8-K/A 1 v045204_8k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 3 TO FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Date of Report: June 16, 2005 MEDICAL STAFFING SOLUTIONS, INC. -------------------------------- (Exact Name of Registrant as Specified in Charter) Nevada 000-23967 91-2135006 ---------------------------- ------------ ------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 8150 Leesburg Pike, Suite 1200, Vienna, Virginia 22182 ------------------------------------------------ ---------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (703) 641-8890 ITEM 2.01. ACQUISITION OR DISPOSITION OF ASSETS Medical Staffing Solutions, Inc. (the "Company" or "MSSI") is amending this Current Report to correct certain figures set forth in the MSSI and Subsidiaries Unaudited Proforma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2004 and to add certain disclosures to the MSSI and Subsidiaries Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. MSSI entered into an asset purchase agreement (the "Purchase Agreement") on June 16, 2005, by and among MSSI, Nurses PRN Acquisition Corp., a Nevada corporation and wholly-owned subsidiary of MSSI ("Purchaser"), Nurses PRN, LLC, a Florida limited liability company (the "Target") and the members listed therein (collectively, the "Members", and together with MSSI, Purchaser and the Target, the "Parties"). The Parties agreed to close the transaction in escrow subject to the confirmation of delivery to the escrow agent (the "Agent") of those certain escrow documents listed in Schedule A to the Confirmation of Closing in Escrow, dated June 16, 2005. Pursuant to the Purchase Agreement, the Purchaser acquired all of the assets, properties, privileges, rights, interests, business and goodwill belonging to the Target, of every kind and description, real, personal and mixed, tangible and intangible and wherever located (the "Purchased Assets"). The Purchased Assets include all cash items, securities and financial instruments of the Target, all Fixed Assets, Accounts Receivable, Real Property Leases, Intellectual Property, Material Contracts, Files and Records and Goodwill (as each term is defined in the Purchase Agreement). As consideration for the Purchased Assets, the Purchaser caused MSSI to issue and deliver 9,500,000 shares of common stock of MSSI to the Target which were delivered to the Members in the denominations set forth opposite each Member's name on Exhibit A to the Purchase Agreement, and 2,500,000 shares to a creditor. The Purchaser also paid to the Target One Million Six Hundred Thousand Dollars ($1,600,000) as a cash consideration. In addition to the share and cash consideration, the Purchaser paid a contingent payment to the Target based on the Purchaser's achievement of financial targets based on an EBITDA Target (as defined in the Purchase Agreement) not to exceed Five Hundred Thousand Dollars ($500,000). In addition to the Purchased Assets, the Purchaser assumed certain Assumed Liabilities (as defined in the Purchase Agreement) including (a) a Three Hundred Sixty Five Thousand Four Hundred Eighty Seven and 50/100 Dollar ($365,487.50) note payable issued to Jeff Dowling by the Purchaser; (b) a Two Hundred Fifty Thousand Dollar ($250,000) note payable to Aftabe Adamjee by the Purchaser and (c) certain general payables as set forth in Schedule 1.4 of the Purchase Agreement. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (a) Provided herewith. (b) Provided herewith. (c) Exhibit No. and Description: Exhibit 99.1 Asset Purchase Agreement, Incorporated by reference effective as of June 16, to Exhibit 99.1 to the 2005, by and among MSSI, Company's Current Report Nurses PRN Acquisition on Form 8-K filed with the Corp., Nurses PRN, LLC and U.S. Securities and the Members listed therein Exchange Commission on July 11, 2004 Exhibit 99.2 $250,000 Promissory Note, Incorporated by reference effective June 16, 2005, to Exhibit 99.2 to the by Nurses PRN Acquisition Company's Current Report Corp., Inc. issued to Mr. on Form 8-K filed with the Aftab Adamjee U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.3 Executive Employment Incorporated by reference Agreement, dated June 16, to Exhibit 99.3 to the 2005, by and between Company's Current Report Nurses PRN Acquisition on Form 8-K filed with the Corp. and Mr. Robert U.S. Securities and Murphy Exchange Commission on July 11, 2004 2 Exhibit 99.4 Executive Employment Incorporated by reference Agreement, dated June 16, to Exhibit 99.4 to the 2005, by and between Company's Current Report Nurses PRN Acquisition on Form 8-K filed with the Corp. and Ms. Linda Romano U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.5 Release, dated June 16, Incorporated by reference 2005, by Mr. Aftab Adamjee to Exhibit 99.5 to the releasing all claims Company's Current Report against Nurses PRN, LLC, on Form 8-K filed with the Mr. Robert Murphy and Ms. U.S. Securities and Linda Romano Exchange Commission on July 11, 2004 Exhibit 99.6 Release, dated May 26, Incorporated by reference 2005, by Mr. Phil Dodge to Exhibit 99.6 to the releasing all against Company's Current Report Nurses PRN, LLC claims on Form 8-K filed with