RSGX Resourcing Solutions Group Inc New (CE)

FOR THE TRANSITION PERIOD FROM ______________ TO _______________

Commission File Number: 000-52740

THE RESOURCING SOLUTIONS GROUP, INC.

 

(Exact name of registrant as specified in its charter)

 

 

	NEVADA		83-0345237
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
	7621 Little Ave  Suite 101 Charlotte, NORTH CAROLINA		28226
	(Address of principal executive offices)		(ZIP Code)

THE RESOURCING SOLUTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

 

		Nine Months Ended September 30,
		2007				2006
Cash flows from operating activities:
Net Profit (loss)		$	(1,444,442)			$	(42,994	)
Adjustments to reconcile net Income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization			121,900				107,115
Stock Issued for Services			54,000				0
(Increase)/Decrease in cash from changes in assets:
Accounts receivable			(159,684)				(116,969	)
Accounts receivable-Unbilled			60,242				(42,253	)
Other receivables			(91,019)				(25,350	)
Insurance deposits			(130,649)				19,245
Prepaid expenses			(99,237)				(49,944	)
Security deposits			(600)				0
Increase/(Decrease) in cash from changes in liabilities:
Accounts payable			86,989				(91,713	)
Accrued expenses			(24,085)				(14,916	)
Client deposit			(52,134)				47,366
Payroll and payroll related liabilities			10,217				27,543
Accrued work site employee payroll costs			(44,496)				33,013
Due to Affiliate			0				638,131
Net cash (used in) provided by operating activities			(1,712,998)				488,274
Cash flows from investing activities:
Purchases of property and equipment                                          -							(2,161	)
Redemption of Restricted CD			105,033				74,822
Cash Acquired in Acquisitions			150,061
Net cash (used in) provided by
investing activities			255,094				72,661
Cash flows from financing activities:
Repayments of notes payable			(234,264)				(41,397	)
Issuance of notes payable			620,000
Common Stock			550,300
Net cash provided by (used in) financing activities			936,036				(41,397	)
Net increase (decrease) in cash and cash equivalents			(521,868)				519,538
Cash and cash equivalents, beginning of period			703,830				255,356
Cash and cash equivalents, end of period		$	181,962			$	774,894
Supplemental disclosure of cash flow information:
Cash paid for interest		$	24,355			$	15,602

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

• the payroll cost of our worksite employees; and
• a markup computed as a percentage of the payroll cost.

• employment-related taxes (“payroll taxes”);
• workers’ compensation claim costs.

		Nine Months Ended				Nine Months Ended
		September 30,				September 30,
		2007				2006
Reconciliation of billings to revenue recognized:
Billings to clients		$	25,890,363			$	18,542,707
Less – Gross wages billed to clients			(21,951,544	)			(15,193,264	)
Total revenue as reported			3,938,819				3,349,443
Total Cost of Sales			2,868,687				2,509,505
Gross Profit		$	1,070,132			$	839,938
Revenue consists of:
Revenue from fees for service
on a fixed percentage		$	3,533,210			$	2,946,337
Revenue from fees for service
on a fixed cost			371,121				397,449
Revenue from insurance commissions			34,488				5,657
Total revenue as reported		$	3,938,819			$	3,349,443
Cost of Sales Consists of:
Employer portion of Social Security
And Medicare taxes		$	1,502,259			$	1,042,201
State and Federal Unemployment taxes			303,404				239, 137
Workers’ Compensation Premium			972,529				995,720
Other Misc.  Expense			90,495				232,447
Total Cost of Sales		$	2,868,687			$	2,509,505

Intangible assets acquired consisted of the following:		Life
Customer contracts		7				$	294,507
Total amount of intangible assets acquired and weighted average life						$	294,507

		Nine Months Ended				Nine Months Ended
		September 30, 2007				September 30, 2006
Revenue		$	4,827,736			$	5,606,862
Cost of Services			(3,649,738	)			(4,486,075	)
Gross Profit			1,177,998				1,120,787
Total operating expenses			2,515,931				1,136,167
Net Loss		$	(1,336,576	)		$	(15,380	)
Net loss per common and common equivalent share:
Basic		$	(0.04	)		$	(7.69	)
Diluted		$	(0.04	)		$	(7.69	)
Weighted average shares outstanding:
Basic			33,304,522				2,000
Diluted			33,304,522				2,000

