RSGX Resourcing Solutions Group Inc New (CE)

		Year Ended				Year Ended
		December 31,				December 31,
		2006				2005
Reconciliation of billings to revenue recognized:
Billings to clients		$	26,091,692			$	16,825,320
Less – Gross wages billed to clients			(21,354,418	)			(14,584,477	)
Total revenue as reported			4,737,274				2,240,843
Total Cost of Sales			3,384,802				1,689,341
Gross Profit		$	1,352,472			$	551,502
Revenue consists of:
Revenue from fees for service on a fixed percentage		$	4,604,385			$	2,202,078
Revenue from fees for service on a fixed cost			113,093				38,765
Revenue from insurance commissions			19,796				0
Total revenue as reported		$	4,737,274			$	2,240,843
Cost of Sales Consists of:
Employer portion of Social Security And Medicare taxes		$	1,494,961			$	973,196
State and Federal Unemployment taxes			288,899				244,985
Workers’ Compensation Premium			1,234,468				418,991
Other Misc.  Expense			366,474				52,170
Total Cost of Sales		$	3,384,802			$	1,689,341

		Six Months  Ended				Six Months Ended
		June 30,				June 30,
		2007				2006
Reconciliation of billings to revenue recognized:
Billings to clients		$	14,789,514			$	10,493,211
Less – Gross wages billed to clients			(12,345,297	)			(8,505,926	)
Total revenue as reported			2,444,217				1,987,285
Total Cost of Sales			1,925,496				1,509,604
Gross Profit		$	518,721			$	477,680
Revenue consists of:
Revenue from fees for service  on a fixed percentage		$	2,192,277			$	1,728,592
Revenue from fees for service on a fixed cost			219,749				258,693
Revenue from insurance commissions			32,191				0
Total revenue as reported		$	2,444,217			$	1,987,285
Cost of Sales Consists of:
Employer portion of Social Security And Medicare taxes		$	855,544			$	594,123
State and Federal Unemployment taxes			205,030				161,916
Workers’ Compensation Premium			842,922				645,962
Other Misc.  Expense			22,000				107,603
Total Cost of Sales		$	1,925,496			$	1,509,604

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of the date hereof and taking into account the completion of the Spin-Off by (i) each of our officers and directors; (ii) each person who is known by us to own beneficially more than 5% of our outstanding Common Stock; and (iii) all of our officers and directors as a group:

Title of Class	Name  of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common Stock	Gary Musselman	8,000,000	22.78%
Common Stock	Marcia Sartori	700,000	1.99%
Common Stock	Antoinette Peterson (a)	5,000,000	14.24%
Common Stock	Frank A. Moody, II	-0-	0%
Common Stock	Carl Horsely	8,000,000	22.78%
Common Stock	Julie Snipes	2,000,000	5.69%
Common Stock	Alexis Moody (b)	3,000,000	8.54%
Common Stock	Taylor Moody (b)	3,000,000	8.54%
Common Stock	Lilly Marketing, Group, LLC	2,500,000	7.12%
All officers and directors (3 persons)		16,000.000	45.56%

ITEM 5.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

The following table sets forth information concerning our directors and executive officers as of the date hereof:

 

Name	Age	Position
Gary Musselman	52	President/CEO/Director
Frank A. Moody, II	47	Director
Carl Horsley	48	Director
Marcia Sartori	64	Vice President
Antoinette Peterson	56	Vice President
Michael Peterson	58	Vice President

 

Gary Musselman.       Prior to joining us in 2004, Mr. Musselman served as the Chief Financial Officer of Grace Global, LLC, an international media company operating within the United States and three foreign locations. Mr. Musselman was responsible for due diligence for several companies being considered for acquisition as well as overseeing the integration of companies that were acquired.  From 2000 to 2002, Mr. Musselman was the Managing Partner for Stratford Financial Resources, LLC, a business development consulting firm specializing in commercial finance, human resources and mergers and acquisitions.  From 1993 to 2000, Mr. Musselman founded and served as the Chief Executive Officer of ECS Financial Management Services, LLC, a financial management company specializing in account receivable management.

Frank A. Moody, II.       Mr. Moody is the managing partner of Scenic Marketing Group, LLC, a company specializing is assisting small publicly traded companies achieve growth by understanding and properly utilizing available financing mechanisms. Prior to forming Scenic Marketing Group, LLC, Mr. Moody was the President/CEO of Homeland Integrated Security Systems, Inc. a high technology company specializing in security systems in the transportation industry.

 

Carl Horsley       Mr. Horsley is the managing partner of Cherokee Capital Management, LLC a private equity firm located in Punta Gorda, FL.  Mr. Horsley has been instrumental in several M & A and LBO deals here in the US and in Europe as well as providing financial options and services to micro-cap companies.  Prior to forming CCM , Mr. Horsley worked twelve years as a financial advisor for Morgan Stanley and then Raymond James Financial in Boca Raton, FL.  Mr. Horsley graduated with BBA degrees in both Business Management and Marketing from Northwood University in Michigan

Marcia Sartori.       Ms. Sartori owned and operated YourStaff Solutions Ô from its beginning in 1987 until the sale to The Resourcing Solutions Group, Inc. in January 2005 as a professional employer organization providing outsourced human resources services to small- to medium-sized businesses in the greater Pittsburgh, Pennsylvania. Services included all employment functions: hiring, firing, payroll, employee handbooks, policy development, workers compensation administration, benefits design and administration, 401k and 529 college plan administration, and a full range of human resource guidance. Ms. Sartori has been a member of the National Association of Professional Employer Organizations since 1988. Marcia served on the Board of Directors of the National Association of Professional Employer Organizations (NAPEO) from 1992-1994. As a member of the NAPEO, she has served on the Legislative Affairs Committee as the Head Delegate for State Sales Tax issues and the NAPEO Task Force.

Antoinette Peterson       Ms. Peterson co-owned and operated World Wide Personnel Services of Maine and Virginia agencies since 1989 until they were sold to the Resourcing Solutions Group, Inc in April 2006 and April 2007 respectively as a professional employer organization providing outsourced human resources services to small- to medium-sized businesses in the New England and Mid-Atlantic regions. Prior to forming her own company Ms. Peterson spent several years in health care administration where she was responsible for integrating several medical practices into a single larger practice. Ms.. Peterson has a degree in accounting from the University of Maine- Auburn and a Masters degree from Husson College in Portland, Maine.

