Attached files

file filename
EX-31.1 - EXHIBIT 31.1 - Staffing Group, Ltd.v369159_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - Staffing Group, Ltd.v369159_ex32-1.htm

 

 

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

Mark One

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

         For the quarterly period ended December 31, 2013

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to _______

 

Commission File No. 333-185083

 

 

THE STAFFING GROUP LTD. 

(Exact name of registrant as specified in its charter)

 

Nevada 7363 99-0377457

(State or jurisdiction of incorporation

or organization)

Primary Standard Industrial

Classification Code Number

IRS Employer

Identification Number

 

400 Poydras Street, Suite 1165

New Orleans, LA 70130 

(Address of principal executive offices)

 

(504) 525-7955

(Issuer’s telephone number)

 

 

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No ¨

 

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company x

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

 

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.

 

N/A

 

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.  Yes ¨   No ¨

 

Applicable Only to Corporate Registrants

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

 

   
Class Outstanding as of February 19, 2014
Common Stock, $0.001 35,100,011

 

 

 
 

 

 

THE STAFFING GROUP LTD.

 

Form 10-Q

 

     
Part 1    FINANCIAL INFORMATION  
Item 1 Financial Statements 3
     Balance Sheets 3
     Statements of Operations 4
     Statements of Cash Flows 5
     Notes to Financial Statements 6
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3.    Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 17
Part II. OTHER INFORMATION  
Item 1    Legal Proceedings 17
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3    Defaults Upon Senior Securities 17
Item 4       Submission of Matters to a Vote of Security Holders 17
Item 5   Other Information 17
Item 6       Exhibits

18

 

 

 

2
 

 

  

ITEM 1. FINANCIAL STATEMENTS

  

  

The Staffing Group Ltd.

 

(A Development Stage Company)

Balance Sheets

 

   December 31, 2013   September 30, 2013 
   (Unaudited)     
         
Assets          
Current Assets          
Cash  $-   $- 
Prepaid expenses   -    2,000 
           
Total current assets   -    2,000 
           
Total assets  $-   $2,000 
           
Liabilities and Stockholders' Deficit          
Current Liabilities          
Bank overdraft  $-   $20 
Accrued expenses   563    - 
Advances from stockholder   8,609    8,474 
           
Total current liabilities   9,172    8,494 
           
Stockholders' Deficit          
Common stock par value $0.001: 75,000,000 shares authorized; 34,000,011 shares issued and outstanding   34,000    34,000 
Additional paid-in capital   489,600    489,600 
Deficit accumulated during the development stage   (532,772)   (530,094)
           
           
Total stockholders' deficit   (9,172)   (6,494)
           
Total liabilities and stockholders' deficit  $-   $2,000 

 

See accompanying notes to the financial statements.

 

3
 

  

The Staffing Group Ltd.

 

(A Development Stage Company)

Statements of Operations

 

           For the Period from 
   For the Three Months   For the Three Months   June 11, 2012 
   Ended   Ended   (inception) through 
   December 31, 2013   December 31, 2012   December 31, 2013 
   (Unaudited)   (Unaudited)   (Unaudited) 
             
Revenue earned during the development stage  $-   $2,000   $2,000 
                
Operating Expenses               
Professional fees   2,563    4,750    32,416 
Compensation - former officer   -    -    300,000 
General and administrative expenses   115    414    2,210 
Impairment of note receivable   -    -    200,000 
                
Total operating expenses   2,678    5,164    534,626 
                
Loss from Operations   (2,678)   (3,164)   (532,626)
                
Other (Income) Expense               
Foreign exchange transaction (gain) loss   -    30    146 
                
Other (income) expense, net   -    30    146 
                
Loss before Income Tax Provision   (2,678)   (3,194)   (532,772)
                
Income Tax Provision   -    -    - 
                
Net Loss  $(2,678)  $(3,194)  $(532,772)
                
Net loss per common share               
- Basic and Diluted  $(0.00)  $(0.00)     
                
Weighted average common shares outstanding               
- Basic and Diluted   34,000,011    29,621,378      

 

See accompanying notes to the financial statements.