the U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.7 Release, dated June 16, Incorporated by reference 2005, by Mr. Robert Murphy to Exhibit 99.7 to the releasing all claims Company's Current Report against Nurses PRN, LLC on Form 8-K filed with the U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.8 Release, dated June 16, Incorporated by reference 2005, by Ms. Linda Romano to Exhibit 99.8 to the releasing all claims Company's Current Report against Nurses PRN, LLC on Form 8-K filed with the U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.9 Assumption Agreement, Incorporated by reference dated June 16, 2005, by to Exhibit 99.9 to the and among Nurses PRN, LLC, Company's Current Report Nurses PRN Acquisition on Form 8-K filed with the Corp. and Mr. Jeffrey T. U.S. Securities and Dowling Exchange Commission on July 11, 2004 Exhibit 99.10 Pledge Agreement, dated Incorporated by reference June 16, 2005, by and to Exhibit 99.10 to the between Mr. Robert Murphy Company's Current Report and Ms. Linda J. Romano as on Form 8-K filed with the Pledgor and Mr. Jeffrey T. U.S. Securities and Dowling as Pledgee Exchange Commission on July 11, 2004 Exhibit 99.11 Indemnity and Guaranty Incorporated by reference Agreement, dated June 16, to Exhibit 99.11 to the 2005, by and among Mr. Company's Current Report Aftab Adamjee, Mr. Robert on Form 8-K filed with the Murphy and Ms. Linda U.S. Securities and Romano as Indemnitors and Exchange Commission on Nurses PRN, LLC July 11, 2004 3 Exhibit 99.12 Guaranty of Payment, dated Incorporated by reference June 16, 2005, by Medical to Exhibit 99.12 to the Staffing Solutions, Inc. Company's Current Report with respect to Mr. on Form 8-K filed with the Jeffrey T. Dowling U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.13 Guaranty of Payment, dated Incorporated by reference June 16, 2005, by Medical to Exhibit 99.13 to the Staffing Solutions, Inc. Company's Current Report with respect to Mr. Aftab on Form 8-K filed with the Adamjee U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.14 Guaranty, dated June 16, Incorporated by reference 2005, by Mr. Robert Murphy to Exhibit 99.14 to the and Ms. Linda Romano with Company's Current Report respect to Jeffrey T. on Form 8-K filed with the Dowling and the payment of U.S. Securities and all indebtedness of Nurses Exchange Commission on PRN, LLC July 11, 2004 Exhibit 99.15 Bill of Sale, undated, by Incorporated by reference and between Nurses PRN, to Exhibit 99.15 to the LLC and Nurses PRN Company's Current Report Acquisition Corp. on Form 8-K filed with the U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.16 Assignment and Assumption Incorporated by reference Agreement, dated June 16, to Exhibit 99.16 to the 2005, by and between Company's Current Report Nurses PRN, LLC and Nurses on Form 8-K filed with the PRN Acquisition Corp. U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.17 Joinder, dated June 10, Incorporated by reference 2005, by and between Mr. to Exhibit 99.17 to the Aftab Adamjee and Mr. Company's Current Report Jeffrey T. Dowling on Form 8-K filed with the U.S. Securities and Exchange Commission on July 11, 2004 Exhibit 99.18 Confirmation of Closing in Incorporated by reference Escrow, dated June 16, to Exhibit 99.18 to the 2005, by and between Company's Current Report attorneys for MSSI, Nurses on Form 8-K filed with the PRN Acquisition Corp. and U.S. Securities and Nurses PRN, LLC Exchange Commission on July 11, 2004 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this amended report to be signed on its behalf by the undersigned hereunto duly authorized. MEDICAL STAFFING SOLUTIONS, INC. Date: June 9, 2006 By /s/ Dr. Brajnandan B. Sahay ------------------------------ Name: Dr. Brajnandan B. Sahay Title: President 5 ITEM 9.01. (A): NURSES PRN, L.L.C. FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 TABLE OF CONTENTS

6 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the members of Nurses PRN, LLC West Palm Beach, FL We have audited the accompanying balance sheets of Nurses PRN, LLC as of December 31, 2004 and 2003 and the related statements of operations, changes in members' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with standards of the Public Company Accounting Oversights Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has incurred losses in the last two years of operations, and will be looking to raise capital over the next year to assist in funding their operations. These factors raise substantial doubt about its ability to continue as a going concern. Management's operating and financing plans in regards to these matters are also discussed in Note 6. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nurses PRN, LLC as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years ended December 31, 2004 and 2003 in conformity with accounting principles generally accepted in the United States of America. BAGELL, JOSEPHS & COMPANY, L.L.C. Bagell, Josephs & Company, LLC. Gibbsboro, New Jersey March 1, 2005 7 NURSES PRN, L.L.C. BALANCE SHEETS DECEMBER 31, 2004 AND 2003

