currently, the Company has factoring credit facilities with TAB Bank under multi-year agreements entered into by First Rate California and First Rate Nevada, respectively. Previously, the Company worked with another lender; however, as the Company’s business has grown and its operations have expanded, the Company established the new credit facilities with TAB Bank in August 2012.

 

Intellectual Property

 

At present, the Company does not possess any intellectual property protection. The Company may decide in the future to pursue efforts to protect its intellectual property, trade secrets and proprietary methods and processes.

 

Research and Development

 

The Company has not to date undertaken, and does not currently plan to undertake, any material research and development activities.

 

Employees and Organization

 

The Company presently has approximately 225 employees, consisting or approximately 175 employees in First Rate California and 50 employees in First Rate Nevada.

 

Most employees receive health benefits. The Company may offer additional fringe and welfare benefits in the future as the Company’s profits grow and/or the Company secures additional outside financing.

 

The Company considers its employees to be a prime strategic asset of its overall business and operations, and the Company strives to operate its business in a lean and cost-effective manner. The Company operates its business through the use of staffing coordinators, operation managers, sales managers, and senior management, all of which are integral to the success of the Company’s organization and operations. The Company’s model for its employment organization is based on the ratio of one employee for approximately every $1,000,000 in sales. The Company believes that this model compares favorably to an industry average based on one employee to every approximately $800,000 in sales.

 

Property

 

The Company currently has two physical locations: Santa Fe Springs, California and Phoenix, Arizona.

 

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The Santa Fe Springs location consists of 1,000 square feet and is a monthly lease that is located in an office park on a major thoroughfare for southern Los Angeles County, California. The monthly lease cost is $1,015, and annually the Company expends $12,700 for such lease. This location is almost filled at capacity and offers limited street visibility.

 

The Phoenix location consists of 1,600 square feet and is a yearly lease and is located at an intersection of a major thoroughfare for Phoenix, Arizona. The Phoenix location offers street visibility and room for growth. The monthly lease cost is $1,757, and annually the Company expends $20,750 for such lease.

 

The Company also anticipates opening an official corporate location in Irvine, California in the near future.

 

Subsidiaries

 

The Company has no subsidiaries.

 

Jumpstart Our Business Startups Act

 

In April, 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things:

 

Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;

 

Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;

 

Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;

 

Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and

 

Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.

 

In general, under the JOBS Act a company is an emerging growth company if its initial public offering ("IPO") of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of

(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,

(ii) the completion of the fiscal year of the fifth anniversary of the company's IPO;

(iii) the company's issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or

(iv) the company becoming a "larger accelerated filer" as defined under the Securities Exchange Act of 1934.

 

The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.

 

Financial Disclosure. The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:

(i) audited financial statements required for only two fiscal years;

(ii) selected financial data required for only the fiscal years that were audited;

(iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies.

(A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)

 

However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.

 

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The JOBS Act also exempts the Company's independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment, except as otherwise required by SEC rule.

 

The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company's accounting firm or for a supplemental auditor report about the audit.

 

Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the Company's independent registered public accounting firm to file a report on the Company's internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company's internal control over financial reporting.

 

Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.

 

Other Items of the JOBS Act. The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.

 

Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.

 

Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.

 

The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period.

 

Reports to Security Holders

 

The Company has filed a registration statement on Form S-1, under the Securities Act of 1933, with the Securities and Exchange Commission with respect to the shares of its common stock. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. Reference is made to the Company’s registration statement and each exhibit attached to it for a more detailed description of matters involving the Company. A potential investor may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission, along with any other filings of the Company, as described below.

 

In June 2011, the Company (as Moosewood Acquisition Corporation) filed a Form 10-12G general registration of securities pursuant to the Securities Exchange Act of 1934 and is a reporting company pursuant such Act and files with the Securities and Exchange Commission quarterly and annual reports and management shareholding information. The Company intends to deliver a copy of its annual report to its security holders, and will voluntarily send a copy of the annual report, including audited financial statements, to any registered shareholder who requests the same.

 

The Company's documents filed with the Securities and Exchange Commission may be inspected at the Commission's principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIK number 0001522215.

 

27
 

 

PLAN OF OPERATION

 

Business Plan

 

The basic business plan of the Company consists of providing employees to its clients and earning fees from these service agreements with clients. Expansion for the Company will come from several sources: first, organic growth with clients who open new facilities which will allow the company to have a presence in a new area if the Company can remain their employee services provider. Second, the Company plans to bid for new contracts that would have enough volume which would warrant opening a new location in an area where the Company was not previously represented. Third, the Company plans acquisitions of staffing companies which would give the Company an immediate presence in new territories. Finally, the Company does not currently operate overseas, but international expansion may present additional expansion opportunities in the future.

 

Potential Revenue

 

The Company expects to earn potential revenue from existing client services engagements whereby employees are placed at these clients. The Company prospects for new clients on an ongoing basis and also seeks additional revenue enhancement opportunities from existing clients.

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

The Company was incorporated in the State of Delaware in April 2011. Each of First Rate Staffing, LLC, a California limited liability company (“First Rate California”), and First Rate Staffing, Inc., a Nevada corporation (“First Rate Nevada”), merged into the Company in separate mergers (collectively, and together, the “Mergers”) that were concurrently completed in November 2012. References to the financial condition and performance of the Company below in this section “Management’s Discussions and Analysis of Financial Condition and Results of Operation” are to First State California and First State Nevada, respectively.

 

Revenues

 

The Company has posted revenues from operations based on its billings to, and services for, customers. Based on a combination of First Rate California and First Rate Nevada, the Company posted revenues of approximately $2.5 million during the partial-year 2010, approximately $6.1 million in the full-year 2011 and approximately $3.3 million for the first half of 2012.

 

Equipment Financing

 

The Company has no existing equipment financing arrangements.

 

Pricing

 

Pricing for services is dependent on several variables ranging from credit, risk exposure, payment terms, payment methods, volume, and potential for growth. Applicable pricing is specified in customer services agreements. The Company typically charges client by marking up the pay of employees or through other bill rates.

 

Potential Revenue

 

The Company expects to earn potential revenue from existing client services engagements whereby employees are placed at these clients. The Company prospects for new clients on an ongoing basis and also seeks additional revenue enhancement opportunities from existing clients.

 

Alternative Financial Planning

 

The Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to expand and implement any part of its longer term business plan or strategy will be severely jeopardized.

 

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Critical Accounting Policies

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of the Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.

 

Although the Company is still evaluating the JOBS Act, it currently intends to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. The Company has elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.

 

Capital Resources

 

As of June 30, 2012, First Rate California had cash available of $33,126, and First Rate Nevada had cash available of $17,175.

 

The Company’s proposed expansion plans and business process improvements will necessitate additional capital and financing. Accordingly, the Company plans to raise between $2 million and $4 million of outside funding in the near future, for the purposes of funding its own accounts receivable factoring company, establishing and operating its own worker’s compensation captive unit, and acquiring competitors and complementary service providers in its sector.

 

There can be no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its contemplated business plans and operations unless it obtains additional financing or otherwise is able to generate sufficient revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

 

Discussion of Six Months ended June 30, 2012 for First Rate California

 

First Rate California generated revenues during the six months ended June 30, 2012 of $2,489,976, as compared to revenues during the six months ended June 30, 2011 of $2,163,448.

 

During the six months ended June 30, 2012, First Rate California posted an operating loss of $95,851 and net loss of $97,185, as compared to an operating profit of $23,019 and net profit of $22,965 for the six months ended June 30, 2011.

 

For the six months ended June 30, 2012, First Rate California used cash of $160,118 in its operations. During such period, First Rate California also obtained cash from financing activities totaling $181,448. During the six months ended June 30, 2011, First Rate California generated cash of $34,688 from operations and used cash of $272 in financing activities.

 

First Rate California did not incur any capital expenditures during the six month period ended June 30, 2012 or the six month period ended June 30, 2011.

 

29
 

 

Discussion of Six Months ended June 30, 2012 for First Rate Nevada

 

First Rate Nevada generated revenues during the six months ended June 30, 2012 of $825,769, as compared to revenues during the six months ended June 30, 2011 of $763,982.

 

During the six months ended June 30, 2012, First Rate Nevada posted an operating loss of $16,020 and net loss of $16,037, as compared to an operating profit of $4,870 and net profit of $4,781 for the six months ended June 30, 2011.

 

For the six months ended June 30, 2012, First Rate Nevada used cash of $14,227 in its operations. During such period, First Rate Nevada also obtained cash from financing activities totaling $31,286. During the six months ended June 30, 2011, First Rate Nevada generated cash of $17,002 from operations and used cash of $448 in financing activities.

 

First Rate Nevada did not incur any capital expenditures during the six month period ended June 30, 2012 or the six month period ended June 30, 2011.

 

Discussion of Year ended December 31, 2011 for First Rate California

 

First Rate California generated revenues during the year ended December 31, 2011 of $4,774,545.

 

During the year ended December 31, 2011, First Rate California posted operating income of $120,783 and net income of $63,518.

 

During the year ended December 31, 2011, First Rate California generated cash of $9,153 in its operations. During such period, First Rate California also obtained cash from financing activities totaling $333.

 

First Rate California did not incur any capital expenditures during the year ended December 31, 2011.

 

Discussion of Year ended December 31, 2011 for First Rate Nevada

 

First Rate Nevada generated revenues during the year ended December 31, 2011 of $1,324,497.

 

During the year ended December 31, 2011, First Rate Nevada posted an operating loss of $25,227 and a net loss of $42,203.

 

During the year ended December 31, 2011, First Rate Nevada used cash of $16,014 in its operations. During such period, First Rate Nevada also obtained cash from financing activities totaling $5,790.

 

First Rate Nevada did not incur any capital expenditures during the year ended December 31, 2011.

 

MANAGEMENT

 

The following table sets forth information regarding the members of the Company’s board of directors and its officers:

 

Name Age Position Year Commenced
       
Cliff Blake 58 Chief Executive Officer and Director 2012
Devon Galpin 34 President and Chief Operating Officer, First Rate 2010
Michael Mautz 46 Vice President of Risk Management, First Rate 2010
Joy Mautz 37 Vice President of Finance, First Rate 2010
Julie Galpin 35 Secretary, First Rate 2010

 

Cliff Blake

 

Cliff Blake serves as Chief Executive Officer, President, Secretary and Treasurer of the Company, and is the sole director of the Company. Mr. Blake has over 22 years of experience in business and management, including in starting, building and operating numerous businesses, including over 12 years in owning and operating staffing businesses. Mr. Blake received a Bachelor of Science degree from Louisiana Tech University in 1974 and a Master of Business Administration degree in Finance from Florida State University in 1975.

 

30
 

 

Devon Galpin

 

Devon Galpin serves as President and Chief Operating Officer of First Rate California and First Rate Nevada. Mr. Galpin supervises all operations of these entities, which includes all office locations, recruiting, internal staffing, order fulfillment, payroll, invoicing compliance, along with client management. Mr. Galpin has worked in similar roles and capacities for over the past 6 years. Mr. Galpin received a Bachelor of Science degree in Political Science from Chapman College.

 

Michael Mautz

 

Michael Mautz serves as Vice President of Risk Management for First Rate California and First Rate Nevada. Mr. Mautz supervises all risk management activities of these entities, including the worker’s compensation program of the companies. Mr. Mautz has worked in similar roles and capacities for over the past 6 years. Mr. Mautz is an OSHA-certified risk manager.