 

4
 

  

The Staffing Group Ltd.

 

(A Development Stage Company)

Statement of Stockholders' Equity (Deficit)

For the period from June 11, 2012 (inception) through December 31, 2013

(Unaudited)

 

   Common stock par value $0.001       Deficit Accumulated     
   Number of
Shares
   Amount   Additional Paid-in
Capital
   during the
Development Stage
   Total Stockholders'
Equity (Deficit)
 
                     
June 11, 2012 ( inception )   -   $-   $-   $-   $- 
                          
Issuance of common shares for cash upon formation   19,703,799    19,704    (16,704)        3,000 
                          
Issuance of common shares for cash in August 2012   6,305,216    6,305    3,295         9,600 
                          
Issuance of common shares for cash in September 2012   3,612,363    3,612    7,388         11,000 
                          
Net loss                  (1,153)   (1,153)
                          
Balance, September 30, 2012   29,621,378    29,621    (6,021)   (1,153)   22,447 
                          
Issuance of common shares for cash on August 27, 2013   4,378,633    4,379    495,621         500,000 
                          
Net loss             -    (528,941)   (528,941)
                          
Balance, September 30, 2013   34,000,011    34,000    489,600    (530,094)   (6,494)
                          
Net loss             -    (2,678)   (2,678)
                          
Balance, December 31, 2013   34,000,011   $34,000   $489,600   $(532,772)  $(9,172)

 

See accompanying notes to the financial statements.

 

5
 

  

The Staffing Group Ltd.

 

(A Development Stage Company)

Statements of Cash Flows

 

           For the Period from 
   For the Three Months   For the Three Months   June 11, 2012 
   Ended   Ended   (inception) through 
   December 31, 2013   December 31, 2012   December 31, 2013 
   (Unaudited)   (Unaudited)   (Unaudited) 
             
Cash Flows from Operating Activities               
Net loss  $(2,678)  $(3,194)  $(532,772)
Adjustments to reconcile net loss to net cash used in operating activities:               
Changes in operating assets and liabilities:               
Impairment of note receivable   -    -    200,000 
Prepaid expenses   2,000    -    - 
Accrued expenses   563    -    563 
                
Net Cash Used in Operating Activities   (115)   (3,194)   (332,209)
                
Cash Flows from Investing Activities               
Note receivable   -    -    (200,000)
                
Net Cash Used in Investing Activities   -    -    (200,000)
                
Cash Flows from Financing Activities               
Bank overdraft   (20)   -    - 
Advances from stockholder   135    -    8,609 
Proceeds from sale of common shares   -    -    523,600 
                
Net Cash Provided by Financing Activities   115    -    532,209 
                
Net Change in Cash   -    (3,194)   - 
                
Cash - beginning of period   -    22,721    - 
                
Cash - end of period  $-   $19,527   $- 
                
Supplemental disclosure of cash flow information:               
Interest paid  $-   $-   $- 
                
Income tax paid  $-   $-   $- 

 

See accompanying notes to the financial statements.

 

6
 

  

The Staffing Group Ltd.

 

(A Development Stage Company)

December 31, 2013 and 2012

Notes to the Financial Statements

(Unaudited)

 

Note 1 - Organization and Operations

 

The Staffing Group Ltd. (Formerly Aviana Corp.)

 

Aviana, Corp. (“Aviana”) was incorporated on June 11, 2012 under the laws of the State of Nevada. Aviana originally engaged in consulting services in EMF (electromagnetic field(s)), Microwave, Electrical and Ionizing detection, shielding and protection in Poland prior to change in control.