The accompanying notes are an integral part of these financial statements 8 NURSES PRN, L.L.C. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 2004 2003 ------------ ------------ REVENUES $ 10,931,812 $ 8,727,973 ------------ ------------ COST OF GOODS SOLD Payroll expense - nurses 8,109,910 7,064,140 Tax expense - nurses 759,138 304,573 Workmen's compensation expense - nurses 263,644 153,881 ------------ ------------ Total cost of goods sold 9,132,692 7,522,594 ------------ ------------ GROSS PROFIT 1,799,120 1,205,379 ------------ ------------ OPERATING EXPENSES Administrative payroll 1,563,284 1,174,492 Dealer commissions 424,892 385,552 Background and drug testing 19,332 1,430 Bad debt expense 57,500 52,058 Bank fees 35,230 40,672 Computer expense 13,089 6,110 Depreciation 52,807 13,306 Insurance 297,213 173,681 Interest expense 1,182,431 613,050 Licenses, permits and taxes 12,380 5,691 Maintenance and cleaning 10,968 5,780 Marketing 19,619 3,625 Miscellaneous 161,470 51,562 Meals and travel 152,134 108,555 Office supplies and printing 68,289 62,902 Postage and delivery 38,760 10,484 Professional fees 120,514 129,243 Recruiting 23,921 39,294 Rent and utilities 120,364 69,120 Telephone 99,125 49,439 Website hosting 90,145 49,309 ------------ ------------ Total operating expenses 4,563,467 3,045,355 ------------ ------------ NET LOSS FROM CONTINUING OPERATIONS (2,764,347) (1,839,976) ------------ ------------ DISCONTINUED OPERATIONS Income from discontinued operations 576,945 346,074 Income on disposal 906,138 -- ------------ ------------ NET LOSS $ (1,281,264) $ (1,493,902) ============ ============ The accompanying notes are an integral part of these financial statements 9 NURSES PRN, L.L.C. STATEMENT OF MEMBERS' DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 BALANCE - JANUARY 1, 2003 $ 4,755 Net loss (1,493,902) ----------- BALANCE - DECEMBER 31, 2003 (1,489,147) Net loss (1,281,264) ----------- BALANCE - DECEMBER 31, 2004 $(2,770,411) =========== The accompanying notes are an integral part of these financial statements 10 NURSES PRN, L.L.C. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

The accompanying notes are an integral part of these financial statements 11 NURSES PRN, L.L.C. STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

The accompanying notes are an integral part of these financial statements 12 NURSES PRN, LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Nurses PRN, LLC (the "Company") is a Limited Liability Company formed in the State of Florida as a licensed temporary staffing agency in the business of providing supplemental staffing to medical care providers. In the recruiting process Nurses PRN is responsible for personally interviewing all potential representatives of Nurses PRN before they are assigned to a hospital or healthcare facility. The Company offers to its clients per diem staffing, local contracts, travel nurses and international nurses. The representatives of the Company specialize in telemetry, med-surg, emergency room and operating room environments. The financial statements for the year ended December 31, 2003 include reclassifications of the operations of the Company to reflect the sale and disposal of certain assets and business that was generated between Nurse Staffing, LLC and Nurses PRN, LLC. This disposal occurred on November 1, 2004. Accordingly, the Company follows FASB 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". The Company has reclassified its December 31, 2003 financial statements to reflect the operations below the line as discontinued operations in accordance with FASB 144. The Company recognized a $906,138 gain on the disposal of the assets of Nurse Staffing, LLC. CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value. ACCOUNTS RECEIVABLE Accounts receivable are evaluated for potential uncollectible amounts and are reduced for any existing bad debts. Accounts receivable, net of reserve allowances was $3,076,919 and $3,295,655 at December 31, 2004 and 2003, respectively. 13 NURSES PRN, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; three years for computers and five years for furniture. Reviews are regularly performed to determine whether facts and circumstances exist that indicate carrying amount of assets may not be recoverable of the useful life is shorter than originally estimated. The Company assesses the recoverability of its fixed assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. If assets are determined to be recoverable, but the useful lives are shorter than originally estimated, the net book value of the assets is depreciated over the newly determined remaining useful lives. When fixed assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss in included in operations. INCOME TAXES The Company was organized as a Limited Liability Company (L.L.C.). Under these provisions, the Company is taxed as a partnership for federal and state income tax purposes. The Company does not pay corporate income taxes on its taxable income. Instead, the member is liable for its income taxes. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during this reported period. Actual results could differ from those estimates. ADVERTISING AND MARKETING Advertising and marketing costs charged to expense were $19,619 and $3,625 for the years ended December 31, 2004 and 2003 respectively. 