 

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Michael Peterson       Mr. Peterson co-owned and operated World Wide Personnel Services of Maine and Virginia agencies since 1989 until they were sold to the Resourcing Solutions Group, Inc in April 2006 and April 2007 respectively as a professional employer organization providing outsourced human resources services to small- to medium-sized businesses in the New England and Mid-Atlantic regions. Prior to forming his own company Mr. Peterson spent several years in the insurance industry providing employee benefits and commercial insurance to a diverse client base. Mr. Peterson has a degree in History and Philosophy from the University of California – Northridge.

 

Our Bylaws currently authorize not less than three directors.  Each director is elected for one year at the annual meeting of stockholders and serves until the next annual meeting or until a successor is duly elected and qualified. Our executive officers serve at the discretion of our board of directors. The only family relationship among our directors and executive officers involves Michael Peterson and Antoinette Peterson, who are husband and wife.

Board Compensation.

We will reimburse our directors for reasonable out-of-pocket expenses incurred in attending meetings of the board of directors and its respective committees.

Board Committees.

The Board of Directors has established an Audit Committee and a Compensation Committee. Frank A. Moody, II and Carl Horsely constitute the members of those committees.

ITEM 6.  EXECUTIVE COMPENSATION

The Company compensates it President and Chief Executive Officer in a manner which is designed to reward the executive for positive growth of the Company. The President/CEO’s contract is for a five year term and will automatically renew for three years unless either party gives written notice to the other 90 days prior to the expiration of the contract. The President/CEO’s contract has a provision prohibiting the executive from engaging competitive with the Company. This provision remains in force for two years after the executive laces the Company. The President/CEO’s is also prohibited from soliciting employees of the Company for a two year period after they leave the Company.

The President/CEO’s is compensated with a base salary and with a bonus incentive plan when the Company makes a profit in excess of $250,000 or a 15% growth over the previous years net profit. Bonuses are paid in stock equal to 12.5% of the growth in excess of the 15% floor. For example if the Company has net profit of $1,000,000 in the base year and net profit of $1,500,000 in the next year the executive will receive stock equal to $43,750 (1,500,000 – 1,000,000 =$500,000. 15% of previous year net income is 150,000. 500,000 – 150,000 is 350,000. 12.5% of 350,000 is 43,750) There is a $1,000,000 cap per year on these stock bonuses. In addition to the stock bonus plan the President will receive a cash incentive equal to two percent and one and one-half percent respectively of the income from operations each year the Company is profitable.

Additionally, if the President remains with the Company until age 60 or earlier retirement on mutual consent of the Board of Directors the President shall receive an annual salary equal to 75% of his annual salary for the remained of his life. If the President becomes permanently disabled while employed he shall receive his salary for 5 years or the remainder of his employment term, whichever is shorter.

 

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Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Changes in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Gary Musselman	2005 2006	168,000 168,000	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	41,836 34,063	209,836 202,063
Marcia Sartori	2005 2006	85,000 85,000	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	8,394 16,387	93,394 101,387
Michael Peterson	2005 2006	-0- 79,690	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- 2,662	-0- 82,352
Antoinette Peterson	2005 2006	-0- 78,657	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- 2,470	-0- 81,127

The salary shown for the above executives reflects the total cash compensation he received. 50% of the total cash compensation was paid by Pacel Corp, the Company’s former parent company.

Equity Awards

There were no outstanding equity awards for the fiscal year ending December 31, 2006.

 

Directors Compensation

During the fiscal year ending December 31, 2006, the Board of Directors did not receive any compensation for services as directors. The Board of Directors has awarded 8,000,000 restricted shares of common stock to the independent directors for serving as directors during 2007. No decision has been made regarding directors’ compensation for any period after 2007. Additionally ,directors will be reimbursed for their out-of-pocket expenses for attending board or committee meetings.

 

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ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTORS INDEPENDENCE.

 Director Independence

At this time, we are not subject to the requirements of a national securities exchange or an inter-dealer quotation system with respect to the need to have a majority of its directors be independent. In the absence of such requirements, we have elected to use the definition established by the Nasdaq independence rule which defines an “independent director” as “a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” The definition further provides that the following relationships are considered bars to independent regardless of the board’s determination:

•            Employment by the company . Employment of the director or a family member by the company or any parent or subsidiary of the company at any time thereof during the past three years, other than family members in non-executive officer positions.

•            $60,000 compensation.   Acceptance by the director or a family member of any compensation from the company or any parent or subsidiary in excess of $60,000 during any twelve month period within three years of the independence determination.

•            Auditor affiliation.   A director or a family member of the director, being a partner of the company’s outside auditor or having been an partner or employee of the company’s outside auditor who worked on the company’s audit, during the past three years.

 

Based on the foregoing definition, Frank A. Moody, II and Carl Horsely are “independent directors”.

ITEM 8.  DESCRIPTION OF SECURITIES .

We are authorized to issue 2,200,000,000 shares of capital stock consisting of 2,000,000,000 shares of Common Stock, par value $0.001 per share and 200,000,000 shares of Preferred Stock, par value $0.001 per share. This Registration Statement applies only to our Common Stock.

 

There are 35,165,630   shares of Common Stock issued and outstanding as of the date hereof.  All shares of Common Stock have equal rights and privileges with respect to voting, liquidation and dividend rights.  Each share of Common Stock entitles the holder thereof to (i) one non-cumulative vote for each share held of record on all matters submitted to a vote of the stockholders; (ii) to participate equally and to receive any and all such dividends as may be declared by the Board of Directors out of funds legally available therefore; and (iii) to participate pro rata in any distribution of assets available for distribution upon liquidation of the Company.  Stockholders of the Company have no preemptive rights to acquire additional shares of Common Stock or any other securities.  The Common Stock is not subject to redemption and carries no subscription or conversion rights.  All outstanding shares of Common Stock are fully paid and non-assessable.

 

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PART II

ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock has been thinly traded in the over-the-counter market and prices for the Common Stock are published on The Pink Sheets ™ under the symbol RSGX. This market is extremely limited and the price for our Common Stock quoted by brokers is not a reliable indication of the value of the Common Stock. The following is the range of high and low bid prices for our Common Stock for the each quarter within the last two fiscal years and the subsequent interim quarter ending March 31, 2007. These prices reflect the one for one thousand reverse split of the Company’s shares on December 15, 2006.

 

Quarter Ending	High	Low
March 31, 2005	$0.10	$0.10
June 30, 2005	$0.10	$0.10
September 30, 2005	$0.10	$0.10
December 31, 2005	$0.10	$0.10
March 31, 2006	$0.10	$0.10
June 30, 2006	$0.10	$0.10
September 30, 2006	$0.10	$0.10
December 31, 2006	*	*
March 31, 2007	*	*

 

*      No market maker existed for the entire quarter; therefore, no bid price is reported.