 

Change in Control and Scope of Business

 

On August 27, 2013, Liudmila Yuziuk (the “Seller”), and Joseph Albunio and Brian McLoone (collectively, the “Purchasers”) entered into stock purchase agreements (the “Stock Purchase Agreements”) whereby the Purchasers each purchased from the Seller, thirty percent (30%) of the issued and outstanding shares of the company’s common stock, par value $0.001 per share. Prior to the Closing of the Stock Purchase Agreements, the Seller was the company's sole officer, director, and majority stockholder.

 

Upon the change in control, the new management of the Company undertook efforts to identify additional commercial opportunities for the Company, and decided to engage in turnkey staffing services.

 

Certificate of Amendment to the Company’s Articles of Incorporation

 

On September 12, 2013, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (i) to change the company’s name from “Aviana Corp.” to “The Staffing Group Ltd.” (the “Company”) and (ii) to implement a 6.567933 for 1 forward stock split of the Company’s then issued and outstanding common stock.

 

Note 2 - Significant and Critical Accounting Policies and Practices

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation – Unaudited Interim Financial Information

 

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended September 30, 2013 and notes thereto contained in the information filed as part of the Company’s annual report on form 10-K filed on the Edgar system on February 14, 2014.

 

Development Stage Company

 

The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. Although the Company has recognized some nominal amount of revenues since inception, the Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.

 

7
 

  

Fiscal Year-End

 

The Company elected September 30th as its fiscal year ending date.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

 

(i) Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

(ii) Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

8
 

  

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

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

Commitment and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

9
 

  

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

Income Tax Provision

 

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

Uncertain Tax Positions

 

The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended December 31, 2013 or 2012.

 

Limitation on Utilization of NOLs due to Change in Control

 

Pursuant to the Internal Revenue Code Section 382 (“Section 382”), certain ownership changes may subject the NOL’s to annual limitations which could reduce or defer the NOL. Section 382 imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.

 

Net Income (Loss) per Common Share

 

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants.

 

There were no potentially dilutive common shares outstanding for the reporting period ended December 31, 2013 or 2012.

 

10
 

  

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recently Issued Accounting Pronouncements

 

In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The ASU adds new disclosure requirements for items reclassified out of accumulated other comprehensive income by component and their corresponding effect on net income. The ASU is effective for public entities for fiscal years beginning after December 15, 2013.

 

In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU No. 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date." This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013.

 

In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity." This ASU addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.

 

In March 2013, the FASB issued ASU 2013-07, “Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting.” The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity’s governing documents from the entity’s inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity’s inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity’s expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

11
 

  

Note 3 – Going Concern

 

The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the financial statements, the Company had a deficit accumulated during the development stage at December 31, 2013, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

Although the Company has recognized some nominal amount of revenues since inception, the Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

 

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 4 – Note Receivable

 

On August 27, 2013, the Company advanced $200,000 for a potential acquisition target’s working capital purposes. This advance was memorialized as a note receivable with simple interest at 6% per annum with principal and interest due on demand.

 

Impairment

 

On September 30, 2013, the Company completed its annual impairment test of its note receivable and determined that there was an impairment of $200,000, based on current information and events that the collectability of the note was not reasonably assured.

 

Interest Income

 

The Company did not record interest income since the collectability of the note was not reasonably assured.

 

Note 5 – Stockholders’ Equity (Deficit)

 

Shares Authorized

 

Upon formation, the total number of shares of all classes of stock which the Company is authorized to issue is Seventy-Five Million (75,000,000) of which Seventy Five Million (75,000,000) shall be Common Stock, par value $0.001 per share.

 

Common Stock

 

On August 27, 2013, the Company entered into private placement subscription agreements (the “Agreements”) with four (4) subscribers (the “Subscribers”). Pursuant to the Agreements, the Company sold 4,378,633 shares of the Company’s common stock (the “Securities”) to the Subscribers for $500,000 in aggregate for cash (the “Financing”).

 

Amendment to the Certificate of Incorporation Affecting Shares Issued and Outstanding

 

On September 12, 2013, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (i) to change the Company’s name from “Aviana Corp.” to “The Staffing Group Ltd.” and (ii) to implement a 6.567933 for 1 forward stock split of the Company’s then issued and outstanding common stock.