14 NURSES PRN, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) REVENUE RECOGNITION Revenue is primarily recognized after services are rendered and confirmed by a time card authorized by the clients. They are billed to the client once per week for the prior week. An accrual is made every month for service rendered and billed to the particular clients that were booked the following month. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. RECENT ACCOUNTING PRONOUNCEMENTS In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is effective for contracts entered into or modified after June 30, 2003, except for certain hedging relationships designated after June 30, 2003. Most provisions of this Statement should be applied prospectively. The adoption of this statement did not have a significant impact on the Company's results of operations or financial position. In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of nonpublic entities, if applicable. 15 NURSES PRN, L.L.C. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED) It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. The adoption of this statement did have a significant impact on the Company's results of operations or financial position. In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantees and elaborates on existing disclosure requirements related to guarantees and warranties. The recognition requirements are effective for guarantees issued or modified after December 31, 2002 for initial recognition and initial measurement provisions. The adoption of FIN 45 did not have a significant impact on the Company's results of operations or financial position. In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of FIN 46 did not have a significant impact on the Company' results of operations or financial position. 16 NURSES PRN, L.L.C. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 2- FIXED ASSETS Fixed assets at December 31, 2004 and 2003 is as follows: 2004 2003 ----------- ----------- Office furniture and computers $ 106,277 $ 219,373 Less: accumulated depreciation (38,419) (13,306) ----------- ----------- Net property and equipment $ 67,858 $ 206,067 =========== =========== Depreciation expense for the years ended December 31, 2004 and 2003 was $89,528 and $13,306 respectively. NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT The Company on June 4, 2002 entered into a mastering factoring agreement with Rockland Credit Finance, a subsidiary of Webbank, Inc. The agreement states from time to time during the term of the agreement that the Company may offer to sell to Rockland Credit certain amounts of the Company's account receivables. In turn of the acceptance of the account receivables, Rockland Credit will pay to the Company an amount up to 90% of the aggregate net face value of the assigned accounts. If the aggregate net face value of the receivables accepted by Rockland Credit is less than $1,500,000, the Company would be required to pay a fee not less than $2,000. The term of the agreement is for one year and the agreement automatically renews for successive one-year periods. 17 NURSES PRN, L.L.C. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 4- NOTE PAYABLE - OTHER The Company has a note payable which was originally $250,000 as of July 2003. The note was amended for another additional $250,000 in September 2003, for a total principal balance of $500,000, of which $419,225 and $483,763 was outstanding as of December 31, 2004 and 2003, respectively. Interest is payable monthly at an annual rate of 9%. The term of the note is for four years, and the principal balance is payable in monthly installments of principal plus accrued interest at which time the final installment equal to the remaining balance shall be due and payable. The maturities over the next three years and in the aggregate are as follows: Fiscal year ending December 31, 2005 $ 182,071 December 31, 2006 150,000 December 31, 2007 87,154 ----------- $ 419,225 =========== NOTE 5 - DUE TO RELATED PARTY The Company as of December 31, 2004 had an amount of $88,156 due to a related party. The amount refers to the pre-funding of the payroll by the related party. The related party was not ready to perform their own payroll and the Company performed this function for them during the month of December 2004. The pre-funding by the related party ended up being too much and the amount was returned on January 14, 2005. The Company has been advanced amounts from its members to cover working capital needs and expansion costs over time. At December 31, 2004 and 2003, there is $1,061,331 and $631,600 outstanding, respectively. There is no stated interest due on these amounts and they are due on demand. These payments will be repaid upon a sale of the Company. 18 NURSES PRN, L.L.C. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 6 - GOING CONCERN As shown in the accompanying financial statements, the Company incurred net losses for the years ended December 31, 2004 and 2003. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support current operations and generate anticipated sales. This raises substantial doubt about the Company's ability to continue as a going concern. Management believes that the Company's capital requirements will depend on many factors including the success of the Company's service efforts. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 7 - COMMITMENTS AND CONTINGENCIES LEASES The Company conducts its operations in either leased facilities, where the leases are month to month or have provisions that provide for renewal options, in hospitals, where no rent is charged or they have agreements where no rent required is part of the agreement. Facilities where there are leases are all operating leases and rent expense is charged to operations as incurred. As of December 31, 2004, the future minimum rental payments due under noncancellable operating leases are as follows: 2005 $ 87,008 2006 44,657 --------- Totals $ 131,665 ========= NOTE 8 - SUBSEQUENT EVENT As of July 1, 2005, the Company sold its assets to Nurses PRN Acquisition Corp., a wholly owned subsidiary of a public company, Medical Staffing Solutions, Inc. 19 NURSES PRN, L.L.C. REVIEWED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 (UNAUDITED) 20 NURSES PRN, L.L.C. REVIEWED FINANCIAL STATEMENTS JUNE 30, 2005 AND 2004 TABLE OF CONTENTS

21 BAGELL, JOSEPHS & COMPANY, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS High Ridge Commons Suites 400-403 200 Haddonfield Berlin Road Gibbsboro, New Jersey 08026 (856) 346-2828 Fax (856) 346-2882 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of Nurses PRN, LLC West Palm Beach, Florida We have reviewed the accompanying balance sheets of Nurses PRN, LLC (the "Company") as of June 30, 2005 and 2004 and the related statements of operations, changes in members' (deficit), and cash flows for the six months then ended. These interim financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above in order for them to be in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has sustained operating losses and capital deficits that raise substantial doubt about its ability to continue as a going concern. Management's operating and financing plans in regard to these matters are also discussed in Note 6. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. BAGELL, JOSEPHS & COMPANY, L.L.C. BAGELL, JOSEPHS & COMPANY, L.L.C. Certified Public Accountants Gibbsboro, New Jersey September 7, 2005 MEMBER OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SEC PRACTICE SECTION OF THE AICPA (SECPSI) NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA STATE BOARD OF ACCOUNTANCY 22 NURSES PRN, L.L.C. BALANCE SHEETS JUNE 30, 2005 AND 2004

The accompanying notes are an integral part of these financial statements 23 NURSES PRN, L.L.C. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 2005 2004 ----------- ----------- OPERATING REVENUES $ 7,229,872 $ 5,034,373 COST OF GOODS SOLD Payroll expense - nurses 5,145,847 3,736,421 Tax expense - nurses 468,264 386,294 Workmen's compensation expense - nurses 284,376 118,985 ----------- ----------- Total cost of goods sold 5,898,487 4,241,700 ----------- ----------- GROSS PROFIT 1,331,385 792,673 ----------- ----------- OPERATING EXPENSES Administrative payroll 590,724 877,868 Dealer commissions 289,725 175,930 Background and drug testing 6,284 10,522 Bad debt expense 12,000 30,000 Bank fees 25,062 18,423 Computers expense 1,895 7,093 Depreciation 7,339 40,833 Interest expense 477,052 654,754 Insurance 248,439 149,402 Licenses, permits and taxes 15,418 5,530 Maintenance and cleaning 3,866 7,113 Marketing 1,406 13,640 Miscellaneous 11,286 16,393 Meals and travel 22,377 82,244 Office supplies and printing 21,835 42,873 Postage and delivery 15,484 19,560 Professional fees 193,669 61,467 Recruiting 8,619 14,381 Rent and utilities 79,088 48,539 Telephone 36,457 42,943 Website hosting 39,824 53,681 ----------- ----------- Total operating expenses 2,107,849 2,373,189 ----------- ----------- NET LOSS FROM CONTINUING OPERATIONS (776,464) (1,580,516) DISCONTINUED OPERATIONS Income from discontinued operations -- 277,316 ----------- ----------- NET LOSS $ (776,464) $(1,303,200) =========== =========== The accompanying notes are an integral part of these financial statements 24 NURSES PRN, L.L.C. STATEMENT OF MEMBERS' DEFICIT FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 BALANCE - JANUARY 1, 2004 $ 1,489,147) Net loss (1,303,200) ----------- BALANCE - JUNE 30, 2004 $(2,792,347) =========== BALANCE - JANUARY 1, 2005 $(2,770,411) Net loss (776,464) ----------- BALANCE - JUNE 30, 2005 $(3,546,875) =========== The accompanying notes are an integral part of these financial statements 25 NURSES PRN, L.L.C. STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