Note 4

Notes Payable

 

		September 30,				December 31,
		2007				2006
Short term payable consists of:
Current portion M. Sartori note		$	27,127			$	27,127
Note payable - A. Peterson			285,864				534,092
Note payable - Carl Horsely			20,000				0
Note payable - Lily Consulting Group LLC			528,585				0
Note Payable			0				59,815
Note Payable - Pacel Corp.			61,081				200,000
Total Short-term borrowings		$	922,657			$	821,034
Long-term Notes Payable
Non current portion – M. Sartori			166,614				192,805
Total long term notes payable		$	166,614			$	192,805

Note 6

Goodwill and Other Intangible Assets

						September     30, 2007								December     31, 2006
		Weighted				Gross								Gross
		Average				Carrying				Accumulated				Carrying				Accumulated
		Life				Amount				Amortization				Amount				Amortization
Amortized intangible assets
Customer lists		7				$	1,034,847			$	206,141			$	740,341			$	117,037
Goodwill						$	16,532							$	16,532

Note 7

Subsequent Events

 

In October 2007 the board of directors authorized the cancellation of Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock.  In addition they have changed the description of the Series B Convertible as follows:

  Series B Convertible Preferred Stock

The Series B Convertible Preferred Stock will consists of 40,000,000 shares, par value $.001 per share. Each share of  the Series B Stock is entitled to one vote on all matters for which shareholders of the Company have a right to vote. Series B Convertible Preferred Shares convert to Common Shares upon the Company achieving an annualized per quarter increase of in Pre Tax Income of 23.5% or and EBTIDA of 23.5% or a share price of $4.00 per share of its Common stock. These milestones must be achieved for 3 out of 5 consecutive quarters to trigger the mandatory conversion to Common shares. Series B Convertible shares receive a 4.5% Dividend Preference paid in common stock upon conversion of the Preferred shares to Common shares. No shares have been issued.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS

You should read the following discussion in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this filing. Historical results are not necessarily indicative of trends in operating results for any future period.

The Resourcing Solutions Group, Inc. is a workforce management solutions company that provides human resources, professional employer organization (“PEO”) and insurance products and services in areas such as payroll, employee benefits, workers’ compensation insurance programs, staffing, compensation, recruiting and retention to small and medium-sized businesses and non-profit organizations.  In 2008 the Company will add to its menu of products and services by forming or acquiring a wholly-owned, commercial property and casualty insurance company. Our workforce management and PEO products and services are marketed under the name AsmaraHR ℠ . Our insurance products are marketed under Consolidated Benefits, Inc. Our headquarters are in Charlotte, North Carolina, and we have regional operations centers in Pittsburgh, Pennsylvania, Auburn, Maine and Mobile, Alabama and sales and client services centers in Houston and El Paso, Texas; Winchester, Virginia; and Raleigh, North Carolina. We serve clients along the Eastern seaboard and across the Gulf of Mexico of the United States. Through a variety of workforce management and insurance services and products, we work with a client base ranging from  small businesses   up to 500 employees.

HR Products

The Company began its entry into the human resource outsourcing (“HRO”) market through the April 2003 acquisition of certain assets of Asmara, Inc, a Professional Employer Organizations (“PEO”) located in North Carolina. In December 2004 the Company acquired substantially all the assets of Beneorp Business Services, Inc., a PEO based in Dallas, TX, and sold all the issued and outstanding shares of Asmara Services I, Inc..  In January 2005, the Company acquired substantially all the assets of Rossar HR, LLC, a Pittsburgh, Pennsylvania based PEO. In January 2006, the Company acquired the stock of Piedmont HR; Inc a northern Virginia based company providing administrative services to PEO’s. Also in January 2006, the Company acquired the outstanding stock of United Personnel Services, Inc.  Maine-based PEO. In April 2006, the Company acquired the outstanding stock of World Wide Personnel Services of Maine, Inc., a Maine- based PEO.  In October 2006, the Company acquired assets of Capital Resources, LLC a North Carolina HRO company. In June 2007, the Company acquired all the stock of World Wide Personnel Services of Virginia, Inc, a PEO operating in the northern Virginia.

