UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  -------------------------------- FORM 10-QSB -------------------------------- (Mark One)  |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For The Quarterly Period Ended February 28, 2007  | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For The Transition Period from __________ To _________  Commission file number: 000-50374  INFE-HUMAN RESOURCES, INC. ---------------------------------------------------------------- (Exact name of small business issuer as specified in its charter)  NEVADA                             54-2013455 ---------------------------------------------------------------- (State or other jurisdiction        (IRS Employer Identification No.) of incorporation or organization)  67 Wall Street, 22nd Floor, New York, New York, 10005-3198 ---------------------------------------------------------------- (Address of principal executive offices)  (212) 859-3466 --------------------------------------------------------------- (Issuers telephone number)  --------------------------------------------------------------- (Former Name, former address and former fiscal year, if changed since last report)  Check whether the issuer (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 |_|   Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes [ ]  No [X]  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS  Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court   Yes [ ]  No  [ ]  APPLICABLE ONLY TO CORPORATE ISSUERS  State the number shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:  As of April 20, 2007, there were 15,447,974 shares of the Registrant's Common Stock, $0.001 par value per share, outstanding.  Transitional Small Business Disclosure Format   Yes ||   No |X|  2   INFE-HUMAN RESOURCES, INC. FOR THE QUARTERLY PERIOD ENDED February 28, 2007  TABLE OF CONTENTS  PART I - FINANCIAL INFORMATION  Item 1. Financial Statements..............................4  Item 2. Management's Discussion and Analysis or Plan of Operation.................................................13  Item 3. Controls and procedures...........................20  PART II - OTHER INFORMATION  Item 1. Legal Proceedings.................................22  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..................................................22  Item 3. Defaults upon Senior Securities...................22  Item 4. Submission of Matters to a Vote of Securities Holders...................................................22  Item 5. Other Information.................................22  Item 6. Exhibits..........................................23  THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE  EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.   3   PART I FINANCIAL INFORMATION  Item 1. Financial Statements  INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET FEBRUARY 28, 2007 (Unaudited)     4   INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTHS ENDED FEBRUARY 28, 2007 AND
                                  FEBRUARY 29,2006
    