The accompanying notes are an integral part of these financial statements 26 NURSES PRN, LLC NOTES TO REVIEWED FINANCIAL STATEMENTS JUNE 30, 2005 AND 2004 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Nurses PRN, LLC (the "Company") is a Limited Liability Company formed in the State of Florida as a licensed temporary staffing agency in the business of providing supplemental staffing to medical care providers. In the recruiting process Nurses PRN is responsible for personally interviewing all potential representatives of Nurses PRN before they are assigned to a hospital or healthcare facility. The Company offers to its clients per diem staffing, local contracts, travel nurses and international nurses. The representatives of the Company specialize in telemetry, med-surg, emergency room and operating room environments. CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value. ACCOUNTS RECEIVABLE Accounts receivable are evaluated for potential uncollectible amounts and are reduced for any existing bad debts. Accounts receivable, net of reserve allowances was $1,803,255 and $3,249,646 at June 30, 2005 and 2004, respectively. PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; three years for computers and five years for furniture. Reviews are regularly performed to determine whether facts and circumstances exist that indicate carrying amount of assets may not be recoverable of the useful life is shorter than originally estimated. The Company assesses the recoverability of its fixed assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. If assets are determined to be recoverable, but the useful lives are shorter than originally estimated, the net book value of the assets is depreciated over the newly determined remaining useful lives. When fixed assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss in included in operations. 27 NURSES PRN, L.L.C. NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2005 AND 2004 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES The Company was organized as a Limited Liability Company (L.L.C.). Under these provisions, the Company is taxed as a partnership for federal and state income tax purposes. The Company does not pay corporate income taxes on its taxable income. Instead, the member is liable for its income taxes. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during this reported period. Actual results could differ from those estimates. ADVERTISING AND MARKETING Advertising and marketing costs charged to expense were $1,406 and $13,640 for the six months ended June 30, 2005 and 2004, respectively. REVENUE RECOGNITION Revenue is primarily recognized after services are rendered and confirmed by a time card authorized by the clients. They are billed to the client once per week for the prior week. An accrual is made every month for service rendered and billed to the particular clients that were booked the following month. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. 28 NURSES PRN, L.L.C. NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2005 AND 2004 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RECENT ACCOUNTING PRONOUNCEMENTS In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is effective for contracts entered into or modified after June 30, 2003, except for certain hedging relationships designated after June 30, 2003. Most provisions of this Statement should be applied prospectively. The adoption of this statement did not have a significant impact on the Company's results of operations or financial position. In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of nonpublic entities, if applicable. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. The adoption of this statement did have a significant impact on the Company's results of operations or financial position. In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantees and elaborates on existing disclosure requirements related to guarantees and warranties. The recognition requirements are effective for guarantees issued or modified after December 31, 2002 for initial recognition and initial measurement provisions. The adoption of FIN 45 did not have a significant impact on the Company's results of operations or financial position. 29 NURSES PRN, L.L.C. NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2005 AND 2004 NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of FIN 46 did not have a significant impact on the Company' results of operations or financial position. NOTE 2- FIXED ASSETS Fixed Assets at June 30, 2005 and 2004 are as follows: 2005 2004 --------- --------- Office furniture and computers $ 113,945 $ 324,934 Less: accumulated depreciation 45,758 60,336 --------- --------- Net property and equipment $ 68,187 $ 264,598 ========= ========= Depreciation expense for the six months ended June 30, 2005 and 2004 was $7,339 and $47,030 respectively. NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT The Company on June 4, 2002 entered into a mastering factoring agreement with Rockland Credit Finance, a subsidiary of Webbank, Inc. The agreement states from time to time during the term of the agreement that the Company may offer to sell to Rockland Credit certain amounts of the Company's account receivables. 