 

Joy Mautz

 

Joy Mautz serves as Vice President of Finance for First Rate California and First Rate Nevada. Ms. Mautz heads all accounting functions, including cash flow management, state and federal tax compliance, financial modeling, forecasting and Sarbanes-Oxley compliance. Ms. Mautz has worked in similar roles and capacities, including as Controller for a large staffing company for over the past 6 years. Ms. Mautz received a Bachelor of Science degree from the California State University at Fullerton in 2004.

 

Julie Galpin

 

Julie Galpin serves as Secretary for First Rate California and First Rate Nevada. In this capacity, she also performs accounting and finance duties for these companies. For the past 6 years, Ms. Galpin has worked in similar accounting roles and capacities. Ms. Galpin received a Bachelor’s degree in Psychology from the University of California, Irvine in 2005.

 

Director Independence

 

Pursuant to Rule 4200 of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee of a company. The Company's board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or indirectly. Based on this review, the board has determined that there are no independent directors.

 

Committees and Terms

 

The Board of Directors (the “Board”) has not established any committees.

 

Legal Proceedings

 

Other than ongoing and routine employee claims for worker’s compensation that arise during the ordinary course of the business of the Company, there are currently no pending, threatened or actual legal proceedings of a material nature in which the Company is a party.

 

EXECUTIVE COMPENSATION

 

Remuneration of Officers: Summary Compensation Table

 

Description of Compensation Table

 

               Aggregate               All   Annual 
       Annual   Annual   Accrued           Comp-   Other   Comp- 
       Earned   Payments   Salary Since       Stock and   -ensation   Comp-   ensation 
Name/Position  Year   Salary   Made   Inception   Bonus   Options   Plans   ensation   Total 
                                              
Cliff Blake   2012                                         
CEO and Director                                             
                                              
Devon Galpin   2012   $39,000   $18,080                               
President and COO, First Rate                                             
                                              
Michael Mautz   2012   $39,000   $17,780                               
Vice President, First Rate                                             
                                              
Joy Mautz   2012   $39,000   $17,780                               
Vice President, First Rate                                             
                                              
Julie Galpin   2012   $39,000   $18,080                               
Secretary, First Rate                                             

 

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The compensation shown above is presented as of June 2012, and represents salaries and compensation payable to the officers noted above in connection with their services for First Rate California and First Rate Nevada. The officers noted above also received profits participation and earnings from their ownership interest in the equity of each of First Rate California and First Rate Nevada; as such profits participation and earnings represent returns to these officers by virtue of their equity ownership of these businesses, any such profits participation are not reflected in the table above.

 

As of June 30, 2012, there was no accrued compensation that was due to the Company’s employees or officers. Upon successful completion by the Company of a primary public offering in the future (or the completion of other financing or funding), however, the Company may compensate officers and employees as is discussed below in “Anticipated Officer and Director Remuneration.”

 

Each of the officers has received certain shares of common stock in the Company in connection with the change of control of the Company and/or the Mergers. Accordingly, the Company has not recorded any compensation expense in respect of any shares issued to the officers as such shares do not represent compensation that was paid to any officer.

 

There are no current plans to pay or distribute any cash or non-cash bonus compensation to officers of the Company, until such time as the Company is profitable, experiences positive cash flow or obtains additional financing. However, the Board of Directors may allocate salaries and benefits to the officers in its sole discretion. No officer is subject to a compensation plan or arrangement that results from his or her resignation, retirement, or any other termination of employment with the Company or from a change in control of the company or a change in his or her responsibilities following a change in control. The members of the Board of Directors may receive, if the Board so decides, a fixed fee and reimbursement of expenses, for attendance at each regular or special meeting of the Board, although no such program has been adopted to date. The Company currently has no retirement, pension, or profit-sharing plan covering its officers and directors; however, the Company plans to implement certain such benefits after sufficient funds are realized or raised by the Company (see “Anticipated Officer and Director Remuneration” below.)

 

Employment Agreements

 

The Company enters into and maintains customary employment agreements with each of its officers and employees.

 

Anticipated Officer and Director Remuneration

 

The Company pays reduced levels of compensation to its officers and director at present. The Company intends to pay regular, competitive annual salaries to all its officers and will pay an annual stipend to its directors when, and if, it completes a primary public offering for the sale of securities and/or the Company reaches greater profitability, experiences larger and more sustained positive cash flow and/or obtains additional funding. At such time, the Company anticipates offering additional cash and non-cash compensation to officers and directors. In addition, although not presently offered, the Company anticipates that its officers and directors will be provided with additional fringe benefits and perquisites at subsidizes rates, or at the sole expense of the Company, as may be determined on a case-by-case basis by the Company in its sole discretion. In addition, the Company may plan to offer 401(k) matching funds as a retirement benefit at a later time.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information as of the date of this prospectus regarding the beneficial ownership of the Company’s common stock by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.

 

32
 

 

              Percent of Class 
          Percent of   After 
      Number of Shares of   Class Before   Offering 
Name  Position  Common Stock   Offering (1)   (2) 
                
Cliff Blake  CEO and Director   1,000,000    14%   13%
                   
Devon Galpin  President and COO, First Rate   1,000,000    14%   13%
                   
Michael Mautz  Vice President, First Rate   1,000,000    14%   13%
                   
Joy Mautz  Vice President, First Rate   1,000,000    14%   13%
                   
Julie Galpin  Secretary, First Rate   1,000,000    14%   13%
                   
Terry Blake  5% shareholder   1,000,000    14%   13%
33 Tall Oak                  
Irvine, CA  92603                  
                   
Total owned by officers and directors (3)   6,000,000    86%   77%

 

* Less than 1%

 

(1) Based upon 7,000,000 shares outstanding as of the date of this offering.

(2) Assumes sale of all 1,600,000 Shares offered, and 7,000,000 shares outstanding following the offering.

(3) Ms. Blake is the spouse of Mr. Cliff Blake, the CEO and sole director of the Company. Ms. Blake’s shares are accordingly presented above as part of the total ownership by officers of the Company, due to the relationship of Ms. Blake with Mr. Blake.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

James Cassidy, a partner in the law firm which acts as counsel to the Company, is the sole owner and director of Tiber Creek Corporation which owns 250,000 shares of the Company's common stock. Tiber Creek has received consulting fees of $45,000 to date from the Company (and is eligible to receive an additional $20,000) and also holds shares in the Company. Tiber Creek and its affiliate, MB Americus LLC, a California limited liability company, each currently hold 250,000 shares in the Company.

 

James Cassidy and James McKillop, who is the sole officer and owner of MB Americus, LLC, were both formerly officers and directors of the Company. As the organizers and developers of Moosewood, Mr. Cassidy and Mr. McKillop were involved with the Company prior to the Mergers. In particular, Mr. Cassidy provided services to the Company without charge, including preparation and filing of the charter corporate documents and preparation of the instant registration statement.

 

From time to time, the First Rate California advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate California for working capital needs. As of June 30, 2012 and December 31, 2011, the amounts due from the affiliate company are $53,580 and $23,198, respectively.

 

From time to time, First Rate Nevada advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate Nevada for working capital needs. As of June 30, 2012 and December 31, 2011, the amount due to the affiliate company is $53,580 and $23,198, respectively.

 

Certain officers, directors and five percent shareholders have family relationships amongst them:

·Cliff Blake, an officer and director of the Company, and Terry Blake, a five percent shareholder of the Company, are married. Mr. and Mrs. Blake are also parents/step-parents of Joy Mautz, an officer of the Company, and Julie Galpin, an officer of the Company.
·Michael Mautz, an officer of the Company, is married to Joy Mautz.
·Devon Galpin, an officer of the Company, is married to Julie Galpin.

 

SELLING SHAREHOLDERS

 

The Company is registering for offer and sale by existing holders thereof 1,600,000 shares of common stock held by such shareholders. The Company will not receive any proceeds from the sale of the Selling Shareholder Shares. The selling shareholders have no agreement with any underwriters with respect to the sale of the Selling Shareholder Shares. The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $2.00 per share, until the Company's common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale.

 

33
 

 

The selling shareholders may from time to time offer the Selling Shareholder Shares through underwriters, dealers or agents, which may receive compensation in the form of underwriting discounts, concessions or commissions from them and/or the purchasers of the Selling Shareholder Shares for whom they may act as agents. Any agents, dealers or underwriters that participate in the distribution of the Selling Shareholder Shares may be deemed to be "underwriters" under the Securities Act and any discounts, commissions or concessions received by any such underwriters, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act.

 

The following table sets forth ownership of shares held by each person who is a selling shareholder.

 

  Shares Owned Before Offering (1)    Offered Herein   Shares Owned After Offering (2) 
Name  Number   Percentage    Number   Number   Percentage 
                      
Cliff Blake                          
CEO and Director   1,000,000    14 %   100,000    900,000    13%
                           
Devon Galpin                          
President and COO, First Rate   1,000,000    14 %   100,000    900,000    13%
                           
Michael Mautz                          
Vice President, First Rate   1,000,000    14 %   100,000    900,000    13%
                           
Joy Mautz                          
Vice President, First Rate   1,000,000    14 %   100,000    900,000    13%
                           
Julie Galpin                          
Secretary, First Rate   1,000,000    14 %   100,000    900,000    13%
                           
Terry Blake                          
5% shareholder   1,000,000    14 %   100,000    900,000    13%
                           
Teri and Daryl Baldridge   13,888    *     13,888    0    * 
                           
Sarah and Nino Barette   13,889    *     13,889    0    * 
                           
Bob Blake   10,000     *     10,000    0    * 
                            
Camille Blake   10,000     *     10,000    0    * 
                            
Katy Blake   10,000     *     10,000    0    * 
                            
Tim and Tracy Brown   10,000     *     10,000    0    * 
                            
Toni and Tammy Canzone   10,000     *     10,000    0    * 
                            
James Cassidy (3)   250,000    4 %   250,000    0    * 
                            
Carla Cole   13,889     *     13,889    0    * 
                            
Janet Dickenson   13,889     *     13,889    0    * 
                            
Eric Escalante   13,889     *     13,889    0    * 
                            
Spiros Galpin   27,778     *     27,778    0    * 
                            
Spiros Galpin II   13,889     *     13,889    0    * 
                            
Tanya Galpin   13,888     *     13,888    0    * 
                            
Brian Gorman   13,889     *     13,889    0    * 
                            
Randy and Vicki Haringa   13,889     *     13,889    0    * 
                            
Edward Hartely   10,000     *     10,000    0    * 
                            
Randy and Dee Haynes   13,889     *     13,889    0    * 
                            
Karl Hempel   10,000     *     10,000    0    * 
                            
Mackie Hempel   10,000     *     10,000    0    * 
                            
Heidi Hermreck   13,889     *     13,889    0    * 
                            
Brad and Linda Ills   13,889     *     13,889    0    * 
                            
Dick and Karen Ills   13,889     *     13,889    0    * 
                            
Debbie Johns   10,000     *     10,000    0    * 
                            
Mike Johns   36,668     *     36,668    0    * 
                            
Doris Knox   10,000     *     10,000    0    * 
                            
Jan Mautz   13,889     *     13,889    0    * 
                            
James McKillop (4)   250,000    4 %   250,000    0    * 
                            
Kathy McArdle   13,889     *     13,889    0    * 
                            
David Mejia   13,889     *     13,889    0    * 
                            
Marty and Patty Pflum   13,889     *     13,889    0    * 
                            
Jen and Kevin Puebla   13,888     *     13,888    0    * 
                            
Don and Barbara Rodgers   10,000     *     10,000    0    * 
                            
Troy and Lisa Schweers   13,889     *     13,889    0    * 
                            
Mike Tafoya   13,888     *     13,888    0    * 
                            
Nancy and Dan Tafoya   13,889     *     13,889    0    * 
                            
Rob Tafoya   13,889     *     13,889    0    * 
                            
Rebecca Zabel   10,000     *     10,000    0    * 
                            
Steve Zabel   10,000     *     10,000    0    * 

 

* Less than 1%

 

(1) Based upon 7,000,000 shares outstanding as of the date of this offering.