The Company markets to its clients, a broad range of products and services that provide an out-sourcing solution for the clients’ human resources (“HR”) and insurance needs. The Company’s products and services will initially include benefits administration, payroll administration, and governmental compliance, risk management, unemployment administration, and health, welfare and retirement benefits. By allowing the management of these small- to medium-size business clients to focus on the “business of business” rather than complicated and time consuming administrative tasks , the Company is well positioned to improve the efficiency of its clients’ businesses and enhance their ability to be profitable in their chosen marketplace.  In addition, such initiatives as improving the ability to attract and retain talent, improving the planning and management of payroll cash flows and managing employment risks should enhance the success of the Company’s clients.

Insurance Products

The Company recognized the need to provide comprehensive insurance services as part of the overall support and administration services offered to clients.  Through Consolidated Services, Inc., (“CSI”), a commercial line insurance agency with branch offices located in various states, the Company will obtain insurance coverage for its clients. Since the Company’s staff holds insurance brokerage licenses, the Company is able to jointly market its products, employee benefits and worker’s compensation insurance on a “one-stop” basis. From the client’s perspective this relieves the client of having to shop for benefits. Since the Company’s sales staff holds valid insurance licenses, it is also able to legally review the benefit plans of a prospect. In many situations benefits are the lead into the sale of our human resource product.

These products offer strong competitive incentives for attracting quality new business.  

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Employee Benefit Products

 The Company currently has multiple avenues to provide employee health insurance. For clients who desire their own specific health insurance plan the Company has a relationship with a medical, health and dental agency allowing the Company to retain 60% of all insurance commissions generated from the sale of insurance products. The Company also can provide large group health coverage  rates to small groups utilizing our PEO services through United Health Care, and dental coverage through Guardian Dental.  Additionally, the Company operates a multiple-employer 401(k) retirement plan for its client companies through Matrix Asset Allocation from Abundance Technologies, Inc..  The Company   receives a sales commission for new employees entering this plan.

Workers’ Compensation Products

The Company receives 100% of commission paid on workers’ compensation insurance where CSI is the broker. Currently CSI is admitted as the broker on multiple national, regional and specialized carriers including Guarantee Insurance Company, Texas Mutual Insurance Company, and Maine Employers Mutual Insurance Company. The Company has established relationships with several insurance wholesale agencies where commissions are divided between both companies. This arrangement gives the Company the ability to market to virtually any employer.

In order to more fully serve our clients and to create multiple revenue streams, the Company determined that it needed to become a full service insurance agency. Our clients are consumers of multiple insurance products which we administer on their behalf. In order to better serve out clients the Company, in September 2006, acquired Consolidated Services, Inc. a full service insurance agency licensed to operate in states where the Company has clients.

Proposed Insurance Company

In 2008, we propose to add to our menu of products and services by forming or acquiring a property and casualty insurance company to market traditional commercial lines of insurance through affiliates and through independent insurance agencies.  The Resourcing Solutions Group will then become a single source solution for the human resources, payroll, administrative, and insurance and risk management responsibilities and challenges faced by employers.  The Company will provide clients with “one-stop shopping” for multiple, related products through internal and external sales forces in two different industries.

The proposed insurer will begin operations by offering workers’ compensation insurance, the coverage most requested by the Company’s clients, in its first year of operation in 2008, adding multiple lines coverages including commercial property and package policies in 2009, with commercial automobile insurance available in 2010.

This wholly-owned insurance company will provide a stable market for the business insurance needs of select clients that use the Company’s human resources outsourcing and payroll administration services.  The insurer’s policies will be sold through consultants in the Company’s human resources outsourcing and payroll division, who will be licensed insurance agents qualified to advise clients on insurance matters.  The insurance company will also market insurance products through a distribution system of non-affiliated independent insurance agencies.  These independent agents will write commercial insurance for businesses that may or may not be potential human resources clients of the Company.

