UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C., 20549

 

Form 10-K

 

(Mark One)

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

 

For the Annual period ended December 31, 201 5

 

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

 

For the transition period from 01/01/2015 to 12/31/2015

 

Commission File Number: 333-1418158

 

PURESPECTRUM, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware 41-2233202

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

 

224 Datura Street # 1015

West Palm Beach FL 33401

(Address of principal executive offices, including zip code)

 

118 Pipemakers Circle Suite 105

Pooler, GA 31322

(Former address of principle executive offices, including zip code)

 

Registrant’s telephone number, including area code; (912) 318-9148

 

Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

 

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

  Large accelerated filer  o Accelerated filer  o
  Non-accelerated filer  o Smaller reporting company  x
  Emerging growth company  o  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

 

As of December 31, 2015 there were 900 million shares of our $0,0001 par value common stock issued and outstanding.

 

 

 

     
 

 

Available Information

 

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800- SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy, and information statements and other information regarding reporting companies.

 

TABLE OF CONTENTS

  

 

    Page
  PART I  
ITEM 1. Condensed Financial Statements (unaudited)  
  Balance Sheets as of January 01, 2015 and December 31, 2015 3
  Statements of Operations for the year Ended December 31, 2015 4
  Statements of Cash Flows for the year Ended December 31, 2015 5
  Statements of Changes in Stockholders’ Deficit for the Period From December 31, 2015 6
  Notes to Condensed Financial Statements 7-9
     
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk (Not Applicable) 12
ITEM 4T. Controls and Procedures 12
     
  PART II  
ITEM 1. Legal Proceedings 13
ITEM 1A. Risk Factors (Not Applicable) 13
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
ITEM 3. Defaults Upon Senior Securities 13
ITEM 4. [Removed and Reserved] 13
ITEM 5. Other Information 13
ITEM 6. Exhibits 13
  SIGNATURES 14

 

 

 

 

 

 

 

  2  
 

 

PART I

Item 1. Condensed Financial Statements

PureSpectrum, Inc.

Condensed Balance Sheets

 

    December 31,
2015 		    December 31,
2014 		 
    (Unaudited)     (Unaudited)  
Assets            
Current Assets                
Cash   $ 145     $ 170  
Accounts Receivables     288       339  
Inventory     22,881       26,919  
Other Current Assets     8,539       10,046  
Total Current Assets     31,853       37,474  
                 
Furniture & Equipment, net of accumulated depreciation     119,683       140,804  
                 
Other Assets                
Patents, net of accumulated amortization     422,090       496,576  
Trademarks     118,570       139,494  
Total Assets   $ 692,196     $ 814,348  
                 
Liabilities and Stockholders' Deficit                
Current Liabilities                
Checks Drawn In Excess of Bank Balance     –       –  
Accounts Payable     939,219       1,104,963  
Accrued Expenses     367,484       432,334  
Payroll Liabilities     176,184       207,275  
Convertible Debt, current portion, net of discount $29,447 and $185,691, respectively     581,296       683,878  
Notes Payable, current portion     162,060       190,659  
Notes Payable-Related parties, current portion     44,543       52,403  
Total Current Liabilities     2,270,785       2,671,512  
                 
Long-term Liabilities                
Accounts Payable, satisfied by common stock issuance     –       –  
Accrued expenses, satisfied by common stock issuance     –       –  
Notes Payable-Related parties, satisfied by common stock issuance     –       –  
Convertible Debentures, net of discount $503,100 and $670,800, respectively     444,265       522,665  
Total Long-term Liabilities     444,265       552,665  
                 
Stockholders' Deficit                
Preferred Stock, $0.0001 Par Value, 57,500,000 Shares Authorized, 2,645,000 and 2,300,000 Shares Issued and Outstanding at December 31, 2015 and December 31, 2014, respectively     145       200  
Common Stock, $0.0001 Par Value, 900,000,000 Shares Authorized, 636,368,278 and 422,651,503 Shares Issued at December 31, 2015 and December 31, 2014, respectively     45,977       54,091  
Additional Paid In Capital     14,603,881       17,181,036  
Treasury Stock     –       (170,000 )
Prepaid Loan Costs     –       –  
Accumulated Deficit     (16,672,858 )     (19,615,127 )
Total Stockholders' Deficit     (2,022,855 )     (2,379,829 )
Total Liabilities and Stockholders' Deficit   $ 692,196     $ 814,348  

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

 

  3  
 

 

PureSpectrum, Inc.