(2) Assumes sale of all 1,600,000 Shares offered, and 7,000,000 shares outstanding following the offering.

 

34
 

 

(3) Includes 250,000 shares held by Tiber Creek Corporation, a Delaware corporation, which provided certain services to the Company as discussed herein. Mr. Cassidy is the president and sole shareholder of Tiber Creek Corporation.

(4) Includes 250,000 shares held by MB Americus, LLC, a California limited liability company. Mr. McKillop also works with Tiber Creek Corporation from time to time. Mr. McKillop is an officer and the sole shareholder of MB Americus, LLC.

 

SHARES ELIGIBLE FOR FUTURE SALE

 

As of the date of this prospectus, there are 7,000,000 shares of common stock outstanding of which 6,000,000 shares are owned by officers, directors and five percent shareholders of the Company. There will be 7,000,000 shares outstanding if the maximum number of Shares offered herein is sold.

 

The shares of common stock held by current shareholders are considered “restricted securities” subject to the limitations of Rule 144 under the Securities Act. In general, securities may be sold pursuant to Rule 144 after being fully-paid and held for more than 12 months. While affiliates of the Company are subject to certain limits in the amount of restricted securities they can sell under Rule 144, there are no such limitations on sales by persons who are not affiliates of the Company. In the event non-affiliated holders elect to sell such shares in the public market, there is likely to be a negative effect on the market price of the Company's securities.

 

LEGAL MATTERS

 

Cassidy & Associates, Beverly Hills, California (“Cassidy & Associates”), has given its opinion as attorneys-at-law regarding the validity of the issuance of the Shares offered by the Company. A member of the law firm of Cassidy & Associates is an officer and director of Tiber Creek Corporation and may be considered the beneficial owner of the 250,000 shares of common stock of the Company owned by Tiber Creek Corporation.

 

Interest of Counsel

 

Cassidy & Associates, counsel for the Company, who has given an opinion upon the validity of the securities being registered and upon other legal matters in connection with the registration or offering of such securities, had, or is to receive in connection with the offering, a substantial interest in the Company and was connected with the Company through Moosewood Acquisition. James Cassidy, a partner of Cassidy & Associates, was a director and officer of Moosewood Acquisition prior to its change of control and subsequent business combination with First Rate California and First Rate Nevada.

 

EXPERTS

 

Anton & Chia, LLP, an independent registered public accounting firm, has audited the balance sheets of First Rate Staffing, LLC as of December 31, 2011 and December 31, 2010, and the related statements of operations, changes in members’ equity (deficit), and cash flows for the year ended December 31, 2011 and the period from April 2, 2010 (Inception) through December 31, 2010. The Company has included such financial statements in the prospectus and elsewhere in the registration statement in reliance on the report of June 25, 2012, given their authority as experts in accounting and auditing.

 

Anton & Chia, LLP, an independent registered public accounting firm, has audited the balance sheets of First Rate Staffing Inc. as of December 31, 2011 and December 31, 2010, and the related statements of operations, changes in shareholders’ equity (deficit), and cash flows for the year ended December 31, 2011 and the period from March 24, 2010 (Inception) through December 31, 2010. The Company has included such financial statements in the prospectus and elsewhere in the registration statement in reliance on the report of June 25, 2012, given their authority as experts in accounting and auditing.

 

Anton & Chia, LLP, an independent registered public accounting firm, has audited Moosewood Acquisition Corporation’s (a development stage company) balance sheets as of December 31, 2011, and the related statements of operations, stockholders’ equity and cash flows for the period from April 20, 2011 (Inception) through December 31, 2011. The Company has included such financial statements in the prospectus and elsewhere in the registration statement in reliance on the report of March 28, 2012, given their authority as experts in accounting and auditing.

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES

 

The Company’s certificate of incorporation includes an indemnification provision that provides that the Company shall indemnify directors against monetary damages to the Company or any of its shareholders or others by reason of a breach of the director’s fiduciary duty or otherwise, except under certain limited circumstances.

 

35
 

 

The certificate of incorporation does not specifically indemnify the officers or directors or controlling persons against liability under the Securities Act. However, the indemnification provided in the certificate of incorporation is broad and should be considered to be of a broad scope and wide extent.

 

The Securities and Exchange Commission’s position on indemnification of officers, directors and control persons under the Securities Act by the Company is as follows:

 

INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF THE SMALL BUSINESS ISSUER PURSUANT TO THE RULES OF THE COMMISSION, OR OTHERWISE, THE SMALL BUSINESS ISSUER HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS, THEREFORE, UNENFORCEABLE.

 

36
 

 

FINANCIAL STATEMENTS

 

 

FIRST RATE STAFFING, INC.

 

FINANCIAL STATEMENTS

 

June 30, 2012 and 2011

 

37
 

 

INDEX TO FINANCIAL STATEMENTS

 

Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011   2
     
Statements of Operations for the Three and Six Months Period Ended June 30, 2012 and 2011 (unaudited)   3
     
Statements of Changes in Shareholders’ Deficit for the Period from December 31, 2010 to June 30, 2012 (unaudited)   4
     
Statements of Cash Flows for the Six Months Period Ended June 30, 2012 and 2011 (unaudited)   5
     
Notes to Financial Statements (unaudited)   6-12

 

 
 

 

 
FIRST RATE STAFFING, INC.
BALANCE SHEETS
 

 

   June 30, 2012   December 31, 2011 
   (unaudited)     
         
ASSETS          
           
Current Assets          
Cash  $17,175   $116 
Accounts receivables, net   24,848    7,397 
Total current assets   42,023    7,513 
           
Deposits and other assets   23,170    9,692 
           
Total Assets  $65,193   $17,205 
           
LIABILITIES AND SHAREHOLDERS' DEFICIT          
           
Current Liabilities          
Bank overdraft  $542   $456 
Accounts payable   3,889    3,662 
Due to affiliate company   53,580    23,198 
Other current liabilities   2,395    265 
Total current liabilities   60,406    27,581 
Note payable - related party   31,200    - 
Total Liabilities   91,606    27,581 
           
Shareholders' Deficit          
Common stock; $0.001 par value; 75,000,000 shares authorized,          
Zero shares issued and outstanding   -    - 
Additional paid-in capital   47,508    47,508 
Accumulated deficit   (73,921)   (57,884)
Total Shareholders' Deficit   (26,413)   (10,376)
           
Total Liabilities and Shareholders' Deficit  $65,193   $17,205 

 

Page 2The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF OPERATIONS
(unaudited)
 

 

   For the Six Months Ended   For the Six Months Ended 
   June 30, 2012   June 30, 2011 
         
Revenues  $825,769   $763,892 
Cost of revenues   (729,893)   (680,462)
Gross profit   95,876    83,430 
           
Operating expenses   111,896    78,560 
Income (loss) from operations   (16,020)   4,870 
           
Other expenses:          
Interest expense, net   17    89 
Other expense   -    - 
    17    89 
           
Income (loss) before income tax   (16,037)   4,781 
           
Income tax expense   -    - 
           
Net income (loss)  $(16,037)  $4,781 

 

Page 3The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
 

 

           Additional       Total 
   Common Stock   Paid-In   Accumulated   Shareholders' 
   Shares   Amount   Capital   Deficit   Deficit 
                     
Balance, December 31, 2010   -   $-   $40,670   $(15,681)  $24,989 
                          
Proceeds from shareholders   -    -    6,838    -    6,838 
Net loss   -    -    -    (42,203)   (42,203)
                          
Balance, December 31, 2011   -    -    47,508    (57,884)   (10,376)
                          
Net loss   -    -    -    (16,037)   (16,037)
                          
Balance, June 30 2012 (unaudited)   -   $-   $47,508   $(73,921)  $(26,413)

 

Page 4The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
 

 

   For the Six Months Ended   For the Six Months Ended 
   June 30, 2012   June 30, 2011 
         
Operating Activities:          
Net income (loss)  $(16,037)  $4,781 
Changes in operating assets and liabilities:          
Accounts receivable   (17,451)   (2,753)
Accounts payable   227    (2,677)
Due to affiliate company   30,382    - 
Other current liabilities   2,130    17,651 
Deposits and other assets   (13,478)     
Net cash provided by (used in) operating activities   (14,227)   17,002 
           
Financing Activities:          
Changes in bank overdraft   86    (1,504)
Proceeds from note payables   31,200    - 
Proceeds from shareholders   -    1,952 
Net cash provided by financing activities   31,286    448 
           
Net change in cash   17,059    17,450 
Cash, beginning of period   116    10,340 
Cash, end of period  $17,175   $27,790 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $19   $90 
Cash paid for taxes  $190   $- 

 

Page 5The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

1. ORGANIZATION

 

First Rate Staffing, Inc. (the “Company”), was incorporated on March 24, 2010 in Nevada as a C-Corporation, and is registered to do business in Arizona. The Company provides recruiting and staffing services for temporary positions for light industrial, distribution centers, assembly, and clerical to its clients in Arizona, with an option for the clients and candidates to choose the most beneficial working arrangements.

 

2. BASIS OF PRESENTATION

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The results of the six month periods ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America in all material respects, and have been consistently applied in preparing the accompanying financial statements.

 

Use of Estimates

 

In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of June 30, 2012 and December 31, 2011. Under the terms of the Company’s bank agreements, outstanding checks in excess of the cash balances in the Company’s primary disbursement accounts create a bank overdraft liability. Bank overdrafts were $542 and $456 at June 30, 2012 and December 31, 2011.

 

Page 6The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

Accounts Receivable and Factoring

 

Accounts receivable billed are carried at original amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The allowance for doubtful accounts as of June 30, 2012 and December 31, 2011 were zero.

 

The Company entered into an accounts receivable factoring arrangement with a non-related third party financial institution (the "Factor"). Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall then remit 90% of the accounts receivable balance to the Company, with the remaining balance, less fees to be forwarded to the Company once the Factor collects the full accounts receivable balance from the customer. An administrative fee of 1.65% is charged on the gross amount of accounts receivables assigned to Factor, plus interest to be calculated at 0.075% per day on late invoices. The total amount of accounts receivables factored was $247,417 and $64,614 at June 30, 2012 and December 31, 2011, respectively.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments include cash, accounts receivable, and accounts payable. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments.

 

Management believes it is not practical to estimate the fair value of due to shareholders because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. Historically, the Company has not experienced any losses on deposits.

 

Page 7The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

The Company’s policy is to maintain an allowance for doubtful accounts, if any, for estimated losses resulting from the inability of its customer to pay. However, if the financial condition of the Company’s customers were to deteriorate rapidly, resulting in nonpayment, the Company could be required to provide for additional allowances, which would decrease operating results in the period that such determination was made.