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NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2006

 

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, 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 for 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 revenues that have been recognized but not invoiced in unbilled accounts receivable on our consolidated balance sheets.

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. 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 nine months ended September 30, 2007 and September 30, 2006.

 

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		Nine Months Ended				Nine Months Ended
		September 30,				September 30,
		2007				2006
Reconciliation of billings to revenue recognized:
Billings to clients		$	25,890,363			$	18,542,707
Less – Gross wages billed to clients			(21,951,544	)			(15,193,264	)
Total revenue as reported			3,938,819				3,349,443
Total Cost of Sales			2,868,687				2,509,505
Gross Profit		$	1,070,132			$	839,938
Revenue consists of:
Revenue from fees for service
on a fixed percentage		$	3,533,210			$	2,946,337
Revenue from fees for service
on a fixed cost			371,121				397,449
Revenue from insurance commissions			34,488				5,657
Total revenue as reported		$	3,938,819			$	3,349,443
Cost of Sales Consists of:
Employer portion of Social Security
And Medicare taxes		$	1,502,259			$	1,042,201
State and Federal Unemployment taxes			303,404				239, 137
Workers’ Compensation Premium			972,529				995,720
Other Misc.  Expense			90,495				232,447
Total Cost of Sales		$	2,868,687			$	2,509,505

 

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.

 Revenue for the nine months ended September 30, 2007 was $3,938,819 compared to revenue of $3,349,443 for the nine months ended September 30, 2006. The increase in revenue is   a direct result of the acquisition of World Wide Personnel Services of Maine, Inc and World Wide Personnel Services of VA. The revenue increase attributable to the WWM and WWV was $1,777,384 and $619,065 respectively.  $1,896,155 was attributable to WWM for 2006 which was included from April 1, 2006 compared to $1,777,384 for the nine months ended September 2007.

 

Cost of Sales for the nine months ended September 30, 2007 was $2,868,687 compared to $2,509,505 for the nine months ended September 30, 2006. The Cost of Sales increased as a direct result of   the acquisition of World Wide Personnel Services of Maine, Inc and World Wide personnel Services of VA. The cost of sales attributable to WWM and WWV was $1,631,605 and $534,628 respectively.  $1,638,231 was attributable to WWM for 2006 which was included from April 1, 2006 compared to $1,631,605 for the nine months ended September 2007.    Cost of Sales as a percentage of revenue decreased from 75% for the nine months ended September 30, 2006 to 73% for the year ended September 30, 2007. The decrease in the percentage is attributable to increased sales of the Company’s products other than PEO services.

Salary, General and Administrative expenses including operating expenses, facilities,  benefits and professional fees was $2,2 11,090 for the nine months ended September 30, 2007 compared to $717,618 for the nine months ended September 30, 2006. The increase was directly attributed to the integration of World Wide Personnel Services of Maine, Inc and World Wide Personnel Services of VA Inc. acquisitions and administrative costs associated with starting our insurance company.  The G&A expenses attributable to WWM & WWV were $326,254 and $81,027 respectively.  $187,594 was attributable to WWM for 2006 which was included from April 1, 2006 compared to $326,255 for the nine months ended September 30, 2007.  

 

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The G&A expenses attributable to the insurance company was $125,400.  We believe that our G&A expenses associated with the insurance company will continue to increase.  Our G&A expenses have also increased over 2006 due to our filing a registration statement and meeting SEC reporting requirements.  We will continue to incur these costs in the future.    We believe that the current and future HR operations can be supported with little or no increase in administrative expenses.

 

Sales and Marketing expenses increased by $115,225 to $157,249 for the nine months ended September 30, 2007 compared to $51,965 for the nine months ended September 30, 2006. The increase in cost results from increased commissions paid for the sales of new clients, an expanded sales force, and new products to existing clients.