These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual purchases and sales by investors.

 

Our Common Stock will be held of record by 438 shareholders as a result of the Spin-Off.

We have not paid any dividends on our Common Stock and we are not likely to pay any dividends in the near future. We intend to retain all earnings for working capital purposes for the foreseeable future.

At the present time, there are no outstanding options or warrants to purchase, or securities convertible into, our Common Stock. In addition, there are no shares of Common Stock that could be sold pursuant to Rule 144 under the Securities Act of 1933 or that we have agreed to register under the Securities Act for sale by security holders, or that are being, or proposed to be, publicly offered by us.

 

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ITEM 2. LEGAL PROCEEDINGS

World Wide Personnel Services of Maine, Inc., United Personnel Service, Inc, and World Wide Personnel Services of World Wide Personnel Services of Virginia, Inc. wholly owned subsidiaries of the Company are defendants in a suit in U.S. District Court, Eastern District of Michigan filed on October 11, 2006.  PML North America, LLC vs. World Wide Personnel Service of Virginia, Inc. et al. Case No. 2:06-cv-14447 . The plaintiff is alleging it is owed premiums for providing workers’ compensation insurance to employees of the defendants prior to the Company acquiring these companies. Defendants assert that all earned premiums were paid in a timely manner. Defendants are seeking Declaratory Relief that claims made by the plaintiff are invalid and unenforceable.

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING OR FINANCIAL DISCLOSURE

There were no disagreements between us and our independent accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the two most recent fiscal years.

ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES

On November 30, 2004, we issued our 8% Convertible Redeemable Debentures in the aggregate principal amount of $100,000 with a maturity in one year. The Debentures were issued to two purchasers who were accredited investors pursuant to the exemption provided by Regulation D Rule 504 under the Securities Act of 1933. In May 2006, the Debenture was amended to provide for repayment over a six-month period on a new fixed term note. As collateral for the repayment of the original Debentures, we deposited 1,000,000 shares of our Common Stock in an escrow account. In January 2007, the amended Debenture was paid in full with funds provided by a third-party in consideration of the issuance of the 1,000,000 shares of Common Stock in the escrow.

Pursuant to an agreement effective as of December 4, 2006, we issued 992,696 shares of our Common Stock, after a reverse stock split of 1-for1,000, in exchange for $1,832,014.00 of payables to our then parent company, Pacel Corp. These shares were issued pursuant to the exemption provided by Section 3(a)(9) under the Securities Act of 1933 covering exchanges with an existing security holder, or in the alternative, under Section 4(2) of the Securities Act of 1933, as non-public offering.

Effective as of January 1, 2007, we issued 1,500,000 shares of our Common Stock under a Consulting Agreement for business advisory services. These shares were issued pursuant to the exemptions provided by Sections 4(2) and 4(6) of the Securities Act of 1933. The consulting firm is an accredited investor as defined in Rule 501 under the Securities Act of 1933. .

 In January 2007, we issued 25,000,000 shares of our Common Stock to certain of our officers and directors in lieu of cash compensation, of which 9,000,000 shares of were issued as performance based bonus compensation and 16,000,000 shares were to the directors as compensation for services as directors. These shares were issued pursuant to the exemptions provided by Sections 4(2) and 4(6) of the Securities Act of 1933.

In January 2007, we sold 803,000 shares of our Common Stock for an aggregate consideration of $80,300. These shares were issued pursuant to the exemptions provided by Sections 4(2) of the Securities Act of 1933 to sophisticated investors without advertising of general solicitation to person with whom we have an existing business or personal relationship.

 

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In January 2007, we issued 5,000,000 shares of Common Stock in exchange for the cancellation of a promissory note in the amount of $500,000 which note has been issued in connection with the acquisition of World Wide Personnel Services of Maine, Inc. and United Personnel Services, Inc. These shares were issued pursuant to the exemptions provided by Sections 4(2) and 4(6) of the Securities Act of 1933.

In January 2007, the Company exchanged 1,000,000 shares of common stock held in escrow to repay the outstanding balance of $59,815 on the 8% note originally issued in November 2004.

In January 2007, we issued 50,000 shares of our Common Stock for an aggregate consideration of $10,000. These shares were issued pursuant to the exemption provided by Regulation D Rule 504 under the Securities Act of 1933.

From March 2007 to July 2007, we issued 815,000 shares of our Common Stock for an aggregate consideration of $435,000. These shares were issued pursuant to the exemptions provided by Sections 4(2) and 4(6) of the Securities Act of 1933.

During the first quarter 2,710 shares of common stock were issued in order to eliminate fractional shares resulting from the December 15, 2006 reverse split.

 

ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS

As permitted by the provisions of the Nevada Revised Statutes ( “NRS” ) and the our Bylaws, we have the power to indemnify any person made a party to an action, suit or proceeding by reason of the fact that they are or were a director, officer, employee or our agent  against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with any such action, suit or proceeding if they acted in good faith and in a manner which they reasonably believed to be in, or not opposed to, the our best interest and, in any criminal action or proceeding, they had no reasonable cause to believe their conduct was unlawful.  Termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which they reasonably believed to be in or not opposed to our best interest, and in any criminal action or proceeding, they had no reasonable cause to believe their conduct was unlawful.

We must indemnify a director, officer, employee or an agent who is successful, on the merits or otherwise, in the defense of any action, suit or proceeding, or in defense of any claim, issue, or matter in the proceeding, to which they are a party because they are or were a director, officer, employee or an agent, against expenses actually and reasonably incurred by them in connection with the defense.

We may agree to pay the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as the expenses are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director of officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that they are not entitled to be indemnified by us.

The NRS also permits a corporation to purchase and maintain liability insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or our agent, or is or was serving at the request of the corporation as a director, officer, employee or agent, of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against them and liability and expenses incurred by them in their capacity as a director, officer, employee or agent, or arising out of their status as such, whether or not the Company has the authority to indemnify them against such liability and expenses.