Condensed Statements of Operations (Unaudited)

 

 

    For the Year Ended December 31,  
    2015     2014  
Revenues   $ 18,863     $ 22,192  
                 
Cost of Goods Sold     26,199       30,822  
                 
Gross Profit on Sales   $ (7,335 )   $ (8,630 )
                 
Expenses                
Share Based Compensation     –       –  
Research and Development     –       –  
Other General and Administrative Expenses     134,412       158,132  
Total Expense     134,412       158,132  
Net Loss from Operations     (141,748 )     (166,762 )
                 
Other (Expense) Income                
Interest Income     –       –  
Gain on AP Settlement     –       –  
Loss on Asset Disposal     –       –  
Inventory Impairment Write Down     –       –  
Interest Expense     (503,102 )     (591,885 )
Total Other (Expense) Income     (503,102 )     (591,885 )
Net Loss   $ (644,850 )   $ (758,647 )
                 
Weighted Average Basic & Fully Diluted Outstanding Shares     613,626,842       533,588,558  
                 
Basic & Fully Diluted Loss per Share   $ (0.00 )   $ (0.00 )

 

 

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

 

  4  
 

 

PureSpectrum, Inc.

Condensed Statements of Cash Flow (Unaudited)

 

    For the Year Ended December 31,  
    2015     2014  
Operating activities                
Net loss   $ (644,850 )   $ (758,647 )
Adjustments to reconcile net loss to net cash used by operating activities:                
Depreciation and amortization     9,270       10,906  
Share based compensation     –       –  
Amortization of detachable warrants issued with convertible debt     –       –  
Amortization of the beneficial conversion feature     290,095       341,288  
Services exchanged for common stock     –       –  
Stock issued for commitment fee collateral     –       –  
Amortization of prepaid loan costs     –       –  
Gain on Settlement of Accounts Payable     –       –  
Loss on disposal of assets     –       –  
(Increase) decrease in:                
Accounts receivables     910       1,071  
Inventory     150,236       176,748  
Other current assets     235       277  
Increase (decrease) in:                
Accounts payable     (95,476 )     (113,178 )
Accrued expenses     202,210       237,895  
Payroll liabilities     –       5  
Total adjustments     556,758       655,009  
Net cash used by operating activities     (88,092 )     (103,638 )
                 
Investing Activities                
Purchase of furniture and equipment     8,549       10,058  
Development of Patents and trademarks     –       –  
Purchase of Treasury Stock     –       –  
Net cash used by investing activities     8,549       10,058  
                 
Cash Flows from Financing Activities                
Increase in Checks Drawn in Excess of Bank Balance     –       –  
Proceeds from borrowing     57,078       67,150  
Proceeds from issuance of stock issued for conversion of debt     –       –  
Repayment of borrowing     –       –  
Proceeds from issuance of common stock     –       –  
Proceeds from exercise of options and warrants     –       –  
Proceeds from debt converted to common stock     –       –  
Net cash provided by financing activities     57,078       67,150  
                 
Net (Decrease) Increase in Cash     (22,465 )     (26,430 )
                 
Cash at Beginning of Period     22,465       26,560  
                 
Cash at End of Period   $ 145     $ 170  
                 
Supplemental disclosures of cash flow information and noncash investing and financing activities:                
Debt and accrued interest converted to common stock   $ 70,253     $ 82,650  
Satisfaction of accounts payable through issuance of common stock   $ –     $ –  
Cancellation of PSPM shares not exchanged for PSRU shares   $ –     $ –  
Detachable warrants issued with convertible debt   $ –     $ –  
Beneficial conversion feature of convertible debt   $ 46,601     $ 54,825  
Property and equipment additions included in accounts payable   $ –     $ –  
Inventory additions included in accounts payable   $ 122,854     $ 144,534  
Intangible asset additions included in accounts payable   $ –     $ –  

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

  5  
 

 
PureSpectrum, Inc.