Depreciation and amortization expenses decreased to $60,563 for the year ended September 30, 2007 compared to $62,595 for the nine months ended September 30, 2006. The decrease is due to the Company fully depreciating existing assets

Interest expense for the nine months ended September 30, 2007 was $24,335 compared to $17,922 for the nine months ended September 30, 2006. The increase is due to short term debt incurred in 2006 and repaid during the same year

 

Three Months Ended September 30, 2007 compared to the three months ended September 30, 2006.

This section should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere in this report. Historical results are not necessarily indicative of trends in operating results for any future period. Also, the section should be read in conjunction with the section on the comparison of September 30, 2007 to September 30, 2006 as the Company’s procedures and policies are the same.

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 three months ended September 30, 2007 and September 30, 2006.

 

		Three Months Ended				Three Months Ended
		September 30,				September 30,
		2007				2006
Reconciliation of billings to revenue recognized:
Billings to clients		$	10,815,537			$	8,049,497
Less – Gross wages billed to clients			(9,320,935	)			(6,687,338	)
Total revenue as reported			1,494,602				1,362,159
Total Cost of Sales			943,193				999,901
Gross Profit		$	551,410			$	362,258
Revenue consists of:
Revenue from fees for service
on a fixed percentage		$	1,349,436			$	1,217,745
Revenue from fees for service
on a fixed cost			126,233				138,756
Revenue from insurance commissions			18,933				5,658
Total revenue as reported		$	1,494,602			$	1,362,159
Cost of Sales Consists of:
Employer portion of Social Security
And Medicare taxes		$	646,716			$	448,078
State and Federal Unemployment taxes			98,374				77,221
Workers’ Compensation Premium			185,592				349,758
Other Misc.  Expense			12,511				124,845
Total Cost of Sales		$	943,193			$	999,901

 

 

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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.

Revenue for the three months ending September 30, 2007 is $1,494,602 compared to $1,362,159 for the three months ended September 30, 2006. The increase is directly attributable to the acquisition of World Wide Personnel Services of Virginia, Inc.

Cost of Sales for the three months ended September 30, 2007 was 943,193 compared to $999,901 for the three months ended September 30, 2006. The Cost of Sales decreased primarily from the Company selling more services outside of the PEO arena. Non-PEO clients have a lower cost of sales than do clients in a PEO relationship. The Cost of Sales as a percentage of revenue increased from 73% for the period ended September 30, 2006 to 63% for the period ended September 30, 2007. The decrease in the percentage is attributable to more greater sales in the non-PEO products offered by the Company.

Salary, General and Administrative expenses including operating expenses, facilities, benefits and professional fees was $798,717 for the three months ended September 30, 2007 compared to $255,355 for the three months ended September 30, 2006. The increased expenses are attributable to an increased costs resulting from Company plans to acquire new lines of business and increased cost of data security between offices. In addition the Company has incurred increased legal and accounting expenses as it prepares to become a fully reporting Company. These costs are reflected in the General and Administrative expenses of the Company.

Sales and Marketing expenses increased to $51,965 for the three months ended September 30, 2007 compared to $27,664 for the three months ended September 30, 2006. The increase in cost results from increased commissions paid for the sales of new clients, new products to existing clients and the acquisition of World Wide Personnel Services of Virginia.. The Company has increased its sales force and compensates its sales force on a commission. As a result of increased revenue sales costs will also increase.

 Depreciation expenses decreased to $10,923 for the three months ended September 30, 2007 compared to $16,003 for the six months ended September 30, 2006. The decrease is due to the Company fully depreciating existing assets.

Interest expense for the three months ended September 30, 2007 was $17,922 compared to $5,376 for the three months ended September 30, 2006. The increase is due to our continued need for working capital.

LIQUIDITY AND CAPITAL RESOURCES

 

Cash and cash equivalents at September 30, 2007 decreased to $181,962 from $703,830 at December 31, 2006. Net cash used in operating activities for the nine months ended September 30, 2007 was $1,712,998 compared to net cash provided by operating activities of $488,274 for the for the nine months ended September 30, 2006. Net cash used in operating activities is attributed to the net loss of $1,444,442, and increase in accounts receivables of $159,684,and increase in other receivables $91,019, an, increases in insurance deposits of $130,649, an increase in prepaid expenses of $99,237, a decrease in Accrued expense of $24,085, client deposits of $52,134 and accrued work site employee costs of $44,496, offset by and increase in payable and non-cash items (Depreciation & amortization)  of $175,900 .