 

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PART F/S

 Attached hereto are the following financial statements:

	(1)	Audited financial statements for the year ended December 31, 2006;
	(2)	Unaudited financial statements for the period ended June 30, 2007.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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INDEX TO FINANCIAL STATEMENTS

 

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006

 

Auditor’s Report	F-1
Balance Sheets as of December 31, 2006 and 2005	F-2
Statement of Operations for the years ended December 31, 2006 and 2005	F-4
Statement of Changes in Stockholder’s Equity for the years ended December 31, 2006 and 2005	F-5
Statement of Cash Flows for the years ended December 31, 2006 and 2005	F-6
Notes to Financial Statements	F-7

 

UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2007

 

Balance Sheets for the three months ended June 30, 2007	F-20
Statement of Operations for the three months ended June 30, 2007 and 2006	F-22
Statement of Cash Flows for the three months ended June 30, 2007 and 2006	F-23
Notes to Financial Statements	F-25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders of

The Resourcing Solutions Group, Inc.

We have audited the accompanying consolidated balance sheets of The Resourcing Solutions Group, Inc. and  subsidiaries as of December 31, 2006 and 2005 and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the 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 is 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 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Resourcing Solutions Group, Inc  and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that The Resourcing Solutions Group, Inc will continue as a going concern.  As discussed in Note1(c) to the consolidated financial statements, the Company has generated significant losses and requires additional working capital to continue operations.  These conditions raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are more fully described in Note 1(c).  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

Peter C. Cosmas Co., CPAs

370 Lexington Ave.

New York, NY 10017

April 30, 2007

F-1

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THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

		December 31,				December 31,
		2006				2005
ASSETS
Current assets:
Cash		$	703,830			$	255,356
Accounts receivable			169,922				15,384
Accounts receivable-Unbilled			583,500				169,749
Prepaid expenses			87,170				31,873
Workers compensation insurance deposits			66,540				26,240
Restricted Cash			355,032				179,855
Total current assets			1,965,994				678,457
Property and equipment, net of accumulated depreciation of
$193,593 and $133,031 respectively			75,614				125,380
Other assets:
Other receivables			25,720				65,126
Goodwill			624,924				101,000
Security deposits			3,176				3,176
Total other assets			653,820				169,302
Total assets		$	2,695,428			$	973,139

 

 

See accompanying notes to the consolidated financial statements.

F-2

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THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

		December 31,				December 31,
		2006				2005
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	207,622			$	151,133
Payroll and payroll related liabilities			385,642				157,371
Accrued work site employee payroll expenses			564,986				163,626
Accrued expenses			43,512				51,755
Client deposits and advance payments			2,208				-0-
Short term payables			821,034				1,147,180
Total current liabilities			2,025,004				1,671,065
Long-term liabilities:
Notes payable – Non Current portion			192,805				218,926
Total long-term liabilities			192,805				218,926
Total liabilities			2,217,809				1,889,991
Stockholders’ equity (deficit):
Preferred stock, .001 par value, 200,000,000
shares authorized, 0 shares issued			-0-				-0-
Common stock, .001 par value, 2,000,000,000 shares
authorized, 994,696 and 2,000 shares
issued respectively			995				2
Additional paid-in capital			1,331,021				-0-
Retained Earnings			(854,397	)			(916,854	)
Total stockholders’ equity (deficit)			477,619				(916,852	)
Total liabilities and stockholders’ equity (deficit)		$	2,695,428			$	973,139

 

 

See accompanying notes to the consolidated financial statements.

F-3

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THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

 

			Year ended December 31,
			2006				2005
Revenue		$	4,737,274			$	2,240,843
Cost of sales			3,384,802				1,689,341
Gross profit			1,352,472				551,502
Operating costs and expenses:
Salary Expense			715,838				848,284
General and Administrative			444,763				466,644
Sales and Marketing			48,296				39,754
Depreciation			60,563				62,595
Loss on Asset Impairment			-0-				131,950
Total operating expenses			1,269,460				1,549,227
Operating Profit (Loss)			83,012				(997,725	)
Other Expenses:
Interest expense			(20,555	)			(16,422	)
Total other expenses			(20,555	)			(16,422	)
Discontinued operations:
Loss on sale of contracts to Allegro, Inc.			-0-				(16,271	)
Total Loss on discontinued operations			-0-				(16,271	)
Net Income (Loss)		$	62,457			$	(1,030,418	)
Basic & diluted earnings per common share:
From continuing operations		$	0.82			$	(507.07	)
From Discontinued operations		$	-0-			$	(8.14	)
Net income (loss)		$	0.82			$	(515.21	)
Weighted average shares outstanding Basic and Diluted			76,325				2,000

 

 

See accompanying notes to the consolidated financial statements.

F-4

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THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Deficit)

For the Two Years Ended December 31, 2005 and 2006

																		Additional				Retained				Total
		Preferred Stock								Common Stock								Paid-in-capital				Earnings				Stockholders
		Shares				Amount				Shares				Amount				Amount				(Deficit)				Equity
Balance, December 31, 2004			-			$	-				2,000			$	2			$	-			$	113,564			$	113,566
Net loss																							(1,030,418	)			(1,030,418	)
Balance, December 31, 2005			-				-				2,000				2				-				(916,854	)			(916,852	)
Issuance of common stock,
in exchange for Outstanding Debt
											992,696				993				1,331,021								1,332,014
Net Profit																							62,457				62,457
Balance, December 31, 2006			-			$	-				994,696			$	995			$	1,331,021			$	(854,397	)		$	477,619

(1) - Shares are restated to reflect a one-for-one thousand reverse stock split in December 2006.

 

See accompanying notes to the consolidated financial statements.

F-5

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THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

 

		Year ended December 31,
		2006				2005
Cash flows from operating activities:
Net Profit (loss)		$	62,457			$	(1,030,418	)
Adjustments to reconcile net Income (loss) to net cash
provided by (used in) operating activities:
Depreciation			60,563				62,595
Loss on Impairment of Goodwill			-0-				131,950
Loss on Sale of Contracts			-0-				16,271
(Increase)/Decrease in cash from changes in assets:
Accounts receivable			29,032				214,832
Accounts receivable-Unbilled			(413,751	)			123,106
Other receivables			39,407				(65,127	)
Insurance deposits			(5,099	)			(26,240	)
Prepaid expenses			(55,297	)			25,645
Security deposits			-0-				(3,176	)
Increase/(Decrease) in cash from changes in liabilities:
Accounts payable			56,489				(938	)
Accrued expenses			(8,244	)			(542,720	)
Client deposit			2,208				-0-
Payroll and payroll related liabilities			(31,299	)			(321,723	)
Accrued work site employee payroll costs			401,361				(119,580	)
Pacel Corporation - Intercompany			472,725				(12,108	)
Net cash (used in) provided by operating activities			610,552				(1,547,631	)
Cash flows from investing activities:
Net purchases of property and equipment                                          -							(8,271	)
Redemption of Restricted CD			(175,178	)			870,383
Cash Acquired in Acquisitions			79,406				-0-
Net cash (used in) provided by
investing activities			(95,772	)			862,112
Cash flows from financing activities:
Repayments of notes payable			(66,306	)			(25,947	)
Issuance of notes payable			-0-				272,000
Net cash provided by (used in) financing activities			(66,306	)			246,053
Net increase (decrease) in cash and cash equivalents			448,474				(439,466	)
Cash and cash equivalents, beginning of period			255,356				694,822
Cash and cash equivalents, end of period		$	703,830			$	255,356
Supplemental disclosure of cash flow information:
Cash paid for interest		$	20,555			$	16,422

 

See accompanying notes to the consolidated financial statements.