 

All share and per share amounts in the financial statements have been adjusted to give retroactive effect to the Stock Split.

 

Note 6 – Related Party Transactions

 

Related Parties

 

Related parties with whom the Company had transactions are:

 

Related Parties   Relationship
     
Liudmila Yuziuk   Former Chairman, CEO, significant stockholder and director
     
Brian McLoone   Chairman, CEO, significant stockholder and director

 

12
 

  

Free Office Space

 

The Company has been provided office space by its former Chief Executive Officer at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement.

 

Advances from Former Majority Stockholder, Director and Chief Executive Officer

 

From time to time, the former majority stockholder, director and chief executive officer of the Company advanced funds to the Company for working capital purpose. These advances are unsecured, non-interest bearing and due on demand.

 

On June 11, 2012, the former majority stockholder, director and chief executive officer of the Company advanced $274 to the Company to pay for incorporation expenses.

 

During the year ended September 30, 2013, the former majority stockholder, director and chief executive officer of the Company advanced $8,200 in aggregate to the Company for its working capital purpose.

 

During the reporting ended December 31, 2013, the former majority stockholder, director and chief executive officer of the Company advanced $135 to the Company for its working capital purpose.

 

Note 7 – Subsequent Events

 

The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent event(s) to be disclosed as follows:

 

Sale of Common Stock

 

On January 8, 2014, the Company issued 1,000,000 shares of its common stock, par value $0.001 per share, to one investor in exchange for $150,000 in cash. In connection with this sale of common stock the Company issued 100,000 shares of its common stock, par value $0.001 per share, to a consultant.

 

Entry into and Consummation of Material Definitive Agreement

 

On January 22, 2014, the Company entered into the Exchange Agreement with EmployUS which agreement closed on February 14, 2014.  Pursuant to the terms and conditions of the final, fully executed Exchange Agreement, and upon the consummation of the closing:

 

·

Each share of EmployUS’s common stock issued and outstanding immediately prior to the closing of the Exchange Agreement was converted into the right to receive an aggregate of 13,153,800 shares of the Company’s common stock.

·

Three of our shareholders agreed to cancel the following shares:

(i)       Joseph Albunio agreed to cancel 8,386,413 shares of his common stock. After the cancellation he owns 500,000 shares of our common stock.

(ii)      Brian McLoone agreed to cancel 2,836,413 shares of his common stock. After the cancellation he owns 6,050,000 shares of our common stock.

(iii)     Luidmila Yuziuk agreed to cancel 1,930,974 shares of her common stock. After the cancellation, she does not own any shares of our common stock.

 

After the closing of the Exchange Agreement, the capitalization of the Company is as follows:

 

Shareholder  # of Shares Owned   Percentage Ownership 
Broadsmoore Group   7,103,800    20.24%
BD Callais   6,050,000    17.24%
Brian McLoone   6,050,000    17.24%
Joseph Albunio   500,000    1.42%
Iroquois Master Fund   1,883,309    5.37%
Float Shares   13,512,902    38.49%
Total Outstanding   35,100,011      

 

13
 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

GENERAL

 

We were originally incorporated under the laws of the State of Nevada on June 11, 2012 under the name Aviana, Corp. Our registration statement was declared effective on January 23, 2013. Our original business was a Poland based corporation that operates a consulting business in EMF (electromagnetic fields), Microwave, Electrical and Ionizing detection, shielding and protection in Poland. We were unsuccessful in operating our business and on August 27, 2013 we entered into a binding letter of intent with EmployUS. It was in connection with that letter of intent that our prior officer and director, Liudmila Yuziuk, resigned and we appointed Mr. Brian McLoone as our sole officer and director. In addition, we changed our name to The Staffing Group, Ltd to better represent our new business operations.