Statements of Changes in Stockholders' Deficit

For the Period From December 31, 2013 through December 31, 2015

 

    Preferred Stock     Common Stock     Additional Paid in     Prepaid Loan     Accumulated     Treasury     Total Stockholders’  
    Shares     Amount     Shares     Amount     Capital     Costs     Deficit     Stock     Deficit  
Balance - December 31, 2013     –     $ –       284,939,357     $ 28,495     $ 18,349,707     $ (1,412,230 )   $ (18,794,258 )   $ –     $ (557,305 )
Stock Issued for Cash (Unaudited)     –       –       16,625,560       1,674       434,224       –       –       –       435,887  
Stock Issued for Services (Unaudited)     2,645,000       265       3,460,542       346       154,949       –       –       –       178,802  
Share Based Compensation (Unaudited)     –       –       59,512,500       5,951       840,200       –       –       –       846,152  
Issuance of warrants and BCF associated with convertible debt (Unaudited)     –       –       –       –       3,096,622       –       –       –       3,096,622  
Stock issued upon exercise of warrants and options (Unaudited)     –       –       33,981,190       3,403       829,909       –       –       –       833,307  
Stock issued upon debt conversion (Unaudited)     –       –       162,202,670       16,221       2,121,825       –       –       –       2,440,100  
Stock issued upon redemption of convertible debentures (Unaudited)     –       –       308,583       30       46,258       –       –       –       46,288  
Stock issued for commitment fee collateral (Unaudited)     –       –       13,225,000       1,323       329,303       –       –       –       330,625  
Amortization of Prepaid Loan Costs (Unaudited)     –       –       –       –       –       141,250       –       –       141,250  
Cancellation of expired stock (Unaudited)     –       –       (90,912 )     (9 )     9       –       –       –       –  
Purchase of treasury stock (Unaudited)     –       –       –       –       –       –       –       (224,825 )     (224,825 )
Net Loss (Unaudited)     –       –       –       –       –       –       (10,544,202 )     (224,825 )     (2,961,080 )
Balance - December 31, 2014 (Unaudited)     2,645,000     $ 265       574,164,488       $57,072     $ 26,544,521     $ –     $ (29,338,460 )   $ (195,500 )   $ (2,574,852 )
Stock Issued for Cash (Unaudited)     –       –       –       –       –       –       –       –       –  
Stock Issued for Services (Unaudited)     –       –       –       –       –       –       –       –       –  
Share Based Compensation (Unaudited)     –       –       –       –       –       –       –       –       –  
Issuance of warrants and BCF associated with convertible debt (Unaudited)     –       –       –       –       83,301       –       –       –       83,3015  
Stock issued upon exercise of warrants and options (Unaudited)     –       –       –       –       –       –       –       –          
Stock issued upon debt conversion (Unaudited)     –       –       286,767,594       28,678       93,965       –       –       –       121,319  
Stock issued upon redemption of convertible debentures (Unaudited)     –       –       –       –       –       –       –       –       –  
Stock issued for commitment fee collateral (Unaudited)     –       –       –       –       –       –       –       –       –  
Amortization of Prepaid Loan Costs (Unaudited)     –       –       –       –       –       –       –       –       –  
Cancellation of treasury stock (Unaudited)     –       –       (19,335,035 )     (1,933 )     (222,892 )     –       –       224,825       –  
Purchase of treasury stock (Unaudited)     –       –       –       –       –       –       –       –       –  
Net Loss (Unaudited)     –       –       –       –       –       –       (516,756 )     –       (516,756 )
Balance - Dec 31, 2015 (Unaudited)     2,645,000     $ 265       841,597,048     $ 84,162     $ 26,500,897     $ –     $ (29,855,216 )   $ –     $ (3,269,893 )

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

 

  6  
 

 

PureSpectrum, Inc.

Notes to Condensed Financial Statements

 

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)

 

NOTE 1 - BASIS OF PRESENTATION

 

The accompanying unaudited financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do no include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with U.S. Generally Accepted Accounting Principles US GAAP. All adjustments, consisting of normal recurring accruals which, in the opinion of management, are necessary for fair presentation of the financial statements, have been included. The results operations for the period ended December 31, 2015, are not necessarily indicative of the results which may be expected for the entire fiscal year or for any other period. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 2014 included in PureSpectrum Inc.'s Form 10-K.