F-6

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THE RESOURCING SOLUTIONS GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

 

Note 1

Summary of Significant Accounting Policies:

 

A.   Nature of the business.

The Resourcing Solutions Group (the "Company" or “TRSG”) was incorporated on December 9, 2002 under the laws of the State of Nevada..  On December 21, 2006, the shareholders of Pacel Corp. voted to spin-off and to distribute its shares of The Resourcing Solutions Group, Inc to its shareholders.

The Company, through its wholly-owned subsidiaries, provides a comprehensive workforce management solutions that encompasses a broad range of services, including benefits and payroll administration, health and workers’ compensation insurance programs, personnel records management, employer liability management, employee performance management, employee training and development services, employee benefits, and retirement programs and business insurance products.

For the majority of the clients, the Company provides these services as a professional employer organization (PEO).  In a PEO relationship, the client transfers certain employment-related risks and liabilities to the Company and retains other risks and liabilities in this context. The client and the Company are each viewed as and become a "co-employer" of the client's worksite employees. As a co-employer, employment -related liabilities are contractually allocated between the Company and the client under a written professional services agreement. Under the professional services agreement, the Company assumes responsibility for and manages the risks associated with each client's worksite employee payroll obligations, including the liability for payment of salaries and wages (including payroll taxes) to each worksite employee and, at the client's options, responsibility for planning, providing and administering group health, welfare and retirement benefits to such individuals. These obligations of the Company are fixed, whether or not the client makes timely payment of the associated service fee in this regard. It is important to understand that, unlike payroll processing service providers, the Company issues to each of the client's worksite employees, Company payroll checks drawn on the Company's bank accounts. The Company also reports and remits all required employment information and taxes to the respective taxing authorities. The Company assumes the responsibility for compliance with those employment-related governmental regulations that can be effectively managed away from the client's worksite. In many cases, the Company provides the employee workers' compensation insurance coverage under the Company's insurance policy. The client may elect, or the workers' compensation carrier may require, retaining its own policy for the management of this risk. In all cases, the Company remains heavily involved with safety and risk management to assist the client in controlling risk and potentially reducing the cost of such coverage. The client contractually retains the general day-to-day responsibility to direct, control, hire, terminate and manage each of the client's worksite employees. The worksite employee services are performed for the exclusive benefit of the client's business. The client also remains responsible for compliance with those employment-related governmental regulations that are more closely related to the day-to-day management of work site employees.

The Company also provides human resource outsourcing (“HRO”) services to clients. In this relationship the client obtains customized solutions for it specific human resource needs.  The Company does not incur employer liability with these services. Services range from full human resource administration to payroll processing.

 

 

F-7

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Clients in both the PEO and HRO relationships may purchase insurance products from the Company through our licensed insurance agency. The Company provides access to a complete line of business insurance products and employee benefits products.

B.           Principles of consolidation.

The consolidated financial statements include the accounts of the Company and all of its subsidiaries in which a controlling interest is maintained. All significant   inter-company accounts and transactions have been eliminated in consolidation.

C.           Basis of Financial Statement Presentation.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  Prior to the current fiscal year, the Company generated significant losses, and  it is unable to predict profitability for the future.  These factors indicate the Company’s continuation, as a going concern is dependent upon its ability to obtain adequate financing as well as implement its sales, marketing and acquisition strategy. The Company is addressing the going concern by obtaining equity financing and to grow the Company with profitable sales both organically and through acquisitions.  Management believes successfully executing these tasks will lead to the removal of the going concern comment from our audited financials.

D.           Cash and cash equivalents.

Cash equivalents consist of liquid investments, with a maturity of three months or less at the time of purchase.  Cash equivalents are stated at cost, which approximate market value.

E.           Credit Risk

The Company routinely maintains cash deposits in various financial institutions in excess of the $100,000 FDIC insurance limit.

The Company has risk that payments from clients may be reversed after a payroll has been processed The Company utilizes the Automated Clearing House (ACH) functionality of financial institutions in order to receive payment from clients. A client generally has three days from the Company initiating an ACH transaction to dispute that transaction. The Company processes a payroll for the client before the three day window lapses. The Company would be liable for paying the employees even if the client disputes the ACH transaction.

F.           Property and Equipment.

Property and equipment are stated at cost less accumulated depreciation and amortization.  Depreciation is determined using the straight-line method     over the estimated useful lives of the assets.  Estimated useful lives of 24 to 36 months are used for computer equipment and related software, five years for office equipment, furniture, and fixtures.  Depreciation and amortization of leasehold improvements is computed using the shorter of the remaining lease term or five years.  Maintenance and repairs are charged against income and betterments are capitalized.

G.           Reclassification.

Certain prior year amounts have been reclassified to conform to current year's presentation.

F-8

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H.       Revenue recognition.

The Company’s revenue is attributable to fees for providing employment services and commissions for the sale of insurance products. Our revenues are primarily dependent on the number of clients enrolled and the resulting number of worksite employees paid each period.

The Company’s revenue is recognized in three distinct categories, two categories are for service fees and the third is from the commissions on the sale of insurance products:

For service fee income, the Company typically enters into agreements for either;

·    a fixed fee per transaction (e.g., number of payees per payroll);

·    a fixed percentage of gross payroll;

When we account for revenue that is a fixed percentage of gross payroll it is accounted for in accordance with Emerging Issues Task Force (“EITF”) 99-19, Reporting Revenues Gross as a Principal Versus Net as an Agent. Our revenues are derived from our billings, which are based on:

·    the payroll cost of our worksite employees; and

·    a markup computed as a percentage of the payroll cost.