    (Unaudited)     INFe-HUMAN RESOURCES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED FEBRUARY 29, 2007 AND FEBRUARY 29, 2006
         (Unaudited)     Supplement Cash Flow:  5    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006   NOTE 1-  ORGANIZATION AND BASIS OF PRESENTATION   INFe- Human Resources, Inc. (the Company) was incorporated in the State of Nevada on March 31, 2000.  The Company was organized to provide human resource administrative management, executive compensation plans and staffing services to client companies.  The business became a publicly traded entity in late 2003 as a result of its acquisition of all of the common stock of Daniels Corporate Advisory Company, Inc. (Daniels), a publicly traded Nevada company.  The Corporate Financial Consulting Division has a growth goal of providing advisory services to payroll client as well as non-payroll client companies.  This division will work with companies seeking to create and/or acquire adjunct service businesses, whose services will initially provide better lifestyles for its existing workforce, and ultimately will be packaged, on an additional profit center basis, for sale to other small companies for the retention of their employees.  The profits generated from all the financial consulting assignments will be available for venture investment through the second division, The Merchant Banking Division.  The Merchant Banking Division has an in-house equity funding program, whereby Daniels will profit by helping finance the growth of client, payroll service companies, as well as non-payroll service companies.  This division will also profit by the purchase of equity in attractive small public companies whose growth strategies are in line with a philosophy of growth through leveraged acquisitions. On December 20, 2005 the Companys wholly owned subsidiary INfe Human Resources of New York purchased all of the outstanding shares of Monarch Human Resources (Monarch), all of whose transactions from the date of acquisition are included as part of these consolidated statements.  On June 1, 2006 the Companys wholly owned subsidiary INfe Human Resources - Unity Inc. purchased Cosmo/Mazel Temps Corporations (Cosmo/Mazel) for the purpose of acquiring the rights to their current business activity and trade name. The Company did not assume any liabilities of the business and all of its transactions from the date of acquisition are included as part of these consolidated statements.  6  INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006  NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Principles of Consolidation  The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, INFe Human Resources  Unity, Cosmo Temp and Mazel Temp (Cosmo/Mazel), INFe Human Resources of New York, Monarch Human Resources (Monarch), Express Employment Agency Corporation (Express), Empire Staffing Inc. (Empire), and Daniels Corporate Advisory Company (Daniels).  All significant inter-company accounts and transactions have been eliminated in consolidation.  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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Cash and Cash Equivalents  For financial statement presentation purposes, short-term, highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The Company maintains it cash accounts at several financial institutions, and the funds are insured at each institution to the maximum limit of $100,000 set by the Federal Savings and Loan Association.  At February 28, 2007 there were no uninsured balances.  Revenue and Cost Recognition  The Company records its transactions under the accrual method of accounting whereby income is recognized when the services are rendered and collection is reasonably assured.  Investments  Marketable securities are classified as available-for-sale. Accordingly, they are carried at fair value with unrealized gains and losses reported, net of deferred income taxes, in accumulated other comprehensive income, a separate component of stockholders equity.  7   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 30, 2007 AND 2006    NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)  Fair Value of Financial Instruments  The carrying amounts reported in the condensed consolidated balance sheets for cash, deposits, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of the financial instruments. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.  Allowance for Bad Debts  The Company establishes an allowance for bad debts through a review of several factors, including historical collection experience, current aging status of the customer accounts, financial condition of our customers, and whether the receivables involve retentions.  Fixed Assets  Fixed assets are reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized.  Goodwill  The reported amounts of goodwill for each business reporting unit are reviewed for impairment on an annual basis and more frequently when negative conditions such as significant current or projected operating losses exist. The annual impairment test for goodwill is a two-step process and involves comparing the estimated fair value of each business reporting unit to the business reporting unit's carrying value, including goodwill. If the fair value of a business reporting unit exceeds its carrying amount, goodwill of the business reporting unit is not considered impaired, and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test would be performed to measure the amount of impairment loss to be recorded, if any.  The Companys annual impairment tests resulted in no goodwill impairment.  8   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006  NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)    Evaluating Impairment of Long-lived Assets  When events or changes in circumstances indicate that long-lived assets other than goodwill may be impaired, an evaluation is performed. For an asset classified as held for use, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying amount to determine if a write-down to fair value is required. When an asset is classified as held for sale, the asset's book value is evaluated and adjusted to the lower of its carrying amount or fair value less cost to sell. In addition, depreciation and amortization is ceased while it is classified as held for sale.  Income Taxes  The Company recognizes the amount of taxes payable or refundable for the year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will not be realized.  In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  The Company is in the process of bringing its tax filings current.   NOTE 3-    ACCOUNTS RECEIVABLE  In 2006 the Company entered into an agreement with a financial institution to sell its trade receivables on a limited recourse basis.  Under the terms of the  INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006  NOTE 3-    ACCOUNTS RECEIVABLE (CONTINUED)   agreement financial institution makes advances in reliance on the collectibility of the assigned receivables value upon sale.  The financial institution has been granted security interests in all of the Companys receivables.  As collections reduce previously sold receivables, the Company may replenish these with new receivables. At February 28, 2007, trade receivables of $285,033 had been sold and remain outstanding and the Company has received advances of $256,936 against those receivables. The risk from bad debt losses on trade receivables sold is retained by the Company.  The Company addresses its risk of loss on trade receivables in its allowance for doubtful accounts.  9   Accounts receivable consisted of the following at February 28, 2007 and 2006:  20072006Accounts receivable$293,337$165,331Allowance for doubtful accounts(49,507)(5,000)$243,830$160,331  NOTE 4-INVESTMENTS  Investments consist of a portfolio of common stocks trading on the OTC: BB.  The fair market values of the investments were $46,902 and $209,900 at February 28, 2007 and 2006, respectively.  Unrealized gains for the three months ended February 28, 2007, and 2006 were $23,481 and 26,254 respectively.    NOTE 5-    ACQUISITIONS AND INTANGIBLE ASSETS  In December 2005, the Company acquired Monarch and in June 2006 acquired Cosmo/Mazel.  The acquisitions were accounted for as business purchases and recorded at the estimated fair values of the net tangible and identifiable intangible assets acquired, with the excess of the purchase prices over the      INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006   NOTE 5-    ACQUISITIONS AND INTANGIBLE ASSETS (CONTINUED)   amounts of those items recorded as goodwill.  Valuations were determined by an independent valuation expert.  A summary of the assets acquired for each of these business purchases is as follows:    MonarchCosmo/