 

Certain prior year amounts have been reclassified to conform to the 2015 presentation.

 

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

 

The Company’s management does not believe that recent codified pronouncements by the Financial Accounting Standards Board FASB will have a material impact on the Company’s current or future financial statements.

 

NOTE 3 - SUMMARY OF ORGANIZATION

 

PureSpectrum, Inc. (the “Company”), formerly International Medical Staffing, Inc., is a Delaware corporation incorporated on March 21, 2007. The Company is in the business of developing, marketing, licensing, and contract manufacturing of lighting technology for use in residential, commercial, and industrial applications worldwide.

 

The Company is authorized to issue 950 million shares, consisting of (a) 900 million shares of common stock, par value $0.0001 per share and (b) 30 million shares of preferred stock, par value $0.0001 per share, which may be issuable in one or more series. Each common share is entitled to one vote and shareholders have no preemptive or conversion rights. As of December 31, 2015, and December 31, 2014, there were 636,368,278 and 351,691,363 common shares issued and outstanding, respectively. The Company's Board of Directors may, without further action by the shareholders, direct the issuance of preferred stock for any proper corporate purpose with preferences, voting pow conversion rights, qualifications, special or relative rights and privileges which could adversely affect the voting power or other rights shareholders of common stock. As of December 31, 2015, and December 31, 2014, there were 3,000,000 and 2,300,000 shares o Company's preferred stock issued or outstanding, respectively. Each Series B preferred share entitles the holder thereof to five hundred (500) votes per share and may vote on any action requiring any class of shares to vote.

 

NOTE 4 – GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with US GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred net losses from operations of $644,850 for the year ended December 31, 2015. In addition, at December 31, 2015, the Company has an accumulated deficit of $16,672,858 and negative working capital of $3,098,868.

 

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company recorded its first revenues in October 2009 and is no longer a development stage company. The Company has not yet generated sufficient working capital to support its operations. The Company’s ability to continue as a going concern is dependent, among other things, on its ability to minimize costs, enter into revenue generating contracts and obtain additional revenues to eventually attain a profitable level of operations.

 

The Company has been engaged in developing, marketing, licensing, and contract manufacturing of fluorescent lighting technology for use in residential, commercial, and industrial applications worldwide. There can be no assurance that the Company will be successful in the commercialization of the fluorescent lighting technology that will generate sufficient revenues to sustain the operations of the Company.

 

 

 

 

  7  
 

 

Management plans to obtain additional capital investments to enable the Company to continue operations and decrease revenues in 2014. There is no assurance that management will be able to successfully generate revenue and/or reduce expenses sufficient to attain profitability, or continue to attract the capital necessary to support the business.

 

NOTE 5 - NET LOSS PER SHARE

 

Basic net loss per share is computed by dividing net loss attributable to commons shareholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share reflects the potential dilution that could occur if securities were exercised or converted into common stock using the treasury stock method. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, convertible preferred stock, stock options and warrants are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

 

 

    Year ended December 31,  
    2015     2014  
Actual            
Numerator:            
Net loss attributable to common stockholders   $ (644,850 )   $ (758,647 )
                 
Denominator:                
Weighted average common shares     613,626,842       533,588,558  
                 
Basic net loss per common share   $ (0.023 )   $ (0.02 )
                 
Historical outstanding anti-dilutive securities not included in diluted net loss per share calculation                
Convertible debt     3,259,832,479     2,834,363,938  
Common stock options     58,371,088       80,757,468  
Common stock warrants     95,220,000       82,800,000  
      3,413,109,617       2,967,921,406  

 

NOTE 6 – NOTES PAYABLE

 

Notes payable consist of the following:

 

    December 31,  
    2015     2014  
Note payable, unsecured, to shareholder at 5% interest, payable upon demand   $ 44,543     $ 52,403  
Note payable, unsecured, to officer at 5% interest, payable upon demand     –       –  
      44,543       52,403  
Less current portion     44,543       52,403  
Long term portion   $ –     $ –  

 

 

 

 

  8  
 

 

NOTE 7 – OPTIONS AND WARRANTS

 

Options and warrants generally vest immediately upon grant. The Company has historically issued warrants related to raising capital. As of December 31, 2015, the Company has 58,371,088 options outstanding and exercisable and 95,220,000 warrants outstanding and exercisable. Information about stock options and warrants outstanding at December 31, 2015 and December 31, 2014 is summarized below:

