SOURCE: First Rate Staffing Corporation

First Rate Staffing Corporation

March 30, 2016 16:01 ET

First Rate Staffing Reports Record Fourth Quarter and Full Year 2015 Results

SANTA FE SPRINGS, CA--(Marketwired - Mar 30, 2016) -  First Rate Staffing Corporation (OTCQB: FRSI), a full service staffing company providing human resources, reported record results for the fourth quarter and year ended December 31, 2015.

Q4 2015 Highlights

  • Revenues increased 79% to a record $11.1 million
  • Gross profit up 59% to $0.9 million
  • Added six clients in the quarter, bringing total to over 100

Q4 and Full Year 2015 Financial Summary
Revenues in the fourth quarter of 2015 increased 79% to a record $11.1 million, compared to $6.2 million in the same year-ago quarter. The increase in revenues was due to new clients added. For the full year of 2015, revenues increased 83% to a record $32.9 million, compared to $18.0 million in 2014. The increase in revenue for the year was primarily due to organic growth.

Gross profit in fourth quarter of 2015 increased 59% to $0.9 million, versus $0.6 million in the same year-ago quarter. For full year of 2015, gross profit increased 57% to a record $2.9 million, compared to $1.9 million in 2014.

Gross margin in the fourth quarter of 2015 decreased 105 basis points to 8.3%, compared to 9.3% in the same year-ago quarter. For the full year of 2015, gross margin decreased 143 basis points to 8.9%, versus 10.4% in 2014. The decrease in gross margin in both periods was due to increased cost of revenues, which represent primarily staffing salaries and workers compensation insurance costs. The cost of revenues increased at a higher rate than the percentage increase in revenues due to an increase in the state and federal unemployment tax rates for the company's staffing employees.

General and administrative (G&A) expenses in the fourth quarter of 2015 increased 50% to $0.8 million versus $0.5 million in the same year-ago quarter. The quarterly increase in G&A expenses were primarily due to increased payroll associated with offices opened earlier in the year. In 2015, the company opened two new offices in California and moved an office location to Torrance, a more strategic recruiting and service area, as well as opened the company's first office in Reno, Nevada.

For the full year of 2015, G&A expenses were $2.6 million, as compared to $1.6 million in 2014. The increase in G&A expenses for the year was primarily due to increased payroll costs, professional fees, as well as the acquisition of Loyalty Staffing Services in February 2014.

Net loss in the fourth quarter of 2015 was $0.7 million or $(0.09) per share, compared to a loss of $34,000 or $(0.005) per share in the same year-ago quarter. For the full year of 2015, net loss was $639,000 or $(0.09) per share, as compared to net income of $10,000 or $0.001 per share in 2014. Net loss in both periods was primarily due to a non-recurring, non-cash impairment charge of $641,000 associated with a former client. The client was part of the Loyal Staffing Services acquisition, and who was dismissed due to violation of First Rate Staffing's risk management standards.

Excluding the impairment charge, net loss in fourth quarter of 2015 was $42,000 or $(0.01) per share, and for the full year of 2015, net income was $2,000 or $0.00 per share.

Cash at December 31, 2015 totaled $0.6 million compared to $0.8 million at December 31, 2014. The decrease in cash was due to cash used by operating activities.

Management Commentary
"During the quarter, our record topline growth was driven by the addition of new clients and increased billings," said First Rate Staffing CEO, Cliff Blake. "In 2015, we dismissed $6 million of business in line with our highly-selective customer process and unique operating model that lowers typical employer risk exposure for greater profitability. Excluding the non-cash impairment charge, we were profitable for the year.

"In 2015, we increased our presence in California with the opening of two new offices. The offices will support our more than 1,000 employees in the state and address the increasing demand for labor assistance. California recently announced its plans to raise the minimum wage to $15 per hour by 2022, which will provide us a strong tailwind for growth. In addition, bill rates in the U.S. industrial and office/clerical staffing skill segments have risen due to pass-through of new administrative and health insurance costs related to the Affordable Care Act, according to Staffing Industry Analysts.