In determining the fixed percentage markup component of the billings, we consider our estimates of the costs directly associated with our worksite employees, including payroll taxes and workers’ compensation costs, plus an acceptable gross profit margin. We invoice the billings concurrently with each periodic payroll of our worksite employees. Revenues, which exclude the payroll cost component of billings, are recognized ratably over the payroll period as worksite employees perform their service at the client worksite. We include billings to clients not invoiced in unbilled accounts receivable and the associated accrued worksite employee expense on the consolidated balance sheet.

When our markup is computed as a percentage of payroll cost, revenues are also affected by the payroll cost of worksite employees, which can fluctuate based on the composition of the worksite employee base, inflationary effects on wage levels and differences in the local economies of our markets.

The primary direct costs associated with our revenue generating activities are:

·    employment-related taxes (“payroll taxes”);

·    workers’ compensation claim costs.

Payroll taxes consist of the employer’s portion of Social Security and Medicare taxes under FICA, federal unemployment taxes and state unemployment taxes. Payroll taxes are generally paid as a percentage of payroll cost subject to maximum limitations. The federal tax rates are defined by federal regulations. State unemployment tax rates are subject to claim histories and vary from state to state.

Due to the significance of the amounts included in billings to the Company’s clients and its corresponding revenue recognition methods, the Company has provided the following reconciliation of billings to revenue for the years ended December 31, 2006 and December 31, 2005.

 

F-9

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		Year Ended				Year Ended
		December 31,				December 31,
		2006				2005
Reconciliation of billings to revenue recognized:
Billings to clients		$	26,091,692			$	16,825,320
Less – Gross wages billed to clients			(21,354,418	)			(14,584,477	)
Total revenue as reported			4,737,274				2,240,843
Total Cost of Sales			3,384,802				1,689,341
Gross Profit		$	1,352,472			$	551,502
Revenue consists of:
Revenue from fees for service
on a fixed percentage		$	4,604,385			$	2,202,078
Revenue from fees for service
on a fixed cost			113,093				38,765
Revenue from insurance commissions		19,796					0
Total revenue as reported		$	4,737,274			$	2,240,843
Cost of Sales Consists of:
Employer portion of Social Security
And Medicare taxes		$	1,494,961			$	973,196
State and Federal Unemployment taxes			288,899				244,985
Workers’ Compensation Premium			1,234,468				418,991
Other Misc.  Expense			366,474				52,170
Total Cost of Sales		$	3,384,802			$	1,689,341

 

When the Company records revenue on a fixed fee per transaction only that fee is recorded as revenue. When the Company records revenue for the sale of insurance products only the commission paid by the insurance carrier is recorded as revenue.

I.           Advertising Costs.

The Company expenses all advertising costs as incurred.

J.           Use of Estimates.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. These estimates form the basis for judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and judgments are based on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. However, future events are subject to change and the best estimates and judgments routinely require adjustment. US GAAP requires estimates and judgments in several areas, including those related to impairment of goodwill and equity investments,

 

F-10

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revenue recognition, recoverability of inventory and receivables, the useful lives of long lived assets such as property and equipment, the future realization of deferred income tax benefits and the recording of various accruals. The ultimate outcome and actual results could differ from the estimates and assumptions used.

K.           Goodwill

The goodwill and intangible assets are subject to the provisions of SFAS No. 142, “ Goodwill and Other Intangible Assets ” (“SFAS 142”). In accordance with SFAS 142, goodwill and other intangible assets are tested for impairment on an annual basis or when indicators of impairment exist, and written down when impaired

L.           Impairment of long-lived Assets.

The Company reviews the recoverability of the carrying amounts of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset might not be recoverable. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed   for   impairment   whenever   events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  Determination of recoverability is based on an estimate of discounted future cash flows resulting from the use of the asset and its eventual disposition.  Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use are based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

M.           Fair Value Disclosures.

The  carrying  amounts  reported  in the  balance  sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses,  approximate  fair value  because of the  immediate or short-term maturity of these financial instruments.

 

N.           Segment Reporting

 

The Company operates in one reportable segment under the Statement of Financial Accounting Standards (“SFAS”) No. 131, Disclosures about Segments of an Enterprise and Related Information

 

O.           New Accounting Pronouncements

 

 In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The effective date for the Company is January 1, 2007. Upon adoption, the cumulative effect of applying the recognition and measurement provisions of FIN 48, if any, shall be reflected as an adjustment to the opening balance of retained earnings. The adoption of FIN 48 is not anticipated to have a material impact on our Consolidated Financial Statements.

 

F-11

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In September 2006, FASB Statement 157, “Fair Value Measurements” (“SFAS 157”) was issued. SFAS 157 establishes a framework for measuring fair value by providing a standard definition of fair value as it applies to assets and liabilities. SFAS 157, which does not require any new fair value measurements, clarifies the application of other accounting pronouncements that require or permit fair value measurements. The effective date for the Company is January 1, 2008. The adoption of SFAS 157 is not anticipated to have a material impact on our Consolidated Financial Statements.

 

Note 2

Acquisitions/Dispositions

On January 1, 2005, The Resourcing Solutions Group, Inc. acquired substantially all the assets of Rossar HR LLC. The acquisition was accounted for as a purchase. The Company assumed certain debts and lease obligations of Rossar HR, LLC and issued a note payable of $272,000 and executed an employment contract with the former owner of Rossar HR, LLC. Consideration under the agreement consists of compensation amounting to $85,000 and bonuses based on business unit performance.. The Company recorded $232,950 in Goodwill in conjunction with this acquisition. During the second quarter of 2005, the Company recorded an impairment of $131,950 reducing the value of Goodwill to $101,000.

In May 2005, The Resourcing Solutions Group, Inc. sold 16 clients administrative service contracts to Allegro, Inc. in Columbia, South Carolina.  The Company sold all of its North Carolina, South Carolina and Florida service contracts.  The Company could no longer service these contracts and make a profit.

In connection with the sale of these contracts the Company recognized a loss from sale of contracts of $16,271 at December 31, 2005.

In April 2006, the Company acquired all the outstanding shares of stock of Piedmont HR, Inc. World Wide Personnel of Maine, Inc and United Personnel Services, Inc. from its parent company Pacel Corp. for $525,000.  The effective date of the purchases was April 1, 2006 for World Wide Personnel of Maine, Inc and January 1, 2006 for Piedmont HR, Inc. and United Personnel Services, Inc. The Company issued a note  to its parent company Pacel Corp. for $525,000 as consideration for these acquisitions. Total assets acquired was $223,106 which included $63,174 in cash and $10,000 in fixed assets which consisted of Office/Computer Equipment. Total Liabilities assumed was $205,498. The Company recorded goodwill of  $507,392 in connection with these acquisitions.