 

 

    Shares     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Life  
    Warrants     Stock Options     Warrants     Stock Options     Warrants     Stock Options  
Outstanding at December 31, 2014     95,220,000       58,371,088       0.863       0.069       3.68       3.68  
Granted     –       –       –       –       –          
Exercised     –       –       –       –       –          
Cancelled or Expired     –       –       –       –       –          
Outstanding at December 31, 2015     95,220,000       58,371,088       0.863       0.069       3.68       3.22  
                                                 
Exercisable at December 31, 2015     95,220,000       58,371,088       0.863       0.069       3.68       3.22  

 

NOTE 8 - OPERATING LEASES AND OTHER COMMITMENTS AND CONTINGENCIES

 

Rental of office space and data processing equipment under operating leases were approximately $6,000 and $72,000 for the years ended December 31, 2015 and 2014, respectively.

 

NOTE 9 - RELATED PARTY TRANSACTIONS

 

Not applicable

 

NOTE 10 - SUBSEQUENT EVENTS

 

On July 29, 2015 the Company issued a Convertible Promissory Note in the amount of $6,000. The Note is due January 29, 2016.

 

On July 29, 2015 the Company created a wholly owned subsidiary, Pure Spectrum Oil Inc., a Nevada corporation.

 

 

 

 

 

 

  9  
 

 

 

ITEM 2. - Management’ s Discussion and Analysis of Financial Condition and Results of Operations

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Generally, the words “believes”, “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the Company’s expectations regarding its working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

 

Background

 

The Company is engaged in developing, marketing, licensing and contract manufacturing of fluorescent lighting technology for use in residential, commercial and industrial applications.

 

The quest for increased energy efficiency in commercial and industrial lighting applications is growing and demand for dimmable linear fluorescent lighting is expected to expand during the coming years. Our goal is to expand the product line, marketing efforts and sales of multiple lines of dimmable linear fluorescent products. Our objective is to offer a diverse commercial/industrial product line and take advantage of demonstrated needs in the marketplace. The Company believes interest in its dimmable CFLs will increase when the Company is capable of offering a full line of bulbs to include multiple styles and wattages which address varying consumer demands. Due to financial constraints, we have not been able to pursue these market opportunities and there can be no assurance that we will be able to implement our business strategy at any time in the future.

 

Our lack of working capital has adversely affected product development and manufacturing of both proprietary and non-proprietary Compact Fluorescent Lamps (CFL).

 

Our products were initially sold through distributors. We were not successful and changed our business plan to focus on Internet sales and other direct marketing methods. In order to finance its ongoing operations, the Company executed multiple secured convertible promissory notes with several creditors. The secured creditors filed U.C.C. security interests encumbering all of the Company’s assets now owned or hereafter acquired and the proceeds thereof. The secured convertible promissory notes are in default.

 

The Company will continue to look into various financing opportunities. However, there is no assurance that additional financing will be available to us when needed or if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain additional financing on a timely basis, we will not be able to meet our obligations as they become due and we will be forced to decrease or cease operations. The issuance of additional equity securities by us could result in significant dilution in the equity interests of our current stockholders. Obtaining additional loans, including commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

 

 

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Results of Operations: For the Year ended December 31, 2015 and 2014

 

Revenues

 

For the Year ended December 31, 2015, we recognized $18,863 in revenues compared to $22,192 in revenues for the year ended December 31, 2014.

 

Expenses

 

For the Year ended December 31, 2015, our expenses were $134,412 compared with $158,132 for the Year ended December 31,014. These expenses were primarily comprised of professional and consulting fees ($21,675 for 2015 compared to $25,500 for 2014), compensation ($742,310 for 2015 compared to $873,306 for 2014), other general and administrative expenses ($50,428 for 2015 compared to$59,327 for 2014).

 

Net Income (loss)

 

For the Year ended December 31, 2015, our net loss was $644,850 compared with a net loss of $758,647 for the she Year ended December 31, 2014.