 

Revenue Recognition

 

The Company’s revenue is derived from providing temporary staffing services to its clients. The Company records its transactions under the accrual method of accounting whereby revenue is recognized on arrangements in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. For the six months period ended June 30, 2012 and 2011, the Company generated revenue of $825,769 and $763,892, respectively.

 

Cost of Revenue

 

Cost of revenue consists of wages, related payroll taxes, workers compensation, and employee benefits of the Company’s employees while they work on contract assignment as temporary staff of the Company’s customers.

 

Income Taxes

 

As a result of the implementation of certain provisions of ASC 740, Income Taxes, (formerly FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109), (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.

 

In 2010, the Company adopted Accounting for Uncertain Income Taxes under the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not recognize any additional liability for unrecognized tax benefits as a result of the adoption of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

 

Page 8The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position.  Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740.  In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740.  Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Our tax provision determined using an estimate of our annual effective tax rate using enacted tax rates expected to apply to taxable income in the years in which they are earned, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Income taxes payable as of June 30, 2012 and December 31, 2011 was zero.

 

Recent Accounting Pronouncements

 

Adopted

 

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The adoption of this accounting standard did not have a material impact on our financial statements and related disclosures.

 

Not Adopted

 

In December 2011, the FASB issued ASU No. 2011-11: Balance Sheet (topic 210): Disclosures about Offsetting Assets and Liabilities, which requires new disclosure requirements mandating that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. This ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. We are currently evaluating the impact of adopting ASU 2011-11 on the consolidated financial statements.

 

Page 9The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

4. GOING CONCERN

 

The Company has sustained operating losses of $73,921 since inception. The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional financing from its shareholders and / or other third parties. In order to address the need to satisfy its continuing obligations and realize its long term strategy, management’s plans include continuing to fund operations with cash received from financing activities. Further, the Company currently plans to start the process to become a public company in the United States to increase its visibility to potential investors.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

5. ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable consists of the following as of:

 

   June 30, 2012   December 31, 2011 
Account receivable  $247,417   $64,614 
Factor reserve at 10%   24,848    7,397 
    272,265    72,011 
Less: factored accounts receivable   (247,417)   (64,614)
    24,848    7,397 
Allowance for doubtful accounts   -    - 
   $24,848   $7,397 

 

6. SHAREHOLDERS’ EQUITY

 

During the six months period ended June 30, 2012 and 2011, the Company had received capital injections from officers in the amount of $0 and $2,200, respectively.

 

As of June 30, 2012 and December 31, 2011, the Company has 75,000,000 shares of common stock authorized, $0.001 par value per share, and no share issued and outstanding.

 

Page 10The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

7. RELATED PARTY

 

From time to time, the Company advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate Staffing, Inc., for working capital needs. As of June 30, 2012 and December 31, 2011, the amount due to the affiliate company is $53,580 and $23,198, respectively.

 

In the first half of 2012, the Company obtained unsecured promissory notes from a related party in the amount of $31,200. These notes are due within three year and carry annual interest rate fixed at 6%. For the six months period ended June 30, 2012 and 2011, interest expense was $19 and $0, respectively. During the reporting period, there were no financial covenant requirements under the note facilities granted to the Company.

 

8. INCOME TAXES

 

The Company accounts for income taxes in accordance with the "liability" method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.

 

This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.

 

Due to the existence of a full valuation allowance against deferred tax assets, future changes in our unrecognized tax benefits will not impact the Company’s effective tax rate.

 

As a corporation, the Company is primarily subject to U.S. federal and state income tax. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2012 and December 31, 2011, the Company had no accruals for interest or penalties related to income tax matters.

 

The components of the provision for income taxes are summarized as follows:

 

   For the Six Months Ended 
   June 30, 2012   June 30, 2011 
Current tax provision  $-   $- 
Deferred tax provision   -    - 
   $-   $- 

 

Page 11The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

The following reconciles income taxes reported in the financial statements to taxes that would be obtained by applying regular tax rates to income before taxes:

 

   June 30, 2012   December 31, 2011 
Expected tax benefit using regular rates  $-   $(16,863)
Valuation allowance   -    16,863 
   $-   $- 

 

9. CONTINGENCIES

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

10. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through September 30, 2012, the date upon which the financial statements were issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require disclosure through the date that these financial statements were issued.

 

Page 12The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, LLC

 

FINANCIAL STATEMENTS

 

June 30, 2012 and 2011

 

 
 

 

INDEX TO FINANCIAL STATEMENTS

 

Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011 2
   
Statements of Operations for the Three and Six Months Period Ended June 30, 2012 and 2011 (unaudited) 3
   
Statements of Changes in Members’ Equity for the Period from December 31, 2010 to June 30, 2012 (unaudited) 4
   
Statements of Cash Flows for the Six Months Period Ended June 30, 2012 and 2011 (unaudited) 5
   
Notes to Financial Statements (unaudited) 6-10

  

 
 

 

 
FIRST RATE STAFFING, LLC
BALANCE SHEETS
 

 

   June 30, 2012   December 31, 2011 
   (unaudited)     
ASSETS          
           
Current Assets          
Cash  $33,126   $11,796 
Accounts receivables, net   56,124    56,562 
Due from affiliate company   53,580    23,198 
Prepaid expense   24,942    - 
Total current assets   167,772    91,556 
           
Deposits and other assets   86,523    32,691 
           
Total Assets  $254,295   $124,247 
           
LIABILITIES AND MEMBERS' EQUITY          
           
Current Liabilities          
Bank overdraft  $-   $13,468 
Accounts payable   46,423    4,800 
Other current liabilities   7,262    3,100 
Total current liabilities   53,685    21,368 
Note payable - related party   204,826    - 
Total Liabilities   258,511    21,368 
           
Members' Equity          
Members' contributions   14,345    24,255 
Retained earnings   (18,561)   78,624 
Total Members' Equity   (4,216)   102,879 
           
Total Liabilities and Members' Equity  $254,295   $124,247 

 

Page 2The accompanying notes are an integral part of these financial statements.
 
 
 
FIRST RATE STAFFING, LLC
STATEMENTS OF OPERATIONS
(unaudited)
 

 

   For the Six Months Ended   For the Six Months Ended 
   June 30, 2012   June 30, 2011 
         
Revenues  $2,489,976   $2,163,448 
Cost of revenues   (2,288,679)   (1,887,132)
Gross profit   201,297    276,316 
           
Operating expenses   297,148    253,297 
Income (loss) from operations   (95,851)   23,019 
           
Interest expense, net   1,334    54 
           
Income (loss) before income tax   (97,185)   22,965 
           
Income tax provision   -    - 
           
Net income (loss)  $(97,185)  $22,965 

 

Page 3The accompanying notes are an integral part of these financial statements.
 
 
 
FIRST RATE STAFFING, LLC
STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
 

 

   Members'       Total Members' 
   Interests   Retained Earnings   Equity 
             
Balance, December 31, 2010  $27,992   $15,106   $43,098 
                
Contributions   492,867    -    492,867 
Distributions   (496,604)   -    (496,604)
Net income   -    63,518    63,518 
                
Balance, December 31, 2011   24,255    78,624    102,879 
                
Contributions   147,590    -    147,590 
Distributions   (157,500)   -    (157,500)
Net loss   -    (97,185)   (97,185)
                
Balance, June 30, 2012 (unaudited)  $14,345   $(18,561)  $(4,216)

 

Page 4The accompanying notes are an integral part of these financial statements.
 
 
 
FIRST RATE STAFFING, LLC
STATEMENTS OF CASH FLOWS
(unaudited)
 

 

   For the Six Months Ended   For the Six Months Ended 
   June 30, 2012   June 30, 2011 
           
Operating Activities:          
Net income (loss)  $(97,185)  $15,988 
Adjustments to reconcile net loss to net cash used in operating activities:          
Provision for doubtful accounts   -    9,951 
Changes in operating assets and liabilities:          
Accounts receivable   438    (22,816)
Due from affiliate company   (30,382)   - 
Prepaid expense   (24,942)   30,524 
Accounts payable   41,623    (1,820)
Other current liabilities   4,162    37,135 
Deposits and other assets   (53,832)   (34,274)
Net cash (used in) provided by operating activities   (160,118)   34,688 
           
Financing Activities:          
Changes in bank overdraft   (13,468)   (4,072)
Proceeds from note payable - related party   204,826    - 
Contributions from members   147,590    66,500 
Distributions to members   (157,500)   (62,700)
Net cash provided by (used in) financing activities   181,448    (272)
           
Net change in cash   21,330    34,416 
Cash, beginning of period   11,796    2,310 
Cash, end of period  $33,126   $36,726 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $1,337   $54 
Cash paid for taxes  $-   $- 

 

Page 5The accompanying notes are an integral part of these financial statements.
 
 
 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

1. ORGANIZATION

 

First Rate Staffing, LLC (the “Company”), was formed on April 2, 2010 as a limited liability company in California. The Company provides recruiting and staffing services for temporary positions for light industrial, distribution centers, assembly, and clerical to its clients in California, with an option for the clients and candidates to choose the most beneficial working arrangements.

 

2. BASIS OF PRESENTATION

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The results of the six month periods ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America in all material respects, and have been consistently applied in preparing the accompanying financial statements.

 

Use of Estimates

 

In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Page 6The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

Cash and Cash Equivalents

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of June 30, 2012 and December 31, 2010. Under the terms of the Company’s bank agreements, outstanding checks in excess of the cash balances in the Company’s primary disbursement accounts create a bank overdraft liability. Bank overdrafts were $0 and $13,468 at June 30, 2012 and December 31, 2011, respectively.

 

Accounts Receivable and Factoring

 

Accounts receivable billed are carried at original amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The allowance for doubtful accounts as of June 30, 2012 and December 31, 2011 are $29,824.

 

The Company entered into an accounts receivable factoring arrangement with a non-related third party financial institution (the "Factor"). Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall then remit 90% of the accounts receivable balance to the Company, with the remaining balance, less fees to be forwarded to the Company once the Factor collects the full accounts receivable balance from the customer. An administrative fee of 1.65% is charged on the gross amount of accounts receivables assigned to Factor, plus interest to be calculated at 0.075% per day on late invoices. The total amount of accounts receivables factored was $482,734 and $506,718 at June 30, 2012 and December 31, 2011, respectively.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments include cash, accounts receivable, and accounts payable. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments.

 

Management believes it is not practical to estimate the fair value of due to shareholders because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. Historically, the Company has not experienced any losses on deposits.

 

Page 7The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

The Company’s policy is to maintain an allowance for doubtful accounts, if any, for estimated losses resulting from the inability of its customer to pay. However, if the financial condition of the Company’s customers were to deteriorate rapidly, resulting in nonpayment, the Company could be required to provide for additional allowances, which would decrease operating results in the period that such determination was made.

 

Revenue Recognition

 

The Company’s revenue is derived from providing temporary staffing services to its clients. The Company records its transactions under the accrual method of accounting whereby revenue is recognized on arrangements in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. For the six months period ended June 30, 2012 and 2011, the Company has generated revenue of $2,489,976 and $2,163,448, respectively.

 

Cost of Revenue

 

Cost of revenue consists of wages, related payroll taxes, workers compensation, and employee benefits of the Company’s employees while they work on contract assignment as temporary staff of the Company’s customers.