 

EmployUS is a full service turnkey staffing company formed in September of 2010. Initially established to respond to the relief and recovery of the major oil spill in the Gulf of Mexico, EmployUS has since expanded to work on most major construction, chemical, and maritime projects in the Southeast United States. Brent Callais, the company’s founder, used his relationships as a prominent former politician to quickly expand operations throughout the state of Louisiana. From its single initial project three years ago, EmployUS has grown to 10 offices in 3 states with more than 150 customers and we have provided staffing needs of over 3,000 people to our 150 customers.

 

The company is led by a management team consisting of industry professionals that capitalizes on their team’s extensive business experience, track record of profitable growth and nationwide network of client relationships. EmployUS recruits, hires, employs and manages skilled workers, eliminating the need for the client do so. By eliminating this necessary administrative requirement of identifying and employing skilled workers, the client has the ability to focus on the important task of managing and growing their own business without needing to worry about the company’s labor needs.

 

The services provided include:

 

Payroll related taxes
Workers’ compensation coverage
General liability insurance
Professional risk management team
24/7 availability of office staff
Safety equipment & training programs
Drug & alcohol screenings
Background checks/MVR reports
Temporary to permanent workers.

 

RESULTS OF OPERATION

 

Our net loss for the three months ended December 31, 2013 was $2,678.  Our net loss since inception (June 11, 2012) to December 31, 2013 was $532,772. During the first three months ended December 31, 2013, we did not generate any revenues.

 

During the three months ended December 31, 2013, we incurred general and administrative expenses and professional fees of $2,678.  From inception (June 11, 2012) to December 31, 2013 we incurred general and administrative expenses and professional fees of $34,626.  General and administrative and professional fee expenses incurred during the three months ended December 31, 2013 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses.

 

14
 

 

Liquidity and Capital Resources

 

Now that we have closed on the reverse merger with EmployUs, please see our disclosure on Liquidity and Capital Resources as disclosed in the Current Report on Form 8-K filed on February 14, 2013. Such information is incorporated by reference herein.

 

2014-2015 Outlook

 

EmployUS LTD has grown organically from one location in the beginning of 2011 to ten locations by the end of 2013 with sales exceeding $15,000,000. The 2014 – 2015 growth plan is going to be a three tiered approach. The first tier involves growing the volume of our current locations. The expectation is that we should collectively increase the sales by 20% from our existing locations. Tier two involves organic expansion. By maximizing the current relationships with our existing customers, EmployUS LTD intends to open three additional locations by the end of 2014 and then 3 additional locations in 2015. The final tier will be growth through acquisition. Due to increased regulations, rising state unemployment rates that are required to be paid by businesses, rising workers compensation rates and uncertainty regarding the Affordable Care Act, we believe that small staffing companies are prime for acquisition. EmployUS intends to pursue possibly acquiring one or two small staffing companies each year.

 

In order to successfully complete our 2014-2015 outlook, we anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

 

Off-Balance Sheet Arrangements

 

None.

 

Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Critical Accounting Policies

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements.

 

The audited consolidated financial statements include all adjustments including normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows of EmployUS for the periods presented. The results of operations for the years ended December 30, 2012 are not necessarily indicative of operating results expected for future periods.

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America.

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of our one operating subsidiary.  All significant inter-company transactions and balances are eliminated in consolidation.

 

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, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions include, but may not be limited to, accounts receivable allowances and evaluation of impairment of long lived assets. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made.

 

15
 

 

Revenue Recognition

 

Contract staffing service revenues are recognized when services are rendered. The Company recognizes revenue in accordance Accounting Standards Codification (“ASC”) 605 “Revenue Recognition”, which requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidence that an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonable assured; and (iv) services have been rendered.

 

Accounts Receivable

 

Accounts receivable are stated at the amounts management expects to collect.  An allowance for doubtful accounts is recorded based on a combination of historical experience, aging analysis and information on specific accounts.  Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

 

Property and Equipment

 

Repairs and maintenance are expensed, while additions and betterments are capitalized.  The cost and related accumulated depreciation of assets sold or retired are eliminated from the accounts and any gains or losses are reflected in earnings.