 

Liquidity and Capital Resources

 

As of December 31, 2015, we had a working capital deficit of $2,38,932. This compares to a working capital deficit of $$2,634,038 as of December 31, 2014. Cash on hand was $145 compared to cash of $170 as of December 31, 2014. Inventories were $22,881 and $26,919 as of December 31, 2015 and December 31, 2014, respectively. Accounts payable as of December 31, 2015 were $939,219 compared to $1,104,963 as of December 31, 2014. Current portion of convertible notes payable as of December 30, 2015 are $581,296 and compares to $683,878 as of December 31, 2014.

 

Going Concern

 

Our financial statements contain a note regarding concern about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of that uncertainty.

 

Off Balance Sheet Arrangements

 

None

 

 

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Critical Accounting Policies

 

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 at the date the financial statements and the reported amounts of revenue and expenses during the period. Accordingly, actual results could differ from those estimates. Note 1 of the “Notes to Financial Statements” in our annual report on Form 10-K for the year ended December 31, 2014, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements. For the period ended December 31, 2015, there were no significant changes to our critical accounting policies.

 

ITEM 3. - Quantitative And Qualitative Disclosures About Market Risk

 

Not applicable.

 

ITEM 4. - Controls and Procedures.

 

(a) Disclosure Controls and Procedures.

 

Management’s Report on Internal Control over Financial Reporting.

 

The Company’s management conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2015 using the criteria set forth in the Internal Control over Financial Reporting - Guidance for Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon the evaluation, Management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2015, because of material weaknesses in its internal control over financial reporting.

 

A material weakness is a control deficiency that results in a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by employees in the normal course of their assigned functions. Management concluded that we have several material weaknesses in our internal control over financial reporting because of inadequate segregation of duties over authorization, review and recording of transactions as well as the financial reporting of such transactions. Due to the Company's limited resources, management has not developed a plan to mitigate the above material weaknesses without the assistance of an independent escrow agent. In furtherance thereof, and with the agreement of the secured creditors, all monies received from either product sales or from any financing, are deposited in an attorney’s escrow account established by the Company at the request of the secured creditors. Distributions from the escrow account must be approved by the secured creditors.

 

Despite the existence of these material weaknesses, we believe the financial information presented herein is materially correct and in accordance with the generally accepted accounting principles.

 

(b) Changes in Internal Control over Financial Reporting.E

 

xcept as set forth above, there have been no changes in the Company’s processes and procedures during the year ended December 31, 2015, that materially affected or is reasonably expected to materially affect the Company’s internal control over financial reporting.

 

(c) Inherent Limitations of Disclosure Controls and Internal Controls over Financial Reporting

 

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation or effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 

 

 

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PART II

 

ITEM 1. - Legal Proceedings

 

There has been no change in status in connection with the pending litigation with Arcata Electronics, Inc. since reported in our prior quarterly report. (Superior Court of Los Angeles Case No. YCO64215.)

 

ITEM 1A. Risk Factors

 

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the period ended December 31, 2015.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the Year ended December 31, 2015 the company issued 286,767,594 common shares to satisfy outstanding debt obligations At all times relevant:

 

- the sale was made to a sophisticated or accredited investor;

 

- we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished;

 

- at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale of the securities; and

 

- neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising

 

In issuing the foregoing securities, we relied on the exemptive provisions of Section 4(2) or Regulation D of the Securities Act.

 

ITEM 3. Defaults Upon Senior Securities

 

On October 29, 2015 , the Company entered a Forbearance Agreement (the "Agreement") with its secured creditors. In order to finance its ongoing operations, the Company executed multiple secured convertible promissory notes totaling $725,400 with several creditors.

 

These notes are in default.

 

The secured creditors have filed U.C.C. security interests encumbering all of the Company's assets now owned or hereafter acquired and the proceeds thereof. Barclay Lyons, LLC has a priority security interest.

 

ITEM 4 - [Removed and Reserved]

 

ITEM 5. - Other Information

 

There is no information that was required to be disclosed by the Company on Form 8-K during the at the end of year 2015 that was not reported.

 

ITEM 6. - Exhibits

 

31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certifications of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

 

 

 

 

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SIGNATURES

 

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

 

 

  PURESPECTRUM, INC.
   
  By:  /s/ Joel Natario
    Joel Natario
President/CEO and CFO
(Principal Executive Officer)

 

Date:  January 10, 2016

 

 

 

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