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Net cash provided by investing activities was $255,094 which consisted of $150,061 cash acquired in the WWV acquisition and the redemption of a restricted CD $105,033.

Net cash provided by financing activities was $936,036 which consisted of  short term borrowing of $620,000 the sale  of $550,300 of commons stock off set by reducing other notes payable by $234,264.

 To satisfy the Company’ short term cash requirements the Company entered into a short term loan agreement for $620,000 with Lily Consulting Group  LLC, in August 2007 at an interest rate of 10% to be repaid by December 31, 2007.

 

As part of our goal to achieve profitability, the Company has developed an aggressive marketing strategy as well as an investment to significantly upgrade its HRIS (Human Resource Information System) capabilities to service its current and prospective clients. This plan includes hiring and training the sales team as well as marketing services through the sale of insurance products. We have successfully negotiated joint marketing programs to market its products and services.

To further growth we are seeking to either acquire or form a property and casualty insurance carrier. This carrier will be operated from its corporate headquarters located in Charlotte, North Carolina. In order to capitalize the proposed insurance carrier and to fund other acquisitions we have obtained a Term-Sheet and “best-efforts” Selling Agent’s Agreement to raise $72 million of investment capital.  We will issue Preferred Series “B” Stock to investors.  Management believes this investment will allow it to expand operations sufficiently to achieve profitability and positive cash flow.  If we are not able to raise the necessary funds to purchase or form an insurance company, the Company will continue to have working capital deficits.

 

The Company’s cash requirements for funding its administrative and operating needs exceeds its cash flows generated from operations. Such shortfalls and other capital needs continue to be satisfied through equity financing  and short term borrowings until additional funds can be generated through acquisitions and organic business growth.  The Company expects to continue its investing activities, including expenditures for acquisitions, sales and marketing initiatives and administrative support.  The inability to obtain equity financing would seriously hinder the Company’s ability to execute its business strategy and impair its ability to continue as a going concern.

 

CRITICAL ACCOUNTING POLICIES

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable based upon information available to us at the time they were made; however, actual results may differ from these estimates under different future conditions.

 

We believe that the estimates and assumptions discussed below are most important to the portrayal of our financial condition and results of operations since they require our most difficult, subjective, or complex judgments and form the basis for the accounting policies deemed to be most critical to our operations.

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. 

 

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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.

Goodwill and other intangibles

Other intangibles with finite lives arising from acquisitions are amortized over their estimated useful lives of 7 years, using the straight-line method.  Goodwill is not amortized.  Goodwill and other intangibles are reviewed to assess recoverability at least annually and when certain impairment indicators are present.  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.

Forward Looking Statements

The Company is making this statement in order to satisfy the "safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995.

This Form 10-QSB includes forward-looking statements relating to the business of the Company. Forward-looking statements contained herein or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those matters expressed in or implied by forward-looking statements. The Company believes that the following factors, among others, could affect its future performance and cause actual results of the Company to differ materially from those expressed in or implied by forward-looking statements made by or on behalf of the Company:  (a) the effect of technological changes; (b) increases in or unexpected losses; (c) increased competition; (d) fluctuations in the costs to operate the business; (e) uninsurable risks; and (f) general economic conditions.

 

 

Item 6.

Exhibits

Exhibit No.	Description	Page
3(i)	Articles of Incorporation	*
3(ii)	Amendments to Articles of Incorporation	*
3(iii)	Bylaws
4	Designation of Series “B” Convertible Preferred Stock	*
31.1	Rule 13a-14(a)/15d-14(a) Certification
32.1	Section 1350 Certification

Item 7.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized.

 

	The Resourcing Solutions Group, Inc.
DATED: November 18, 2007	By:	/s/ Gary Musselman
		Gary Musselman, President, Chief Executive Officer, and Chief Financial Officer

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