MazelFixed Assets$  31,491$    73,415Identifiable Intangible Assets:Trade name/Trademark346,920937,805Customer List104,776230,099Non Compete Agreement---180,070Goodwill236,675---Purchase Price$719,862$1,421,389  Amortization of intangible assets were $28,338 and $0 for the three months ended February 28, 2007 and 2006 respectively. Accumulated amortization of intangible assets at February 28, 2007 was $ 93,066.  In the quarter ended February 28, 2007 the Company renegotiated on of the notes issued in the acquisition and the note was reduced by $30,000 which reduced the goodwill.  10   NOTE 6-    CONVERTIBLE NOTES PAYABLE  The Company executed a Securities Purchase Agreement to issue 8% secured convertible notes payable in the amount of $3,000,000.  The notes are convertible at anytime by the holder of the security into shares of common stock, par value $.001 per share.  In addition, the Company issued warrants enabling the buyer to purchase 800,000 shares of common stock at an exercise price of $1.50 per share.  The Company has issued $2,000,000 of convertible notes in two tranches, one tranche of $1,250,000 was issued on November 29th, 2005 and the second tranche of $750,000 was issued on February 14th, 2006.  The   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006  NOTE 6-    CONVERTIBLE NOTES PAYABLE (CONTINUED)  notes mature 3 years from their date of issue.  The warrants value, relative to the corresponding notes has been accounted for as a debt discount, being amortized over the life of the corresponding convertible notes.  The value of the warrants has been determined using the Black-Scholes pricing model using the following assumptions:  February 14,November 29,Issue date20062005Valuation assumptions:Expected term (in years)55Expected stock price volatility125%132%Expected stock dividend yield0%0%Risk-free interest rate4.6%4.4%Fair value per warrant$0.351$0.543Number of warrants300,000500,000Value of warrants$105,263$271,458Relative value of warrants$92,308$223,025    The Company paid finance fees of $265,600 in association with the convertible notes.  The fees are being amortized over the life of the notes.  Amortization of $22,133 was recorded for each of the three months ended February 28, 2007 and 2006.  These notes had a conversion price of 25¢ per underlying common share.  On the issue date of the first tranche of convertible notes of $1,250,000 the market price of the Companys common stock was 69¢ per share and on the issue date of the second tranche of $750,000 the market price was 45¢ per share.  Because the conversion was in-the-money at the date of issue of each tranche, interest expense of $1,026,975 was recorded as of November 29th, 2005 and interest expense of $8,994 was recorded as of February 14th, 2006 due to the beneficial conversion rights.   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006  NOTE 6-    CONVERTIBLE NOTES PAYABLE (CONTINUED)   The financial statements for the year ended November 30, 2005 did not reflect the debt discount above or the charge of $1,026,975.  In addition, an excess of $100,000 in finance fees related to the first tranche of convertible notes was recorded.  Therefore, the 2005 financial statements were restated to correct these items.  Although the Company has not met some of the terms of the agreement, the lender has stated that the notes will not be considered as being in default.  However, if the agreement were strictly followed there would be substantial penalties for interest due because of a default and penalties for the inability to satisfy stock registration rights under the agreement which could also be imposed in the future.  NOTE 7-    LONG-TERM LIABILITIES  Long term debt consists of the following: February 28
2007November 30
2006Bank revolving line of credit of up to $75,000 expiring in three-years and having an annual interest rate of 9.25%.  The loan is secured by the Companys assets.$63,463$70,535Loan outstanding with an employee and former owner of an acquired Company, Cosmo/Mazel.  The loan is a twelve month unsecured loan with an interest rate of 5% per annum.183,580283,580Loan outstanding with the former owner of an acquired Company, Monarch.  The loan is a twelve-month unsecured loan with an interest rate of 5% per annum.  A
$30,000 reduction in the loan term was negotiated in the
Quarter ended February 28, 2007.15,00060,000Loan outstanding with an employee and former owner of an acquired Company, Cosmo/Mazel.  The loan is payable on demand without a stated interest rate.10,00010,000
Total Long-Term Liabilities272,043423,935Less Unamortized Discount(8,960)(6,273)Total Long-Term Liabilities263,083417,662Less Current Portion(219,701)(336,313)Net Long-Term Liabilities$43,382$84,349  NOTE 7-LONG-TERM LIABILITIES (CONTINUED)  Principal maturities of the long-term liabilities over the next five years are as follows:  Year Ending November 30Amount2007$22,504200820,8782009---2010---2011---Total Long-Term Liabilities$43,382   NOTE 8-LOANS PAYABLE TO SHAREHOLDERS  The $243,581 loan from a shareholder is to be used for working capital. The loan is non-interest bearing, and has no specific repayment terms. The Company has been told that there will not be a demand payment within the next 12 months; therefore, the loan has been classified as a long-term liability.  11   NOTE 9-    GOING CONCERN  The accompanying consolidated financial statements have been presented in accordance with accounting principles generally accepted in the United States of America, which assume the continuity of the Company as a going concern.  As reflected in the financial statements, the Company has incurred cumulative net losses, which has resulted in an increase to its accumulated deficit.  However,  the Company has realized its first revenue stream and emerged out of the development stage.  Presently, with the acquisitions, management believes that the Company has the revenue streams necessary to operate and develop its business.  Since there are newly acquired businesses, the Company cannot currently ascertain the consistency of the revenue stream with any degree of certainty. This raises substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above.  Management believes that the Companys capital requirements will depend on many factors including the success of the Companys product development efforts. With the business plan being followed, management believes along with working capital being raised that the operations and sales will make the Company a viable entity over the next twelve months.  The financial statements also do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.   NOTE 10-    RELATED PARTY TRANSACTIONS  During the periods ended February 28, 2007 and 2006, The Company has utilized office space provided by its President, Mr. Arthur Viola at no charge. Loans payable to shareholders at February 28, 2007 totaled $243,581.   NOTE 11-    COMMITMENTS AND CONTINGENCIES  The Company leases office space under a non-cancelable operating lease that expires May 31, 2009.  Future minimum lease payments follow:  For the year ending November 30,         Amount  2007                                                                          $22,200 2008                                                                           31,824 2009                                                                           16,224  TOTAL                                                                       $70,248    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2007 AND 2006   12  NOTE 12-    RESTATEMENT OF PRIOR PERIODS   The financial statements for the year ended year ended November 30, 2005 were restated to reflect the costs associated with its convertible debt financing done in November of 2005. In addition, the Company incurred new financing in February 2006.  The financial statements for the quarter ended February 28, 2006 are being restated to include interest expense on these notes, to properly reflect the accretion of the debt discount and to restate the amortization of deferred financials costs incurred.