.

Wide Personnel of Maine, Inc and United Personnel Services, Inc. are licensed Professional Employer Organizations operating in the state of Maine. United Personnel was formed in 1999 and World Wide Personnel of Maine, Inc was formed in 1997. Both companies offer full service human resource management services for small and mid-sized businesses. Combined these acquisitions increase the Company’s work site employees by approximately 600. The purchase of these companies extends the operating footprint of the Company from the mid-Atlantic region to the northeast region of the country.

Piedmont HR, Inc is a Virginia corporation which provides support to non-owned PEO’s in Virginia.

The following condensed pro forma financial information gives effect to the Company’s operations as if the United/World Wide acquisition had occurred on January 1, 2005. Unaudited pro forma financial information is not necessarily indicative of the results that the Company would have achieved had the acquisition occurred on either of those dates.

 

F-12

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The Resourcing Solutions Group and Subsidiaries with World Wide/United Personnel

 

			Year Ended
			December 31,
			2006				2005
Revenue		$	5,891,720			$	5,463,998
Net Income (Loss)		$	77,225			$	(963,214	)
Basic & Diluted  Net Income ( loss )
per common and common equivalent
share		$	1.01			$	(481.61	)

In September 2006, the Company acquired all the outstanding stock of Consolidated Services, Inc. an insurance agency licensed in multiple states and appointed to multiple insurance carriers. Acquiring Consolidated allows the Company to receive insurance commissions paid by the carriers to the producer. The effective date of the purchase was September 1, 2006. The Company issued a Promissory Note for $34,090. Total assets acquired in the acquisition were $27,802 which included $16,232 in cash, $10,773 in receivables and $797 in furniture, fixtures and equipment. Total liabilities assumed were $10,242; Goodwill was valued at $16,532.

 

Note 3

Accounts Receivable

The Company’s accounts receivable is primarily composed of trade receivables and unbilled receivables. The Company’s trade receivables, which represent outstanding billings to clients, are reported net of allowance for doubtful accounts of $0 for 2006 and 2005. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectibility of specific accounts and by making a general provision for other potentially uncollectible amounts.

The Company makes an accrual at the end of each accounting period for billings to clients not invoiced in unbilled accounts receivable and the associated accrued worksite employee expense on the consolidated balance sheet. The Company generally requires that clients pay invoices for service fees no later than one day prior to the applicable payroll date. As such, the Company generally does not require collateral. Customer prepayments directly attributable to unbilled accounts receivable have been netted against such receivables as the billings have been earned and the payroll cost has been incurred, thus the Company has the legal right of offset for these amounts. As of December 31, 2006 and 2005, unbilled accounts receivable consisted of the following:

 

		December 31,
		2006				2005
Accrued worksite employees payroll cost		$	564,986			$	163,626
Unbilled revenue			18,514				6,123
Unbilled accounts receivable		$	583,500			$	169,749

 

Property and equipment consist of the following:                                                                                                                                          

		December 31,
		2006				2005
Computers and office Equipment		$	258,411			$	258,411
Less accumulated deprecation			182,797				133,031
		$	75,614			$	125,380

The Company had an inter-company payable to its parent Pacel Corp. of $ 0.00 and $1,020,053 at December 31, 2006 and 2005 respectively.  As part of the December 4, 2006 agreement the Company issued 992,696 shares of common stock (shares have been restated for 1 for 1000 reverse) in exchange for $1,832,014 of payables to Pacel Corp. and the assumption of a $500,000 obligation to Antoinette Peterson. The remaining $200,000 payable has been converted to a demand note at an interest rate of eight percent (8%).

 

Note 6

Income Taxes

 

At inception, the Company adopted SFAS No. 109, Accounting for income taxes.  Under the provision of SFAS No. 109, the Company elected not to restate prior years due to immateriality.

At this time, the Company does not believe it can reliably predict profitability for the long-term.  Accordingly, the deferred tax asset applicable to 2006 and 2005 operation has been reduced in its entirety by the valuation allowance.

As a result of the operating losses for the year ended December 31, 2005, the Company has available to offset future taxable income a net operating loss of approximately $360,646 expiring in 2025.

The components of this provision (credit) for income taxes from continuing operations is as follow:

 

		2006				2005
Federal
Statutory rate		$	21,860			$	(360,646	)
Net operating loss carry forwards			(21,860	)
Tax benefit not provided
Due to valuation allowance						$	360,646
Provision for income taxes		$	-0-			$	-0-

Components of the Company’s deferred tax assets and liabilities are as follow:

		December 31,
		2006				2005
Deferred tax assets:
Tax benefit related to net operating loss carry forward
And research tax credit		$	338,786			$	360,646
Total deferred tax assets		$	338,786			$	360,646
Valuation allowance for
Deferred tax assets		$	338,786			$	360,646
Net deferred tax assets		$	-0-			$	-0-

Note 8

Commitments and Contingencies

 

Operating Leases

Future annual minimum lease payments under all non-cancelable operating leases as of December 31, 2006 are as follows:

2007			128,294
2008			132,568
2009			122,583
2010 & thereafter			116,222
Total Minimum Lease Payments		$	499,667

THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

		June 30,				December 31,
		2007				2006
		(Unaudited)				(Audited)
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		$	407,448			$	207,622
Payroll and payroll related liabilities			643,339				385,642
Accrued worksite employee payroll expense			868,617				564,986
Accrued expenses			20,295				43,512
Client deposits and advance payments			11,958				2,208
Short term payables			450,352				821,034
Total current liabilities			2,402,009				2,025,004
Long-term liabilities:
Notes Payable – Non Current portion			174,525				192,805
Total long term liabilities			174,525				192,805
Total liabilities			2,576,534				2,217,809
Stockholders’ equity (deficit):
Preferred stock, .001 par value, 200,000,000
shares authorized, 0 shares issued			-0-				-0-
Common stock, .001 par value, 2,000,000,000 shares
authorized, 35,118,630 and 994,920 shares
issued respectively			35,119				995
Additional paid-in capital			2,326,412				1,331,021
Retained Earnings			(1,781,171	)			(854,397	)
Total stockholders’ equity			580,360				477,619
Total liabilities and stockholders’ equity		$	3,156,894			$	2,695,428

THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

		Six Months     Ended								Three months ended
		June 30,								June 30,
		2007				2006				2007				2006
Revenue		$	2,444,217			$	1,987,284			$	1,324,720			$	1,563,166
Cost of services			1,925,496				1,509,604				1,130,335				1,194,382
Gross profit			518,721				477,680				194,385				368,784
Operating costs and expenses:
Salary Expense			803,948				318,418				413,764				171,847
General and administrative			575,320				184,055				324,623				97,292
Sales and marketing			37,941				14.933				6,395				7,647
Depreciation and amortization			21,873				30,165				10,923				16,003
Total operating expenses			1,439,082				547,571				755,705				292,789
Operating Loss			(920,361	)			(69,891	)			(561,320	)			75,995
Other expenses:
Interest expense			(6,413	)			(10,226	)			(837	)			(5,710	)
Total other expense							(10,266	)			(837	)			(5,710	)
Net Profit (loss)		$	(926,774	)		$	(80,117	)		$	(562,157	)		$	70,285
Net Profit (loss) per common and common equivalent share:
Basic			(0.028	)			(40,059	)		$	(0.016	)		$	(35,143	)
Diluted			(0.028	)			(40,059	)		$	(0.016	)		$	(35,143	)
Weighted average shares outstanding:
Basic			32,562,960				2				35,050,498				2
Diluted			32,562,960				2				35,050,498				2

THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

		Six months ended
		June 30,
		2007				2006
Cash flows from operating activities:
Net profit (loss)		$	(926,774	)		$	(80,117	)
Adjustments to reconcile net Income (loss) to net cash
provided by (used in) operating activities:
Depreciation			21,873				30,185
Stock Issued for services			42,000				-0-
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable			(187,815	)			(146,863	)
Accounts receivable-Unbilled			(43,361	)			(425	)
Other receivables			25,720				38,842
Insurance deposits			(85,986	)			(19,173	)
Prepaid expenses			(76,881	)			(18,016	)
Security Deposit			(600	)			-0-
Increase (decrease) in liabilities:
Accounts payable			195,712				69,847
Accrued expenses			(23,217	)			58,514
Payroll and payroll related liabilities			168,500				78,092
Accrued work site employee payroll cost			(45,288	)			243
Client Deposits and advance payments			(119,212	)			-0-
			-0-
Net cash (used in) operating activities			(1,055,329	)			16,545
Cash flows from investing activities:
Cash CD-Restricted			105,033				(2,713	)
Cash acquired in World Wide of Virginia Acquisition			150,061				63,174
Net cash (used in) investing activities			255,094				60,461
Cash flows from financing activities:
Repayments of notes payable			(93,856	)			(18,485	)
Loans & Exchanges Pacel Corp.							(62,934	)
Issuance of common stock			510,300				-0-
Net cash provided by financing activities			416,444				(81,419	)
Net increase (decrease) in cash and cash equivalents			(383,791	)			(4,413	)
Cash and cash equivalents, beginning of period			703,830				255,356
Cash and cash equivalents, end of period		$	320,039			$	250,943

THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

		Six months ended
		June 30,
		2007				2006
Supplemental disclosure of cash flow information:
Cash paid during the years for:
Interest		$	9,066			$	11,592
Income taxes		$	415			$	-0-

Due to the significance of the amounts included in billings to the Company’s clients and its corresponding revenue recognition methods, the Company has provided the following reconciliation of billings to revenue for the 2nd quarter ended June 30, 2007 and June 30, 2006.

 

Note 4

Notes Payable

		June 30,				December 31,
		2007				2006
Short term payable consists of:
Current portion M. Sartori note		$	27,127			$	27,127
Note payable A. Peterson			298,801				534,092
Note Payable			0				59,815
Note Payable Pacel Corp.			124,424				200,000
Total Short-term borrowings		$	250,352			$	821,034
Long-term Notes Payable
Note Payable – A. Peterson			200,000
Non current portion – M. Sartori		$	174,525			$	214,339

In September 2004, the Company issued a Note Payable to the former owner of Rossar HR LLC for $272,000 for the purchase of the assets of Rossar HR, LLC. $71,337 is payable over a 5 year period at $1,622 per month. $200,663 is payable over a 10 year period at $2,228 per month. The balance at June 30, 2007 was $27,127 current portion, $174,525 non current for a total balance of $201,652.  The balance at December 31,, 2006 was $27,127 current portion, $214,339 non current for a total balance of $241,466.

In September 2006, the Company issued a Note Payable to the former owner Antoinette Peterson of Consolidated Services, Inc. for the acquisition of Consolidated Services, Inc. for $34,092. The Company paid $551 in interest on this note. The Note is payable in one-year at an interest rate of six percent (6%). In December 2006 the Company issued a note payable for $500,000, payable in one year at an interest rate of six percent (6%) ,when it assumed a $500,000 obligation from its former parent as part of the December 4, 2006 Pacel agreement. In January 2007 the Company issued 5,000,000 shares of common stock in exchange for the cancellation of the note. On May 17, 2007, the Company issued a Note Payable to the former owner of World Wide Personnel Services of Virginia, Inc. for $200,000 the acquisition of World Wide Personnel Services of Virginia, Inc. The Company accrued $1,446.00 in interest on this note. The Note is payable in one-year at an interest rate of six percent (6%). As part of the acquisition of World Wide Personnel Services of Virginia, Inc. we assumed a $64,710 debt to A. Peterson. The Company owes a total of 298,801 to A. Peterson

The Company had a note payable to its former parent of $124,424 and $200,000 at June 30, 2007 and December 31, 2006 respectively.   The Company paid $3,055 in interest on this note.

On November 30, 2004, the Company borrowed $100,000 at an interest rate of 8% , payable in one year. In May 2006, the note was modified to be repaid over a six-month period at $7,500 per month with a balloon payment for the remaining balance. As collateral for the note, The Resourcing Solutions Group, Inc. placed 1,000,000 shares in escrow. In January 2007, The balance of the note $59,815  was  exchanged for 1,000,000shares held in escrow.

 

Note 5

Related Party Transactions

Employment Agreements

In February 2007, the Company entered into a five year employment agreement with its President and Chief Executive Officer.  Compensation will include an annual base salary of $240,000 and an incentive bonus plan based on the EBITDA (earnings before interest, tax, depreciation and amortization).  The agreement also includes severance payments upon termination of employment.

 

SIGNATURES

 In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	The Resourcing Solutions Group, Inc.
Date:  September 24, 2007		/s/ GARY MUSSELMAN
		Gary Musselman, President & CEO

 

 

 

 

 

 

 

 

 

 

 

 

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