 

Members’ Equity, Personal Assets and Income Taxes

 

Net income, loss, capital gains and cash distributions pertaining to the Company are allocated to its members in accordance with the provisions of the Company’s operating agreements. The operating agreements provide that all items of net income, loss, capital gain and cash distributions be allocated among the members based upon their respective percentage interest. There is only one class of members’ interest, whose rights are governed and set forth in the operating agreements.

 

In accordance with the generally accepted method of presenting limited liability company financial statements, the financial statements do not include the personal assets and liabilities of the members, including their obligation for income taxes on their distributive shares of net income of the LLCs, or any provision for federal income taxes.

 

The Company is taxed as a limited liability company (“LLC”) under the provisions of federal and state tax codes. Under federal laws, taxes based on income of a limited liability company are payable by the LLC members individually. Accordingly, no provision for federal income taxes has been made in the accompanying consolidated financial statements. A provision for California franchise tax has been recorded in costs and expenses in the accompanying financial statements at a statutory amount based on gross receipts under California laws.

 

Page 8The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

Recent Accounting Pronouncements

 

Adopted

 

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The adoption of this accounting standard did not have a material impact on our financial statements and related disclosures.

 

Not Adopted

 

In December 2011, the FASB issued ASU No. 2011-11: Balance Sheet (topic 210): Disclosures about Offsetting Assets and Liabilities, which requires new disclosure requirements mandating that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. This ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. We are currently evaluating the impact of adopting ASU 2011-11 on the consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

Page 9The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
(unaudited)
 

 

4. ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable consists of the following as of:

 

   June 30, 2012   December 31, 2011 
Account receivable  $488,327   $506,718 
Factor reserve at 10%   49,013    60,457 
Chargebacks   31,342    25,929 
    568,682    593,104 
Less: factored accounts receivable   (482,734)   (506,718)
    85,948    86,386 
Allowance for doubtful accounts   (29,824)   (29,824)
   $56,124   $56,562 

 

5. RELATED PARTY

 

From time to time, the Company advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate Staffing, LLC for working capital needs. As of June 30, 2012 and December 31, 2011, the amount due from the affiliate company is $53,580 and $23,198, respectively.

 

In the first half of 2012, the Company obtained unsecured promissory notes from a related party in the amount of $204,826. These notes are due within three year and carry annual interest rate fixed at 6%. For the six months period ended June 30, 2012 and 2011, interest expense was $1,337 and $0, respectively. During the reporting period, there were no financial covenant requirements under the note facilities granted to the Company.

 

6. CONTINGENCIES

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

7. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through September 30, 2012, the date upon which the financial statements were issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require disclosure through the date that these financial statements were issued.

 

Page 10The accompanying notes are an integral part of these financial statements.
 

  

FIRST RATE STAFFING, INC.

 

FINANCIAL STATEMENTS

 

December 31, 2011 and 2010

 

 
 

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm 1
   
Balance Sheets as of December 31, 2011 and 2010 2
   
Statements of Operations for the Year Ended December 31, 2011 and for the Period from March 24, 2010 (Inception) to December 31, 2010 3
   
Statements of Changes in Stockholders’ Equity (Deficit) for the Period from March 24, 2010 (Inception) to December 31, 2011 4
   
Statements of Cash Flows for the Year Ended December 31, 2011 and for the Period from March 24, 2010 (Inception) to December 31, 2010 5
   
Notes to Financial Statements 6-12

 

 
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Shareholders of

First Rate Staffing, Inc.:

 

We have audited the accompanying balance sheets of First Rate Staffing, Inc. (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, changes in shareholders’ equity (deficit), and cash flows for the year ended December 31, 2011 and the period from March 24, 2010 (Inception) through December 31, 2010. 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 audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to the above present fairly, in all material respects, the financial position of First Rate Staffing, Inc. as of December 31, 2011 and 2010, and the results of its operations and cash flows for the year ended December 31, 2011 and the period from March 24, 2010 (Inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has incurred an accumulated deficit of $57,884 from inception to December 31, 2011. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Anton & Chia, LLP

Newport Beach, California

June 25, 2012

 

 
 

 

 
FIRST RATE STAFFING, INC.
BALANCE SHEETS
 

 

   December 31, 2011   December 31, 2010 
         
ASSETS          
           
Current Assets          
Cash  $116   $10,340 
Accounts receivables, net   7,397    12,579 
Total current assets   7,513    22,919 
           
Deposits and other assets   9,692    9,692 
           
Total Assets  $17,205   $32,611 
           
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)          
           
Current Liabilities          
Bank overdraft  $456   $1,504 
Accounts payable   3,662    3,662 
Due to affiliate company   23,198    - 
Other current liabilities   265    2,456 
Total current liabilities   27,581    7,622 
Total Liabilities   27,581    7,622 
           
Shareholders' Equity (Deficit)          
Common stock; $0.001 par value; 75,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2011 and 2010   -    - 
Additional paid-in capital   47,508    40,670 
Accumulated deficit   (57,884)   (15,681)
Total Shareholders' Equity (Deficit)   (10,376)   24,989 
           
Total Liabilities and Shareholders' Equity (Deficit)  $17,205   $32,611 

 

Page 2The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF OPERATIONS
 

 

       From March 24, 2010 
   For the year ended   (Inception) to 
   December 31, 2011   December 31, 2010 
         
Revenues  $1,324,497   $685,346 
Cost of revenues   (1,177,761)   (616,188)
Gross profit   146,736    69,158 
           
Operating expenses   171,963    77,321 
Loss from operations   (25,227)   (8,163)
           
Other income (expenses):          
Interest expense   (17,131)   (7,518)
Other income   200    - 
    (16,931)   (7,518)
Loss before income tax   (42,158)   (15,681)
           
Income tax expense   45    - 
           
Net loss  $(42,203)  $(15,681)

 

Page 3The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the period from March 24, 2010 (Inception) to December 31, 2011
 

 

           Additional       Total 
   Common Stock   Paid-In   Accumulated   Shareholders' 
   Shares   Amount   Capital   Deficit   Equity (Deficit) 
                     
Balance, March 24, 2010 (Inception)   -   $-   $-   $-   $- 
                          
Proceeds from shareholders   -    -    40,670    -    40,670 
Net loss   -    -    -    (15,681)   (15,681)
                          
Balance, December 31, 2010   -    -    40,670    (15,681)   24,989 
                          
Proceeds from shareholders   -    -    6,838    -    6,838 
Net loss   -    -    -    (42,203)   (42,203)
                          
Balance, December 31, 2011   -   $-   $47,508   $(57,884)  $(10,376)

 

Page 4The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, INC.
STATEMENTS OF CASH FLOWS
 

 

       From March 24, 2010 
   For the year ended   (Inception) to 
   December 31, 2011   December 31, 2010 
         
Operating Activities:          
Net loss  $(42,203)  $(15,681)
Changes in operating assets and liabilities:          
Accounts receivable   5,182    (12,579)
Deposits and other assets   -    (9,692)
Accounts payable   (2,191)   3,662 
Due to affiliate company   23,198    - 
Other current liabilities   -    2,456 
Net cash used in operating activities   (16,014)   (31,834)
           
Financing Activities:          
Changes in bank overdraft   (1,048)   1,504 
Proceeds from shareholders   6,838    40,670 
Net cash provided by financing activities   5,790    42,174 
           
Net change in cash   (10,224)   10,340 
Cash, beginning of period   10,340    - 
Cash, end of period  $116   $10,340 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $17,131   $7,518 
Cash paid for taxes  $45   $- 

 

Page 5The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

1. ORGANIZATION

 

First Rate Staffing, Inc. (the “Company”), was incorporated on March 24, 2010 in Nevada as a C-Corporation, and is registered to do business in Arizona. The Company provides recruiting and staffing services for temporary positions for light industrial, distribution centers, assembly, and clerical to its clients in Arizona, with an option for the clients and candidates to choose the most beneficial working arrangements.

 

2. BASIS OF PRESENTATION

 

The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements.

 

Use of Estimates

 

In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2011 and 2010. Under the terms of the Company’s bank agreements, outstanding checks in excess of the cash balances in the Company’s primary disbursement accounts create a bank overdraft liability. Bank overdrafts were $456 and $1,504 at December 31, 2011 and 2010.

 

Page 6The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Accounts Receivable and Factoring

 

Accounts receivable billed are carried at original amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The allowance for doubtful accounts as of December 31, 2011 and 2010 are zero.

 

The Company entered into an accounts receivable factoring arrangement with a non-related third party financial institution (the "Factor"). Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall then remit 90% of the accounts receivable balance to the Company, with the remaining balance, less fees to be forwarded to the Company once the Factor collects the full accounts receivable balance from the customer. An administrative fee of 1.65% is charged on the gross amount of Accounts Receivables assigned to Factor, plus interest to be calculated at 0.075% per day on late invoices. The total amount of accounts receivables factored was $64,614 and $70,842 at December 31, 2011 and 2010, respectively.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments include cash, accounts receivable, and accounts payable. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments.

 

Management believes it is not practical to estimate the fair value of due to shareholders because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. Historically, the Company has not experienced any losses on deposits.

 

Page 7The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The Company’s policy is to maintain an allowance for doubtful accounts, if any, for estimated losses resulting from the inability of its customer to pay. However, if the financial condition of the Company’s customers were to deteriorate rapidly, resulting in nonpayment, the Company could be required to provide for additional allowances, which would decrease operating results in the period that such determination was made.

 

Revenue Recognition

 

The Company’s revenue is derived from providing temporary staffing services to its clients. The Company records its transactions under the accrual method of accounting whereby revenue is recognized on arrangements in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. For the year ended December 31, 2011 and the period from March 24, 2010 (Inception) to December 31, 2010, the Company generated revenue of $1,324,497 and $685,346, respectively.

 

Cost of Revenue

 

Cost of revenue consists of wages, related payroll taxes, workers compensation, and employee benefits of the Company’s employees while they work on contract assignment as temporary staff of the Company’s customers.

 

Income Taxes

 

As a result of the implementation of certain provisions of ASC 740, Income Taxes, (formerly FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109), (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.

 

In 2010, the Company adopted Accounting for Uncertain Income Taxes under the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not recognize any additional liability for unrecognized tax benefits as a result of the adoption of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

 

Page 8The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position.  Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740.  In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740.  Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Our tax provision determined using an estimate of our annual effective tax rate using enacted tax rates expected to apply to taxable income in the years in which they are earned, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Income taxes payable as of December 31, 2011 and 2010 was zero.

 

Recent Accounting Pronouncements

 

In January 2010, the FASB issued amended standards that require additional fair value disclosures. These disclosure requirements are effective in two phases. In the first quarter of 2010, we adopted the requirements for disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers. Beginning in the first quarter of 2011, these amended standards will require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3). These amended standards do not have a material impact on our financial statements or disclosures.

 

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of this accounting guidance to have a material impact on its financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

4. GOING CONCERN

 

The Company has sustained operating losses of $57,884 since inception. The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional financing from its shareholders and / or other third parties.