Item 2.

Management's Discussion and Analysis or Plan of Operation.



THE  FOLLOWING  DISCUSSION  SHOULD  BE READ  IN  CONJUNCTION WITH  THE COMPANY'S  FINANCIAL  STATEMENTS  AND THE  NOTES TO THOSE  STATEMENTS  AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT.



OVERVIEW

General



INFe-Human Resources, Inc. was incorporated in the State of Nevada on March 31, 2000. The Company was a subsidiary of INFe, Inc. a publicly trading entity on the over the counter bulletin board through October 31, 2003.  On October 21, 2003, the Company purchased all of the common stock of Daniels Corporate Advisory Company, Inc. (Daniels), a Nevada company formed on May 2, 2002. Daniels Corporate Advisory Company, Inc. has thereafter been a wholly owned subsidiary of Infe.  On December 14, 2005, we formed Infe-Human Resources of New York, Inc., in Nevada to operate a staffing services division.  Infe-Human Resources of New York, Inc. is a wholly owned subsidiary.  On January 19, 2006, we formed Infe-Human Resources Unity, Inc. in Nevada to operate additional staffing services.  Infe-Human Resources Unity, Inc is a wholly owned subsidiary.  In addition, Monarch Human Resources, Inc. is a wholly owned subsidiary of Infe Human Resources of New York, Inc. and Empire Staffing, Inc. is a wholly owned subsidiary of Monarch Human Resources, Inc.



Through our wholly owned subsidiary, Daniels Corporate Advisory Company, Inc., we offer: (a) corporate financial consulting and (b) merchant banking. Our corporate financial consulting provides advisory services to client companies.  Our merchant banking plans include an in-house equity funding program in which we intend to finance the growth of client and payroll service companies, as well as purchase equity in small public companies.



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However, Infe intends to pursue the growth of the merchant banking business within the next twelve months.  Infe does not intend to register under the Investment Company Act of 1940, but rather intends to operate its merchant banking division within allowable exemptions from registration.