"Also in 2015, we opened an office in Reno, Nevada, and we are planning to open additional offices in two other states to support current clients who requested our services in additional locations. Given our growth trajectory, expanding footprint, favorable industry tailwinds, and unique business model that provides strong competitive advantages, we are on track to generate revenues between $45 million to $50 million in 2016, which would represent profitable growth of 37 to 52%."

About First Rate Staffing
First Rate Staffing provides recruiting and staffing services for temporary positions in light industrial, distribution center, assembly, and clerical businesses. The company is headquartered in Santa Fe Springs, California, with offices in Arizona and Nevada. For more information about the company, visit

Important Cautions Regarding Forward-Looking Statements
This press release may from time to time make, certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, among others, statements with respect to the Company's future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical and that may constitute statements of future expectation. While we believe these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. We cannot assure you that these expectations will occur, and our actual results may be significantly different. Factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by us are sometimes presented within the forward-looking statements themselves or are otherwise discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K and available on our website: Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company disclaims any obligation to update or revise any forward-looking statement, whether written or oral, that may be made from time to time, based on the occurrence of future events, the receipt of new information, or otherwise.

    Year Ended  
    December 31
    December 31
Revenues   $ 32,874,503     $ 18,003,628  
Cost of revenues     29,936,133       16,137,224  
Gross profit     2,938,370       1,866,404  
Impairment of intangible assets     640,733       -  
General and administrative expenses     2,632,050       1,604,707  
Income (loss) from operations     (334,413 )     261,697  
Gain on sale of property and equipment     5,292       -  
Gain on settlement agreement     75,000       -  
Interest and other expense, net     (273,632 )     (185,255 )
Income (loss) before income tax     (527,753 )     76,442  
Income tax expense     111,102       66,676  
Net income (loss)   $ (638,855 )   $ 9,766  
Net income (loss) per share:                
Basic and diluted   $ (0.09 )   $ -  
Weighted average shares outstanding:                
Basic and diluted     7,500,000       7,442,466  
    December 31,
    December 31,
Current assets            
  Cash   $ 565,040     $ 787,238  
  Accounts receivable, net     733,009       330,538  
  Notes receivable - related party, current portion     -       8,388  
    Total current assets     1,298,049       1,126,164  
Property and equipment, net     53,309       19,823  
Intangible assets, net     272,522       1,206,429  
Notes receivable - related party, net of current portion     98,918       -  
Deposit and other assets     7,640       6,200  
    Total assets   $ 1,730,438     $ 2,358,616  
Liabilities and Stockholders' Equity                
Current liabilities                
  Accounts payable   $ 355,452     $ 385,571  
  Accrued expenses     780,863       534,735  
  Car loan payable, current portion     4,623       -  
  Notes payable - current portion, net of discount     107,786       474,837  
  Notes payable - related parties     -       4,509  
  Total current liabilities     1,248,724       1,399,652  
  Car loan payable, net of current portion     31,605       -  
  Notes payable, net of current portion     130,000       -  
  Total liabilities     1,410,329       1,399,652  
  Commitments and contingencies                
Stockholders' equity                
  Preferred stock, $0.0001 par value, 20,000,000 shares authorized, zero shares issued and outstanding     -       -  
  Common stock, $0.0001 par value, 100,000,000 shares authorized, 7,500,000 shares issued and authorized at December 31, 2015 and December 31, 2014    
  Additional paid-in capital     1,089,802       1,089,802  
  Accumulated deficit     (770,443 )     (131,588 )
    Total stockholders' equity     320,109       958,964  
    Total liabilities and stockholders' equity   $ 1,730,438     $ 2,358,616  

Contact Information

  • Company Contact:
    First Rate Staffing
    Cliff Blake, CEO
    Email Contact

    Investor Relations Contact:
    Liolios Group
    Ron Both, Senior Managing Director
    Email Contact