 

Page 9The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

4. GOING CONCERN (CONTINUED)

 

In order to address the need to satisfy its continuing obligations and realize its long term strategy, management’s plans include continuing to fund operations with cash received from financing activities. Further, the Company currently plans to start the process to become a public company in the United States to increase its visibility to potential investors.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

5. ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable consists of the following as of:

 

   December 31 
   2011   2010 
Account receivable  $64,614   $70,842 
Factor reserve at 10%   7,397    12,579 
    72,011    83,421 
Less: factored accounts receivable   (64,614)   (70,842)
    7,397    12,579 
Allowance for doubtful accounts   -    - 
   $7,397   $12,579 

 

6. SHAREHOLDERS’ EQUITY

 

During the year ended December 31, 2011 and the period from March 24, 2010 (Inception) to December 31, 2010, the Company had received capital injections from shareholders in the amount of $6,838 and $40,670, respectively.

 

As of December 31, 2011 and 2010, the Company has 75,000,000 shares of common stock authorized, $0.001 par value per share, and no share issued and outstanding.

 

7. RELATED PARTY

 

From time to time, the Company advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate Staffing, Inc., for working capital needs. As of December 31, 2011 and 2010, the amount due to the affiliate company is $23,198 and $0, respectively.

 

Page 10The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

8. INCOME TAXES

 

The Company accounts for income taxes in accordance with the "liability" method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.

 

Due to the existence of a full valuation allowance against deferred tax assets, future changes in our unrecognized tax benefits will not impact the Company’s effective tax rate.

 

As a corporation, the Company is primarily subject to U.S. federal and state income tax. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2011 and 2010, the Company had no accruals for interest or penalties related to income tax matters.

 

The components of the provision for income taxes are summarized as follows:

 

       For the period from March 
   For the year ended   24, 2010 (Inception) to 
   December 31, 2011   December 31, 2010 
Current tax provision  $45   $- 
Deferred tax provision   -    - 
   $45   $- 

 

The following reconciles income taxes reported in the financial statements to taxes that would be obtained by applying regular tax rates to income before taxes:

 

   December 31 
   2011   2010 
Expected tax benefit using regular rates  $16,863   $6,272 
Valuation allowance   (16,863)   (6,272)
   $-   $- 

 

8. CONTINGENCIES

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

Page 11The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, INC.
NOTES TO FINANCIAL STATEMENTS
 

 

9. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through June 25, 2012, the date upon which the financial statements were issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require disclosure through the date that these financial statements were issued.

 

Page 12The accompanying notes are an integral part of these financial statements.
 

 

FIRST RATE STAFFING, LLC

 

FINANCIAL STATEMENTS

 

December 31, 2011 and 2010

 

 
 

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm 1
   
Balance Sheets as of December 31, 2011 and 2010 2
   
Statements of Operations for the Year Ended December 31, 2011 and for the Period from April 2, 2010 (Inception) to December 31, 2010 3
   
Statements of Changes in Members’ Equity for the Period from April 2, 2010 (Inception) to December 31, 2011 4
   
Statements of Cash Flows for the Year Ended December 31, 2011 and for the Period from April 2, 2010 (Inception) to December 31, 2010 5
   
Notes to Financial Statements 6-10

 

 
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Members of

First Rate Staffing, LLC:

 

We have audited the accompanying balance sheets of First Rate Staffing, LLC (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, changes in members’ equity, and cash flows for the year ended December 31, 2011 and the period from April 2, 2010 (Inception) through December 31, 2010. 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 audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to the above present fairly, in all material respects, the financial position of First Rate Staffing, LLC as of December 31, 2011 and 2010, and the results of its operations and cash flows for the year ended December 31, 2011 and the period from April 2, 2010 (Inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Anton & Chia, LLP

Newport Beach, California

June 25, 2012

 

 
 

 

 
FIRST RATE STAFFING, LLC
BALANCE SHEETS
 

 

   December 31, 2011   December 31, 2010 
ASSETS          
           
Current Assets          
Cash  $11,796   $2,310 
Accounts receivables, net   56,562    36,037 
Due from affiliate company   23,198    - 
Prepaid expense   -    30,524 
Total current assets   91,556    68,871 
           
Deposits and other assets   32,691    1,431 
           
Total Assets  $124,247   $70,302 
           
LIABILITIES AND MEMBERS' EQUITY          
           
Current Liabilities          
Bank overdraft  $13,468   $9,398 
Accounts payable   4,800    5,060 
Other current liabilities   3,100    5,946 
Tax payable   -    6,800 
Total current liabilities   21,368    27,204 
Total Liabilities   21,368    27,204 
           
Members' Equity          
Members' contributions   24,255    27,992 
Retained earnings   78,624    15,106 
Total Members' Equity   102,879    43,098 
           
Total Liabilities and Members' Equity  $124,247   $70,302 

 

Page 2The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
STATEMENTS OF OPERATIONS
 

 

       From April 2, 2010 
   For the year ended   (Inception) to 
   December 31, 2011   December 31, 2010 
           
Revenues  $4,774,545   $1,813,577 
Cost of revenues   (4,356,262)   (1,677,495)
Gross profit   418,283    136,082 
           
Operating expenses   297,500    96,787 
Income from operations   120,783    39,295 
           
Other expenses:          
Interest expense, net   (50,164)   (17,389)
Other expense, net   (301)   - 
    (50,465)   (17,389)
           
Income before income tax   70,318    21,906 
           
Income tax expense   6,800    6,800 
           
Net income  $63,518   $15,106 

 

Page 3The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
 

 

   Members       Total Members' 
   Interests   Retained Earnings   Equity 
             
Balance, April 2, 2010 (Inception)  $-   $-   $- 
                
Contributions   52,325    -    52,325 
Distributions   (24,333)   -    (24,333)
Net income   -    15,106    15,106 
                
Balance, December 31, 2010   27,992    15,106    43,098 
                
Contributions   492,867    -    492,867 
Distributions   (496,604)   -    (496,604)
Net income   -    63,518    63,518 
                
Balance, December 31, 2011  $24,255   $78,624   $102,879 

  

Page 4The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
STATEMENTS OF CASH FLOWS
 

 

       From April 2, 2010 
   For the year ended   (Inception) to 
   December 31, 2011   December 31, 2010 
           
Operating Activities:          
Net income  $63,518   $15,106 
Adjustments to reconcile net income to net cash used by operating activities:          
Provision for doubtful accounts receivable   29,824    - 
Changes in operating assets and liabilities:          
Accounts receivable   (50,349)   (36,037)
Due from affiliate company   (23,198)   - 
Prepaid expense   30,524    (30,524)
Accounts payable   (260)   5,060 
Other current liabilities   (2,846)   5,946 
Tax payable   (6,800)   6,800 
Deposits and other assets   (31,260)   (1,431)
Net cash provided by (used in) operating activities   9,153    (35,080)
           
Financing Activities:          
Changes in bank overdraft   4,070    9,398 
Contributions from members   492,867    52,325 
Distributions to members   (496,604)   (24,333)
Net cash provided by financing activities   333    37,390 
           
Net change in cash   9,486    2,310 
Cash, beginning of period   2,310    - 
Cash, end of period  $11,796   $2,310 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $50,173   $17,389 
Cash paid for taxes  $13,600   $- 

 

Page 5The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
 

 

1. ORGANIZATION

 

First Rate Staffing, LLC (the “Company”), was formed on April 2, 2010 as a limited liability company in California. The Company provides recruiting and staffing services for temporary positions for light industrial, distribution centers, assembly, and clerical to its clients in California, with an option for the clients and candidates to choose the most beneficial working arrangements.

 

2. BASIS OF PRESENTATION

 

The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements.

 

Use of Estimates

 

In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2011 and 2010. Under the terms of the Company’s bank agreements, outstanding checks in excess of the cash balances in the Company’s primary disbursement accounts create a bank overdraft liability. Bank overdrafts were $13,468 and $9,398 at December 31, 2011 and 2010, respectively.

 

Page 6The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Accounts Receivable and Factoring

 

Accounts receivable billed are carried at original amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful receivables by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The allowance for doubtful accounts as of December 31, 2011 and 2010 are $29,824 and $0, respectively.

 

The Company entered into an accounts receivable factoring arrangement with a non-related third party financial institution (the "Factor"). Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall then remit 90% of the accounts receivable balance to the Company, with the remaining balance, less fees to be forwarded to the Company once the Factor collects the full accounts receivable balance from the customer. An administrative fee of 1.65% is charged on the gross amount of Accounts Receivables assigned to Factor, plus interest to be calculated at 0.075% per day on late invoices. The total amount of accounts receivables factored was $506,718 and $355,648 at December 31, 2011 and 2010, respectively.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments include cash, accounts receivable, and accounts payable. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments.

 

Management believes it is not practical to estimate the fair value of due to shareholders because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. Historically, the Company has not experienced any losses on deposits.

 

Page 7The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The Company’s policy is to maintain an allowance for doubtful accounts, if any, for estimated losses resulting from the inability of its customer to pay. However, if the financial condition of the Company’s customers were to deteriorate rapidly, resulting in nonpayment, the Company could be required to provide for additional allowances, which would decrease operating results in the period that such determination was made.

 

Revenue Recognition

 

The Company’s revenue is derived from providing temporary staffing services to its clients. The Company records its transactions under the accrual method of accounting whereby revenue is recognized on arrangements in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. For the year ended December 31, 2011 and the period from April 2, 2010 (Inception) to December 31, 2010, the Company generated revenue of $4,774,545 and $1,813,577, respectively.

 

Cost of Revenue

 

Cost of revenue consists of wages, related payroll taxes, workers compensation, and employee benefits of the Company’s employees while they work on contract assignment as temporary staff of the Company’s customers.

 

Members’ Equity, Personal Assets and Income Taxes

 

Net income, loss, capital gains and cash distributions pertaining to the Company are allocated to its members in accordance with the provisions of the Company’s operating agreements. The operating agreements provide that all items of net income, loss, capital gain and cash distributions be allocated among the members based upon their respective percentage interest. There is only one class of members’ interest, whose rights are governed and set forth in the operating agreements.

 

In accordance with the generally accepted method of presenting limited liability company financial statements, the financial statements do not include the personal assets and liabilities of the members, including their obligation for income taxes on their distributive shares of net income of the LLCs, or any provision for federal income taxes.

 

The Company is taxed as a limited liability company (“LLC”) under the provisions of federal and state tax codes. Under federal laws, taxes based on income of a limited liability company are payable by the LLC members individually. Accordingly, no provision for federal income taxes has been made in the accompanying consolidated financial statements. A provision for California franchise tax has been recorded in costs and expenses in the accompanying financial statements at a statutory amount based on gross receipts under California laws.

 

Page 8The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Recent Accounting Pronouncements

 

In January 2010, the FASB issued amended standards that require additional fair value disclosures. These disclosure requirements are effective in two phases. In the first quarter of 2010, we adopted the requirements for disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers. Beginning in the first quarter of 2011, these amended standards will require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3). These amended standards do not have a material impact on our financial statements or disclosures.

 

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of this accounting guidance to have a material impact on its financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

4. ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable consists of the following as of:

 

   December 31 
   2011   2010 
Account receivable  $506,718   $355,648 
Factor reserve at 10%   60,457    36,037 
Chargebacks   25,929    - 
    593,104    391,685 
Less: factored accounts receivable   (506,718)   (355,648)
    86,386    36,037 
Allowance for doubtful accounts   (29,824)   - 
   $56,562   $36,037 

 

Page 9The accompanying notes are an integral part of these financial statements.
 