Through our wholly owned subsidiary, Infe-Human Resources of New York, Inc., we conduct part of our employment staffing services. The staffing services includes both temporary and permanent placement for both professional and nonprofessional employment.  Infe Human Resources of New York, Inc. operates through two wholly owned subsidiaries, Monarch Human Resources, Inc. and Empire Staffing, Inc.  Also, through our wholly owned subsidiary, Infe-Human Resources Unity, Inc. we conduct additional employment staffing services.



On June 1, 2006 Infe-Human Resources Unity, Inc. purchased the assets and business operations of Cosmo Temp, Inc. and Mazel Temp, Inc. both of which are employee staffing companies.  The Company formed Infe-Human Resources Unity, Inc. to acquire Cosmo Temp and Mazel Temp, rather than utilize the already operating Infe Human Resources of New York, due to certain future performance based provisions (earn-out provisions) related to the consideration to be paid for the assets and business operations of Cosmo Temp and Mazel Temp.



The staffing business, through both Infe-Human Resources Unity and Infe-Human Resources of New York, is our primary source of revenue.



Daniels developed and implemented the Staffing Company Rollup for its parent, INfe Human Resources, Inc., as a pilot project in order to advance and publicize in-house consulting and senior management expertise.  In general, Corporate Consulting Assignments have as a primary aim  for a client company to advance from the OTC:BB to the American Stock Exchange through a leveraged acquisition/rollup strategy. Daniels has not yet achieved this goal, but is still working towards this end.





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It is our plan that the future profits from Corporate Consulting Assignments will be invested in the In-house Fund of the Merchant Bank Division for investment in client companies needing equity for down payment amounts in leveraged transaction(s) to meet exchange listing requirements andin the expansion of the wholly-owned Consolidated Staffing Companies through direct acquisition of additional, diversified companies in specific growth niches and through the development of add on services that can be marketed down the same client/employee pipeline.



Our newly developed website address is Infehumanresources.com



Future Plans



We intend to look at potential acquisitions in complementary areas of corporate financial services and staffing services and grow through internal sales and development initiatives as well.



Due to our physical presence in New York, we expect to expand our current New Jersey  New York concentration down the east coast.  We are currently developing a working relationship with several sales professionals in the Staffing Industry that will use their expertise and networks to aid in this East Coast Expansion.  We expect to expand down the East Coast to Florida, during the current fiscal year.  This growth should come from the internal generic growth opportunities mentioned herein, as well as further execution on select acquisition opportunities, as they become available.



Management believes that Florida is fast growing due to its (i) above average population growth; (ii) a low tax regulatory climate; (iii) a favorable climate for small businesses including such things as State funded business incubators; and (iv) a diverse population, all of which lead, in management's view, to greater small business formation and correspondingly greater potential demand for our services.



As an additional means to potentially increase our size and scale, we are also reviewing potential acquisitions of small and medium sized payroll processing companies as well as companies that can provide "add on" services, including investment services to the client company and its employees.  Due to the numerous uncertainties associated with acquiring a company, we do not have a definitive timetable on making our next acquisition.



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However, we believe that making acquisitions can be an important method to our growth as a complement to growth internally.



RESULTS OF OPERATIONS



THREE MONTHS ENDED FEBRUARY 28, 2007

COMPARED TO THREE MONTHS ENDED FEBRUARY 28, 2006



Revenues



Revenues were $1,644,044  for the three months ended February 28, 2007, as compared to $687,932 for the three months ended February 28, 2006.  The increase of revenues was due to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  The Company completed several staffing business acquisitions since December 2005.



Cost Of Revenues



Cost of revenues was $1,340,275 for the three months ended February 28, 2007, as compared to $557,225 for the three months ended February 28, 2006. Gross profit was $303,769 for the three months ended February 28, 2007 compared to $130,707 for the three months ended February 28, 2006.



Operating Expenses



Operating expenses for the three months ended February 28, 2007 were $218,713 compared to $183,683 for the three months ended February 28, 2006. This increase was primarily attributed to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  The Company completed several staffing business acquisitions since December 2005.  The Companys largest expense is its compensation, which is generally associated with the staffing subsidiaries.  Moreover, the Company now incurs significant selling, general and administrative expenses.



Income (Loss) From Staffing Operations



Income from operations of our staffing business for the three months ended February 28, 2007 was $85,056 compared to a loss of ($52,976) for the three months ended February 28, 2006.





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Income (Loss) From Daniels Advisory Consulting Operations





Loss from operations of our Daniels Advisory Consulting business for the three months ended February 28, 2007 was ($114,765) compared to income of $108,928 for the three months ended February 28, 2006.