30 NURSES PRN, L.L.C. NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2005 AND 2004 NOTE 3 NOTE PAYABLE - RECEIVABLE LINE OF CREDIT (CONTINUED) In turn of the acceptance of the account receivables, Rockland Credit will pay to the Company an amount up to 90% of the aggregate net face value of the assigned accounts. If the aggregate net face value of the receivables accepted by Rockland Credit is less than $1,500,000, the Company would be required to pay a fee not less than $2,000. The term of the agreement is for one year and the agreement automatically renews for successive one-year periods. NOTE 4- NOTE PAYABLE - OTHER The Company has a note payable which was originally $250,000 as of July 2003. The note was amended for another additional $250,000 in September 2003, for a total principal balance of $500,000, of which $365,487 and $451,700 was outstanding as of June 30, 2005 and 2004, respectively. Interest is payable monthly at an annual rate of 9%. The term of the note is for four years, and the principal balance is payable in monthly installments of principal plus accrued interest at which time the final installment equal to the remaining balance shall be due and payable. NOTE 5- DUE TO MEMBERS The Company has been advanced amounts from its members to cover working capital needs and expansion costs over time. At June 30, 2005 and 2004, there is $993,332 and $1,225,117 outstanding, respectively. There is no stated interest due on these amounts and they are due on demand. These payments will be repaid upon a sale of the Company. 31 NURSES PRN, L.L.C. NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2005 AND 2004 NOTE 6- GOING CONCERN As shown in the accompanying financial statements, the Company incurred net losses for the years ended December 31, 2004 and 2003. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support current operations and generate anticipated sales. This raises substantial doubt about the Company's ability to continue as a going concern. Management believes that the Company's capital requirements will depend on many factors including the success of the Company's service efforts. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 7- COMMITMENTS AND CONTINGENCIES LEASES The Company conducts its operations in either leased facilities, where the leases are month to month or have provisions that provide for renewal options, in hospitals, where no rent is charged or they have agreements where no rent required is part of the agreement. Facilities where there are leases are all operating leases and rent expense is charged to operations as incurred. As of June 30, 2005, the future minimum rental payments due under noncancellable operating leases are as follows: 2005 $ 43,504 2006 44,657 -------- Totals $ 88,161 ======== NOTE 8 - SUBSEQUENT EVENT As of July 1, 2005, the Company sold its assets to Nurses PRN Acquisition Corp., a wholly owned subsidiary of a public company Medical Staffing Solutions, Inc. 32 ITEM 9.01 (B): MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On July 1, 2005, Medical Staffing Solutions Inc. and Subsidiaries ("The Company") consummated an Asset Purchase Agreement with Nurses PRN, LLC, a privately held Company whereby, Medical Staffing Solutions, Inc. and Subsidiaries, agreed to acquire all the assets, properties, rights, intents, business and goodwill of Nurses PRN, LLC. The Company also acquired certain liabilities. The accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2005 has been presented with a consolidated subsidiary at June 30, 2005. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2005 purport what the acquisition would look like. The year ended December 31, 2004 statement of operations has been presented as if the acquisition had occurred January 1, 2004 combined. The unaudited pro forma condensed consolidated statements do not necessarily represent the actual results that would have been achieved had the companies been combined at the beginning of the year, nor may they be indicative of future operations. These unaudited pro forma condensed financial statements should be read in conjunction with the companies' respective historical financial statements and notes included thereto. 33 MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 2005

The accompanying notes are an integral part of the condensed consolidated financial statements. 34 MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005

The accompanying notes are an integral part of the condensed consolidated financial statements. 35 MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004

36 MEDICAL STAFFING SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma adjustments are included in the accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2005 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2005 and the statement of operations for the year ended December 31, 2004 to reflect the purchase of the assets and assumption of certain liabilities. A. To record the purchase of the assets and certain liabilities of Nurses PRN, LLC. B. Nurses PRN, LLC had disposed of a subsidiary during the 2005 year, and had reported the income from discontinued operations and the gain on the disposal of the assets from said discontinued operations on their financial statements in the amounts of $576,945 and $906,138, respectively. However, in accordance with proper reporting requirements, those elements have been eliminated in the pro-forma presentation, resulting in an increase in loss reported on the pro-forma from an actual amount of $(1,281,264) to a pro-forma loss amount of $(2,764,347). 37

MEDICAL STAFFING SOLUTIONS INC 8-K/A