 

 
FIRST RATE STAFFING, LLC
NOTES TO FINANCIAL STATEMENTS
 

 

5. RELATED PARTY

 

From time to time, the Company advances amounts to, as well as receives payments from, a related party, an affiliate company under common control by the same shareholders of First Rate Staffing, LLC for working capital needs. As of December 31, 2011 and 2010, the amount due from the affiliate company is $23,198 and $0, respectively.

 

6. CONTINGENCIES

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

7. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through June 25, 2012, the date upon which the financial statements were issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require disclosure through the date that these financial statements were issued.

 

Page 10The accompanying notes are an integral part of these financial statements.
 

 

FINANCIAL STATEMENTS




Report of Independent Registered Public Accounting Firm             1

Balance Sheet as of December 31, 2011                               2

Statement of Operations for the period from April 20, 2011
 (Inception) to December 31, 2011                                   3

Statement of Changes in Stockholders' Equity for the Period
 from April 20, 2011 (Inception) to December 31, 2011               4

Statement of Cash Flows for the period from April 20, 2011
 (Inception) to December 31, 2011                                   5

Notes to Financial Statements                                      6-8



 
 

ANTON & CHIA                             CERTIFIED PUBLIC ACCOUNTANTS

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Moosewood Acquisition Corporation

We have audited the accompanying balance sheet of Moosewood
Acquisition Corporation (the "Company") as of December 31, 2011, and
the related statements of operations, stockholders' equity and cash
flows for the period from April 20, 2011 (Inception) through December
31, 2011. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company was not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of
December 31, 2011 and the results of its operations and its cash flows
for the period from April 20, 2011 (Inception) through December 31, 2011,
in conformity with accounting principles generally accepted in the United
States of America.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company has no revenues and income since
inception. Management's plans concerning these matters are also described
in Note 2, which includes the raising of additional equity financing or
merger with another entity. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ Anton & Chia LLP
Newport Beach, CA
March 28, 2012

1
 






                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                               BALANCE SHEETS
                            As of December 31, 2011


                       ASSETS


                                                    December 31,
                                                        2011
                                                 -----------------

  Current Assets
    Cash                                         $         2,000
                                                 -----------------
  TOTAL ASSETS                                   $         2,000
                                                 =================

             LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities

    Accrued liabilities                          $           400
                                                 -----------------
            Total Liabilities                    $           400
                                                 -----------------

  Stockholders' Equity
        Preferred stock, $0.0001 par value,      $            -
        20,000,000 shares authorized; none
        outstanding
    Common Stock; $0.0001 par value,                       2,000
      100,000,000 shares authorized;
      20,000,000 shares issued and
      outstanding
  Additional paid-in capital                                 943
  Accumulated deficit                                     (1,343)
                                                 -----------------
          Total Stockholders' Equity             $         1,600
                                                 -----------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $         2,000
                                                 =================


 The accompanying notes are an integral part of these financial statements

                                     
2
 




                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                         STATEMENTS OF OPERATIONS
                              For the Period
           from April 20, 2011 (Inception) to December 31, 2011

                                                  For the period from
                                                   April 20, 2011
                                                    (Inception) to
                                                      December 31,
                                                         2011
                                                 -----------------

    Operating expenses                           $          1,343
                                                 -----------------

    Net loss                                     $         (1,343)
                                                 =================


    Loss per share - basic and diluted           $         (0.00)
                                                 -----------------

    Weighted average shares-basic and diluted          20,000,000
                                                 -----------------




 The accompanying notes are an integral part of these financial statements

                                     
3
 




                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
   For the Period from April 20, 2011 (Inception) to December 31, 2011


                             Common Stock           Additional                Total
                          -----------------------   Paid-In     Accumulated   Stockholders'
                          Shares        Amount      Capital     Deficit       Equity

Balance, April 20,
  2011 (Inception)            -         $     -     $    -      $      -      $     -

Shares issued for cash    20,000,000      2,000          -             -         2,000

Additional paid-in
  capital                      -              -        943             -           943

Accumulated deficit            -              -          -        (1,343)       (1,343)
                          ==========     =======    =======     =========      =========
Balance,
 December 31, 2011        20,000,000     $ 2,000    $  943      $ (1,343)      $ 1,600
                          ==========     =======    =======     =========      =========


 The accompanying notes are an integral part of these financial statements

                                     
4
 




                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                          STATEMENT OF CASH FLOWS
                              For the Period
          from April 20, 2011 (Inception) to December 31, 2011


                                                  For the period from
                                                    April 20, 2011
                                                     (Inception) to
                                                  December 31, 2011
                                                 ------------------

CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                      $        (1,343)
                                                 ------------------

   Changes in Operating Assets and Liabilities

       Accrued liabilities                                   400
                                                 ------------------
       nET Cash Used by Operating Activities                (943)
                                                 ------------------
CASH FLOW FROM FINANCING ACTIVITIES

   Proceeds from issuance of common stock                  2,000
   Proceeds from stockholders' additional
       paid-in capital                                       943
                                                 ------------------
Net Cash Flows from Financing Activities                   2,943
                                                 ------------------
Net Increase in Cash                                       2,000

Cash at Beginning of Period                                   -
                                                 ------------------
Cash at End of Period                             $        2,000
                                                 ==================


 The accompanying notes are an integral part of these financial statements

                                     
5
 



                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                     Notes to the Financial Statements

NOTE 1   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES

NATURE OF OPERATIONS

Moosewood Acquisition Corporation ("Moosewood" or "the Company")
was incorporated on April 20, 2011 under the laws of the State of
Delaware to engage in any lawful corporate undertaking, including, but not
limited to, selected mergers and acquisitions. Moosewood has been in the
developmental stage since inception and its operations to date have been
limited to issuing shares to its original shareholders and filing this
registration statement. Moosewood will attempt to locate and negotiate
with a business entity for the combination of that target company with
Moosewood. The combination will normally take the form of a merger,
stock-for-stock exchange or stock-for-assets exchange. In most instances
the target company will wish to structure the business combination to be
within the definition of a tax-free reorganization under Section 351 or
Section 368 of the Internal Revenue Code of 1986, as amended. No
assurances can be given that Moosewood will be successful in locating or
negotiating with any target company. Moosewood has been formed to
provide a method for a foreign or domestic private company to become a
reporting company with a class of securities registered under the Securities
Exchange Act of 1934.

BASIS OF PRESENTATION

The summary of significant accounting policies presented below is
designed to assist in understanding the Company's financial statements.
Such financial statements and accompanying notes are the representations
of the Company's management, who are responsible for their integrity and
objectivity. These accounting policies conform to accounting principles
generally accepted in the United States of America ("GAAP") in all
material respects, and have been consistently applied in preparing the
accompanying financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP 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 periods.  Actual results
could differ from those estimates.

CONCENTRATION OF RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The Company
places its cash with high quality banking institutions. From time to time,
the Company maintains cash balances at certain institutions in excess of
the Federal Deposit Insurance Corporation limit.

INCOME TAXES

Under ASC 740, "Income Taxes", deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Valuation allowances are established
when it is more likely than not that some or all of the deferred tax assets
will not be realized.

                                     
6
 


                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                     Notes to the Financial Statements


NOTE 1   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
         (CONTINUED)

LOSS PER COMMON SHARE

Basic loss per common shares excludes dilution and is computed by
dividing net income by the weighted average number of common shares
outstanding during the period. Diluted loss per common share reflect the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the loss
of the entity. As of December 31, 2011 there are no outstanding dilutive
securities.

FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC 820 "Fair Value Measurements and Disclosures" establishes a
three-tier fair value hierarchy, which prioritizes the inputs in measuring
fair value. The hierarchy prioritizes the inputs into three levels based on
the extent to which inputs used in measuring fair value are observable in
the market.

These tiers include:

      Level 1: defined as observable inputs such as quoted prices in
               active markets;
     Level 2:  defined as inputs other than quoted prices in active
               markets that are either directly or indirectly observable;
               and
     Level 3:  defined as unobservable inputs in which little or no
               market data exists, therefore requiring an entity to develop
               its own assumptions.

The carrying amounts of financial assets and liabilities, such as cash and
accrued liabilities approximate their fair values because of the short
maturity of these instruments.

Note 2 - GOING CONCERN

The Company has sustained net loss of $1,343 since inception of the
Company on April 20, 2011. Additionally, the Company has accumulated
deficit of $1,343 on December 31, 2011.  The Company's continuation as
a going concern is dependent on its ability to generate sufficient cash
flows from operations to meet its obligations, which it has not been able
to accomplish to date, and /or obtain additional financing from its
stockholders and/or other third parties.

These financial statements have been prepared on a going concern basis,
which implies the Company will continue to meet its obligations and
continue its operations for the next fiscal year. The continuation of the
Company as a going concern is dependent upon financial support from its
stockholders, the ability of the Company to obtain necessary equity
financing to continue operations, successfully locating and negotiate with
a business entity for the combination of that target company with the
Company.

Tiber Creek Corporation, a company affiliated with management, will pay
all expenses incurred by the Company until a business combination is
effected, without repayment. There is no assurance that the Company
will ever be profitable. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of
liabilities that may result should the Company be unable to continue
as a going concern.

                                     
7
 



                      Moosewood Acquisition Corporation
                       (A DEVELOPMENT STAGE COMPANY)
                     Notes to the Financial Statements


NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS (ADOPTED)

In January 2010, FASB issued ASU No. 2010-01- Accounting for
Distributions to Shareholders with Components of Stock and Cash. The
amendments in this update clarify that the stock portion of a distribution
to shareholders that allows them to elect to receive cash or stock with a
potential limitation on the total amount of cash that all shareholders can
elect to receive in the aggregate is considered a share issuance that is
reflected in EPS prospectively and is not a stock dividend for purposes of
applying Topics 505 and 260 (Equity and Earnings Per Share). The
amendments in this update are effective now. The adoption of this ASU
did not have a material impact on our financial statements.

In January 2010, FASB issued ASU No. 2010-06   Improving Disclosures
about Fair Value Measurements. This update provides amendments to
Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in
and out of Levels 1 and 2.  A reporting entity should disclose separately
the amounts of significant transfers in and out of Level 1 and Level 2
fair value measurements and describe the reasons for the transfers.  2)
Activity in Level 3 fair value measurements.  In the reconciliation for
fair value measurements using significant unobservable inputs (Level 3),
a reporting entity should present separately information about purchases,
sales, issuances, and settlements (that is, on a gross basis rather than
as one net number). This update provides amendments to Subtopic 820-10
that clarifies existing disclosures as follows: 1) Level of disaggregation.
A reporting entity should provide fair value measurement disclosures for
each class of assets and liabilities. A class is often a subset of assets
or liabilities within a line item in the statement of financial position.
A reporting entity needs to use judgment in determining the appropriate
classes of assets and liabilities. 2) Disclosures about inputs and
valuation techniques. A reporting entity should provide disclosures about
the valuation techniques and inputs used to measure fair value for both
recurring and nonrecurring fair value measurements. Those disclosures
are required for fair value measurements that fall in either Level 2 or
Level 3. The new disclosures and clarifications of existing disclosures
are effective now.  The adoption of the ASU's did not have a material
impact on the financial statements.