Depreciation and Amortization Expense



Depreciation and amortization expense was $34,505 and $456 for the three months ended February 28, 2007 and 2006, respectively.





Interest Expense



Interest expense was $132,022 and $ for80,576 the three months ended February 28, 2007 and 2006, respectively.



Interest Income



Interest Income was $0 and $699 for the three months ended February 28, 2007 and 2006, respectively.



Net Loss Applicable To Common Stock



Net loss applicable to Common Stock was $196,235 for the three months ended February 28, 2007, compared to $24,381 for the three months ended February 28, 2006. Net loss per common share was $0.01 for the three months ended February 28, 2007 and $0.00 for the three months ended February 28, 2006.



LIQUIDITY AND CAPITAL RESOURCES



Our financial statements are prepared on a going-concern basis, which assumes that we will realize assets and discharge liabilities in the normal course of business. With continued efforts to reduce expenses and increase revenues we believe we will generate sufficient cash flow to support current operations through fiscal 2007.  We have cash flow demands on financing we currently have in place, however the interest payments are non-cash items, as they are contracted to be paid in the form of common stock.  Management is currently seeking replacement financing that will be more conducive to achieving long term goals via additional acquisitions using the common stock and other securities packages of the company.



Our commitments for capital expenditures and leasing commitments include our month-to-month lease of our corporate operations office in New York, a monthto-month lease of our Executive Offices/Board Room in New York, a month to month lease for a small office in New Jersey, which was the former Express Employment Agency office and a three year lease for offices in New Jersey which were the former  Mazel Temp and Cosmo Temp offices.  In addition, the Company has obligations associated with its outstanding Secured Convertible Promissory Notes and Notes payable associated with its recent acquisitions.



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On June 1, 2006, Infe closed on the acquisition of the assets of Cosmo Temp, Inc. and Mazel Temp, Inc.  At closing Infe utilized $950,000 of its cash.  In addition Infe is obligated to pay an additional $333,580 over the next twelve months payable $83,395 per quarter.



Additional financing is currently being raised in the form of accounts receivable financing (factoring); while negotiations are in progress with institutional investor for a private placement of equity securities.



On November 30, 2005, we sold 8% Secured Convertible Promissory Notes for an aggregate of $1,250,000.  On February 14, 2006, the four investors each purchased additional secured convertible notes for an aggregate of $750,000.  Each of the Notes has a three year term, accordingly $1,250,000 plus interest shall become due and payable on November 30, 2008 and $750,000 shall become due and payable on February 14, 2009.



The funds from the sale of Convertible Notes provided the down payment amounts for the Monarch Acquisition and its add-on acquisition of Express Employment, as well as the down payment amount for the Cosmo/Mazel Asset Purchase Acquisition.  The Convertible Note funding also provided working capital for the entire staffing operation, as well as our overall operations.   To date, the Convertible Notes have provided $2 Million.  Management is actively seeking replacement financing and expects to pay off the Convertible Notes over the next 12 months  either by means of outside financing or a combination of outside financing and the use of excess cash flow from all the staffing subsidiaries as well as any consulting cash flows.  The Company does not expect the conversion of a significant portion of the Notes and may provide non-affiliated, friendly buyers for the Notes.



Unlike venture capital funding, the Convertible Note Financing allows management to stay in charge and carryout its business plan without judgmental interference and does not drain corporate liquidity and cash. Unlike conventional venture capital debt, whose debt service comes out of corporate cash flow, the existing Convertible Note Debt is convertible into equity.



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Section 4(e) of the Securities Purchase Agreement with the Holders of our Convertible Notes prohibits Infe from obtaining additional equity financing involving the sale of convertible securities, common stock at a discount to market or warrants, without first obtaining the consent of the Holders, for a period ending on the later of 270 days from November 30, 2005 or 180 days from the effectiveness of a registration statement. In addition, Infe granted the Holders a right of first refusal on future offerings for a period in excess of two (2) years.  The right of first refusal is subject to certain exclusions, including, a capital raise involving a firm commitment underwritten public offering for in excess of $15,000,000, issuances associated with mergers, acquisitions and joint ventures, and issuances under stock option plans.