 

Fair Value Measurements

 

We measure our financial assets and liabilities in accordance with U.S. GAAP. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. For certain of our financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The fair value of debt is not determinable due to the terms of the debt and the lack of a comparable market for such debt.  These tiers include:

 

Level 1 Inputs– Quoted prices for identical instruments in active markets.

 

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

 

Level 3 Inputs– Instruments with primarily unobservable value drivers.

 

Our financial instruments include cash, trade receivables and debt. The carrying amounts of cash and trade receivables approximate fair value due to their short maturities.  We believe that our indebtedness approximates fair value based on current yields for debt instruments with similar terms.

 

Research and development

 

Research and software development costs are expensed as incurred.

 

Long-Lived Assets

 

We review the carrying value of our long-lived assets whenever events or changes in circumstances indicate that the carrying values may no longer be appropriate.  Recoverability of carrying values is assessed by estimating future net cash flows from the assets.  Based on management’s evaluations, no impairment charge was deemed necessary at September 30, 2013 and December 31, 2012. Impairment assessment inherently involves judgment as to assumptions about expected future cash flows and the impact of market conditions on those assumptions.  Future events and changing market conditions may impact management’s assumptions as to sales prices, rental rates, costs, holding periods or other factors that may result in changes in our estimates of future cash flows.  Although management believes the assumptions used in testing for impairment are reasonable, changes in any one of the assumptions could produce a significantly different result.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

No report required.

 

16
 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2013. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the nine-month period ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

  

PART II. OTHER INFORMATION

  

ITEM 1. LEGAL PROCEEDINGS

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

 

ITEM 5. OTHER INFORMATION

 

The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent event(s) to be disclosed as follows:

 

Sale of Common Stock

 

On January 8, 2014, the Company issued 1,000,000 shares of its common stock, par value $0.001 per share, to one investor in exchange for $150,000 in cash. In connection with this sale of common stock the Company issued 100,000 shares of its common stock, par value $0.001 per share, to a consultant.

 

17
 

 

Entry into and Consummation of Material Definitive Agreement

 

On January 22, 2014, the Company entered into the Exchange Agreement with EmployUS which agreement closed on February 14, 2014.  Pursuant to the terms and conditions of the final, fully executed Exchange Agreement, and upon the consummation of the closing:

 

Each share of EmployUS’s common stock issued and outstanding immediately prior to the closing of the Exchange Agreement was converted into the right to receive an aggregate of 13,153,800 shares of the Company’s common stock.

Three of our shareholders agreed to cancel the following shares:

(i)       Joseph Albunio agreed to cancel 8,386,413 shares of his common stock. After the cancellation he owns 500,000 shares of our common stock.

(ii)      Brian McLoone agreed to cancel 2,836,413 shares of his common stock. After the cancellation he owns 6,050,000 shares of our common stock.

(iii)     Luidmila Yuziuk agreed to cancel 1,930,974 shares of her common stock. After the cancellation, she does not own any shares of our common stock.

 

After the closing of the Exchange Agreement, the capitalization of the Company is as follows:

 

Shareholder # of Shares Owned Percentage Ownership
Broadsmoore Group   7,103,800 20.24%
BD Callais     6,050,000 17.24%
Brian McLoone   6,050,000 17.24%
Joseph Albunio      500,000   1.42%
Iroquois Master Fund   1,883,309   5.37%
Float Shares 13,512,902 38.49%
Total Outstanding 35,100,011  

 

ITEM 6. EXHIBITS

 

Exhibit

Number

  Description
31.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
32.1*   Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

 

* The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is being furnished and is not deemed filed with the Securities and Exchange Commission.

 

18
 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  The Staffing Group Ltd.
   
   
Dated: February 19, 2014 By: /s/ Brian McLoone
  Brian McLoone, President and Chief Executive Officer and Chief Financial Officer

 

 

 

 

 

19