In December 2010, the FASB issued ASU 2010-29, which contains updated
accounting guidance to clarify the acquisition date that should be used
for reporting pro forma financial information when comparative financial
statements are issued.  This update requires that a company should disclose
revenue and earnings of the combined entity as though the business
combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only.  This
update also requires disclosure of the nature and amount of material,
nonrecurring pro forma adjustments.  The adoption of this ASU did not
have a material impact on our financial statements.

In September 2011, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2011-08, "Intangibles-Goodwill and Other
(Topic 350): Testing Goodwill Impairment" which is intended to simplify
goodwill impairment testing by permitting the assessment of qualitative
factors to determine whether events and circumstances lead to the conclusion
that it is necessary to perform the traditional two-step impairment test.
Under this update, we are not required to calculate the fair value of our
reporting units unless we conclude that it is more likely than not
(likelihood of more than 50%) that the carrying value of our reporting
units is greater than the fair value of such units based on our assessment
of events and circumstances.  This update is effective for fiscal years
beginning after December 15, 2011, with early adoption permitted.  We have
adopted the provisions of this update at the beginning of our fourth
quarter.  The adoption of this provision did not have a material impact
on our financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS (NOT YET ADOPTED)

In May 2011, the FASB issued ASU 2011-04, "Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and International
Financial Reporting Standards (IFRS) of Fair Value Measurement - Topic 820."
ASU 2011-04 is intended to provide a consistent definition of fair value and
improve the comparability of fair value measurements presented and disclosed
in financial statements prepared in accordance with U.S. GAAP and IFRS.
The amendments include those that clarify the FASB's intent about the
application of existing fair value measurement and disclosure requirements,
as well as those that change a particular principle or requirement for
measuring fair value or for disclosing information about fair value
measurements.  This update is effective for annual and interim periods
beginning after December 15, 2011.  The adoptio of this ASU is not
expected to have a material impact on our financial statements.

NOTE 4   STOCKHOLDER'S EQUITY

On April 25, 2011, the Company issued 20,000,000 common shares to two
directors and officers for $2,000 in cash.

NOTE 5   SUBSEQUENT EVENTS

In preparing these financial statements, the Company has evaluated
events and transactions for potential recognition or disclosure
through March 28, 2012, the date the financial statements were issued.


8
 



PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FINANCIAL STATEMENTS

 

Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011   1
     
Statements of Operations for the Three and  Six Months Ended June 30, 2012, and the Period from April 20, 2011 (Inception) to June 30, 2012 (unaudited)   2
     
Statements of Cash Flows for the Six Months Ended June 30, 2012, and the Period from April 20, 2011 (Inception) to June 30, 2012 (unaudited)   3
     
Notes to Financial Statements (unaudited)   4-7

 

 
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

 

   June 30, 2012   December 31, 2011 
   (unaudited)     
ASSETS           
Current assets          
           
Cash  $150   $2,000 
TOTAL ASSETS  $150   $2,000 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities          
Accrued liabilities  $-   $400 
           
Total liabilities   -    400 
           
Stockholders' equity          
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding   -    - 
Common stock, $0.0001 par value, 100,000,000 shares authorized; 1,500,000 and 20,000,000 shares issued and outstanding   150    2,000 
Additional paid-in capital   2,093    943 
Accumulated deficit   (2,093)   (1,343)
           
Total stockholders' equity   150    1,600 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $150   $2,000 

 

The accompanying notes are an integral part of these financial statements

 

1
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation) 

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(unaudited)

 

             For the period from 
    For the three    For the six     April 20, 2011 
   months ended     months ended     (Inception) to June 
   June 30, 2012    June 30, 2012    30, 2012 
                  
Revenue  $-    $-    $- 
Cost of revenue   -     -     - 
Gross profit   -     -     - 
Operating expenses   -     750     2,093 
Loss before income tax   -     (750)    (2,093)
Income Taxes   -     -     - 
Net loss  $-    $(750)   $(2,093)
                  
Loss per share - basic and diluted  $-    $(0.00)      
                  
Weighted average shares - basic and diluted   16,030,220     16,030,220       

 

The accompanying notes are an integral part of these financial statements

 

2
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)  

(A DEVELOPMENT STAGE COMPANY)

Notes to the Financial Statements

(unaudited)

 

         For the period from 
   For the six     April 20,2011 
   months ended    (Inception) to 
   June 30, 2012    June 30, 2012 
CASH FLOWS FROM OPERATING ACTIVITIES           
Net loss  $(750)   $(2,093)
Changes in operating assets and liabilities           
Accrued liabilities   (400)    - 
            
Net cash used in operating activities   (1,150)    (2,093)
            
CASH FLOWS FROM FINANCING ACTIVITIES           
Proceeds from the issuance of common stock   100     2,100 
Redemption of common stock   (1950)    (1,950)
Proceeds from stockholders' additional paid-in capital   1,150     2,093 
Net cash provided by (used in) financing activities   (700)    2,243 
            
Net change in cash   (1,850)    150 
            
Cash at beginning of period   2,000     - 
            
Cash at end of period  $150    $150 

 

The accompanying notes are an integral part of these financial statements

 

3
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)  

(A DEVELOPMENT STAGE COMPANY)

Notes to the Financial Statements

(unaudited)

 

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES

 

NATURE OF OPERATIONS

 

First Rate Staffing Corporation. (“First Rate” or “the Company”), formerly known as Moosewood Acquisition Corporation ("Moosewood”) was incorporated on April 20, 2011 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has been in the developmental stage since inception and its operations to date have been limited to issuing shares to its original shareholders. The Company will attempt to locate and negotiate with a business entity for the combination of that target company with First Rate Staffing. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that Moosewood will be successful in locating or negotiating with any target company. Moosewood has been formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities to be registered under the Securities Exchange Act of 1934.

 

BASIS OF PRESENTATION

 

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011 as filed with the SEC.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with GAAP 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 periods.  Actual results could differ from those estimates.

 

CONCENTRATION OF RISK

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of June 30, 2012 and December 31, 2011.

 

INCOME TAXES

 

Under ASC 740, "Income Taxes", deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2012 and December 31, 2011, there were no deferred taxes.

 

4
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)   

(A DEVELOPMENT STAGE COMPANY)

Notes to the Financial Statements

(unaudited)

 

LOSS PER COMMON SHARE

 

Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of June 30, 2012 and December 31, 2011, there are no outstanding dilutive securities.

 

Fair Value of Financial Instruments

 

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

· Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

· Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

· Level 3 inputs are unobservable inputs for the asset or liability.

 

The carrying amounts of financial assets and liabilities, such as cash and accrued liabilities approximate their fair values because of the short maturity of these instruments.

 

NOTE 2 - GOING CONCERN

 

The Company has sustained operating losses since inception. It has an accumulated deficit of $2,093 as of June 30, 2012. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties.

 

These financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiate with a business entity for the combination of that target company with the Company.

 

5
 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)  

(A DEVELOPMENT STAGE COMPANY)

Notes to the Financial Statements

(unaudited)

 

The Company’s management plans tol pay all expenses incurred by the Company until a business combination is effected, without repayment. There is no assurance that the Company will ever be profitable. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

 

Adopted

 

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS) of Fair Value Measurement – Topic 820.” ASU 2011-04 is intended to provide a consistent definition of fair value and improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. The amendments include those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements, as well as those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. This update is effective for annual and interim periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on our financial statements.

 

Not Adopted

 

In December 2011, the FASB issued ASU No. 2011-11: Balance Sheet (topic 210): Disclosures about Offsetting Assets and Liabilities, which requires new disclosure requirements mandating that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. This ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. We are currently evaluating the impact of adopting ASU 2011-11 on the consolidated financial statements.

 

The FASB issued Accounting Standards Update (ASU) No. 2012-02—Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, on July 27, 2012, to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years starting after September 15, 2012. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2012-02 on the consolidated financial statements.

 

6
 

 

First Rate Staffing Corporation

(Formerly known as Moosewood Acquisition Corporation)  

(A DEVELOPMENT STAGE COMPANY)

Notes to the Financial Statements

(unaudited)

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

NOTE 4 – COMMON STOCK

 

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of June 30, 2012, 1,500,000 shares of common stock and no preferred stock were issued and outstanding.

 

On May 22, 2012, the shareholders of the corporation and the Board of Directors unanimously approved the change of the Registrant’s name to First Rate Staffing Corporation and filed such change with the State of Delaware.

 

On May 22, 2012, the Company redeemed an aggregate of 19,500,000 of the then 20,000,000 shares of outstanding stock at a redemption price of $0.0001 per share for an aggregate redemption price of $ 1,950.

 

On May 22, 2012, new officers and directors were appointed and elected and the prior officers and directors resigned.

 

On May 23, 2012, the Company issued 1,000,000 shares of its common stock at a par for an aggregate of $100 representing 67% of the total outstanding 1,500,000 shares of common stock.

 

7
 

 

 

PART II

 

Item 13. Other expenses of Issuance and Distribution

 

The following table sets forth the Company’s expenses in connection with this registration statement. All of the listed expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission.

 

Registration Fees  $437 
State filing fees  $  
Edgarizing fees  $  
Transfer agent fees  $  
Accounting fees  $  
Legal fees  $  
Printing  $  

 

Item 14. Indemnification of Directors and Officers

 

The Company's certificate of incorporation, by-laws and other contracts provide for indemnification of its officers, directors, agents, fiduciaries and employees. These provisions allow the Company to pay for the expenses of these persons in connection with legal proceedings brought because of the person's position with the Company. The Company does not believe that such indemnification affects the capacity of such person acting as officer, director or control person of the Company.

 

Item 15. Recent Sales of Unregistered Securities

 

The Company has issued the following securities in the last three (3) years. All such securities were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering, as noted below.

 

(1) On April 20, 2011, 10,000,000 shares of common stock were issued to Tiber Creek Corporation for total consideration paid of $1,000.00. Subsequently, in May 2012, the Company redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.00

 

On April 20, 2011, 10,000,000 shares of common stock were issued to MB Americus, LLC for total consideration paid of $1,000.00. Subsequently, in May 2012, the Company redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.00

 

(2) On March 23, 2012, 1,000,000 shares of common stock were issued by the Company to Cliff Blake pursuant to a change of control in the Company. The aggregate consideration paid for these shares was $100. 

 

(3) From July 1, 2012 through October 31, 2012, 500,000 shares of common stock were issued by the Company to the shareholders named below pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities. Each of these transactions was issued as part of the private placement of securities by the Company in which no underwriting discounts or commissions applied to any of the transactions set forth below.

 

38
 

 

Shareholder Name  Consideration   Number of Shares 
         
Teri and Daryl Baldridge  $1.39    13,888 
Sarah and Nino Barette  $1.39    13,889 
Bob Blake  $1.00    10,000 
Camille Blake  $1.00    10,000 
Katy Blake  $1.00    10,000 
Tim and Tracy Brown  $1.00    10,000 
Toni and Tammy Canzone  $1.00    10,000 
Carla Cole  $1.39    13,889 
Janet Dickenson  $1.39    13,889 
Eric Escalante  $1.39    13,889 
Spiros Galpin  $2.78    27,778 
Spiros Galpin II  $1.39    13,889 
Tanya Galpin  $1.39    13,888 
Brian Gorman  $1.39    13,889 
Randy and Vicki Haringa  $1.39    13,889 
Edward Hartely  $1.00    10,000 
Randy and Dee Haynes  $1.39    13,889 
Karl Hempel  $1.00    10,000