Section 4(j) of the Securities Purchase Agreement with the Holders of our Convertible Notes provides that so long as a selling stockholder beneficially owns any Notes or Warrants, Infe shall maintain its corporate existence and shall not sell all or substantially all of its assets, except in the event of a merger or consolidation or sale of all or substantially all of the Companys assets, where the surviving or successor entity in such transaction (i) assumes the Companys obligations and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.



Under the registration rights agreement with the Holders of our Convertible Notes, if a registration statement relating to the securities is not declared effective by the SEC within 120 days of March 30, 2006, Infe is obligated to pay a registration default fee to the 8% callable secured convertible debenture holders equal to the principal of the Convertible Notes outstanding multiplied by .02 multiplied by the sum of the number of months that the registration statement is not yet effective, on a pro rata basis.  Although the Holders of the Convertible Notes have not notified Infe of a default to date, this failure to notify us does not act as a waiver of the default.  Accordingly, the Companys failure to make a registration effective could result in the assessment of liquidated damages in the amount of $40,000 per month against Infe beginning from July 30, 2006.



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OFF-BALANCE SHEET ARRANGEMENTS



As of February 28, 2007, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we were engaged in such relationships.





ITEM 2.  DESCRIPTION OF PROPERTY



Our New York operational offices, are located in an office service complex located on the 22nd floor of 67 Wall Street, New York, New York 10005-3198.  Our lease is month-to-month with no expiration date.



In addition, we lease approximately 2500 square feet of office space at 1405 Clinton Ave., Irvington, NJ 07111, which lease is for a three year period beginning June 1, 2006.  Our landlord for this property is Ludin Pierre, who is an employee of Infe Human Resources-Unity, Inc. and from whom we purchased Cosmos Temp, Inc. and Mazel Temp., Inc.



In addition, we lease approximately 1,500 square feet of office space at 1027 Hooper Avenue, Toms River, New Jersey for the operational headquarters of the Monarch Human Resources, Inc. Subsidiary of the Company.



In addition, we lease approximately 900 square feet of Executive Office/Board Room space at 106 Central Park South in Manhattan New York.  This space is rented by the Company on a month to month basis from the Chairman and CEO  Arthur D. Viola  who has personally guaranteed a one year lease on the space.



We believe that our existing facilities are adequate for our needs for the foreseeable future and that if additional space is needed, it would be available on favorable terms at the same location.





ITEM 3.  CONTROLS AND PROCEDURES



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We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



Based upon their evaluation as of the end of February 28, 2007, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.



A material weakness is a significant deficiency or a combination of significant deficiencies that result in a more than remote likelihood than a material misstatement of the annual or interim financial statements will not be prevented or detected.

Miller Ellin Company, LLC, our independent registered public accounting firm, has advised management and the board of directors that it has identified the following material weaknesses in our internal controls:



A material weakness exists as of February 28, 2007 with regard to insufficient personnel in the accounting and financial reporting function due to the size of our company which prevents the ability to employ sufficient resources to have adequate segregation of duties within the internal control system.



In order to remediate these material weaknesses in our internal control over financial reporting, management is in the process of designing and implementing and continuing to enhance controls to aid in the correct preparation, review, presentation and disclosures of our Consolidated Financial Statements.  We are continuing to monitor, evaluate and test the operating effectiveness of these controls.



Other than indicated above, there were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II

OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS



We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.





ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



On March 7, 2007 we issued 100,000 shares of restricted common stock to Ken Hersh in exchange for services rendered valued at $10,000.



On March 9, 2007 we issued 300,000 shares to John Scrudato in exchange for the cancellation of a warrant for the purchase of 10% of the outstanding equity in Infe Human Resources of New York, Inc.



On March 9, 2007 we issued 300,000 shares to Gregg Oliver in exchange for the cancellation of a warrant for the purchase of 10% of the outstanding equity in Infe Human Resources of New York, Inc.



ITEM 3.  DEFAULTS UPON SENIOR SECURITIES



NONE



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS



none



ITEM 5.  OTHER INFORMATION



none



Item 6.  Exhibits



EXHIBIT

NUMBER

DESCRIPTION

----- ------------------------------------------------------





22





31.1

Certification of Principal Executive Officer and Principal Financial Office pursuant to Sarbanes-Oxley Section 302



32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 906





SIGNATURES



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



Infe-Human Resources, Inc.





-------------------------

By:  Arthur Viola

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

Date: April 23, 2007



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



/s/ Arthur Viola

By:  Arthur Viola

Director

Date:  April 23, 2007







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