AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1998
REGISTRATION STATEMENT NO. _____
WASHINGTON, D. C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
THE MURDOCK GROUP CAREER SATISFACTION CORPORATION
(Name of small business issuer in its charter)
UTAH 736104
(State or other jurisdiction of (Primary Standard
incorporation or organization) Industrial ID number)
87-0562244
(IRS Employer Classification Code Number)
5295 SOUTH COMMERCE DRIVE, SUITE 300,SALT LAKE CITY,UTAH 84107 / (801) 268-3232
(Address and telephone number of principal executive
offices and principal place of business)
KC HOLMES, CEO, 5295 SOUTH COMMERCE DRIVE, SUITE 300,
SALT LAKE CITY, UTAH 84107 / TEL (801) 268-3232
(Name, address, and telephone number of agent for service)
Copies to:
STANFORD SMITH, GENERAL COUNSEL
5295 SOUTH COMMERCE DRIVE, SUITE 300,
SALT LAKE CITY, UTAH 84107 / TEL (801) 263-5103
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the follow ing box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered offering price per share aggregate offering price Registration
registered Fee
<S> <C> <C> <C> <C>
Shares (1) 2,000,000 $4 $8,000,000 $2,424
Shares (2) 181,500 $4 $726,000 $220
Bonds (3) $3,000,000 In increments of $1,000 $3,000,000 $909
---------- ----------
Total $11,726,000 $3,553
</TABLE>
(1) Offered by the registrant.
(2) Offered for immediate sale by shareholders of the registrant.
(3) Offered by the registrant in increments of $1,000.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effec tive date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registra tion statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The registrant has applied for listing of the Shares on the Nasdaq SmallCap
Market, subject to meeting applicable requirements. Copies of the reports, proxy
and information statements and other information which the company may file can
be inspected and copied at the public reference facilities maintained by the
Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
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The company intends to distribute to its shareholders annual reports containing
financial statements audited by its independent accountant approximately five
months after the close of each fiscal year, and will distribute such other
periodic reports to its shareholders as the company may deem to be appropriate,
or as may be required by law. The company's fiscal year ends on December 31 of
each year.
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Prospectus
2,181,500 Common Shares at $4 Per Share
[THE MURDOCK GROUP letterhead]
$3,000,000 of Bonds in $1,000 Increments
Minimum Investment - $1,000
The Murdock Group Career Satisfaction Corporation
We provide employment-related services to two types of clients:
Individual clients seeking to advance their careers by finding "the fastest
way to a better job"(TM) through counsel ing, training, and comprehensive
job search resources; and
Business clients seeking assistance with employee recruiting, hiring,
training, and outplacement.
This is our initial public offering, consisting of 2 million shares at $4 per
share for $8 million, and $3 million of bonds (repaying, at the end of 4 years,
principal and 15% interest compounded annually). In addition, four shareholders
seek to sell 181,500 of their shares for $726,000.
There is currently no public market for our shares or bonds. At the conclusion
of this offering we will apply with the National Association of Securities
Dealers to list our shares on the Nasdaq SmallCap Market under the symbol
"JOBS."
Investing in our shares and bonds involves a high degree of risk; you should
purchase only if you can afford a complete loss of your investment. See "Risk
Factors" beginning on page 9.
Item Explanation Total
Public offering price of shares $4 per share $8,726,000
Public offering price of bonds $1,000 increments $3,000,000
Less sales commissions 10% of sales price $1,172,600
----------
Net Proceeds $10,553,400
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Prospectus dated __________
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Notices About This Offering
You can copy the full securities registration statement, of which this
prospectus is a part, at the public reference facil ities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. This information is also available on the
Commission's World Wide Web site at www.sec.gov.
You may also request such documents, free of charge, from us at our headquarters
located at 5295 South Commerce Drive, Salt Lake City, Utah 84117. Our telephone
number is (801) 268-3232, our fax number is (801) 268-3289, and our web site
address is www.themurdockgroup.com.
Once this offering is concluded, the Securities Exchange Act of 1934 requires us
to file reports, proxy statements and other information with the Securities and
Exchange Commission at least quarterly. This information is also available to
you at the Commission's reference library and web site, and at the company. Our
company is changing rapidly and the information in this prospectus will soon be
out of date.
This prospectus contains the important facts about these securities. You should
not rely on any other information or claims.
This prospectus contains many forward-looking statements (within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21 E of the
Securities Exchange Act of 1934). These statements are based on our beliefs,
assumptions, current expectations, estimates, and projections.
Many of the factors that will determine our future results are beyond our
ability to control or predict. The forward- looking statements are subject to
risks and undertainties, and as a result, actual operating results may differ
substan tially. Even if circumstances change, we will not update any of the
statements in this prospectus.
In addition to registering with the Commission, we have registered this offering
in the following states: Arizona, Cal ifornia, Colorado, Florida, Idaho,
Illinois, Nevada, New Mexico, Oregon, Texas, Utah, Washington, West Virginia,
Wyoming.
If you live in another state, you may not purchase these securities during this
offering. You may, however, be able to purchase the shares from your stockbroker
if the shares are listed for public trading after the offering is complete.
Because the shares have not been publicly traded before this offering, we have
arbitrarily determined the offering price. We cannot guarantee that any active
trading market will exist after the offering.
We are making this offering through our own officers, and seeking the
participation of NASD-licensed selling agents on a "best efforts" basis. The
placement agents are not required to sell any specific number of shares or
bonds.
This offering will end when all the securities are sold, 9 months after the date
of this prospectus, or anytime we choose. We reserve the right to reject any
subscription in full or in part for any reason.
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Table Of Contents
Offering Overview ....................................................7
Risk Factors .........................................................9
Management's Discussion and Analysis of
Financial Condition and Results of Operations....................... 18
Use of Offering Proceeds.............................................21
The Company..........................................................23
Business Operations..................................................24
Management...........................................................30
The Shares...........................................................34
The Bonds............................................................37
Plan of Distribution.................................................38
Experts ............................................................40
Additional Information...............................................40
Financial Statements.................................................41
Subscription Agreement...............................................70
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Offering Overview
The table below contains a very brief outline of the information contained in
this prospectus. Please read the entire prospectus before you decide whether and
how much to invest in our shares.
The Company The Murdock Group Career Satisfaction Corporation
is a Utah corporation. We plan to expand rapidly,
establishing offices coast-to-coast over the next
two de cades. See "The Company."
Our Business We provide employment-related services to
individuals and companies. We "popularize" career
advancement through radio and newspaper
advertising, target mid-level professionals, and
offer financing to our clients. See "Business
Operations."
How to Contact Us We are located at 5295 South Commerce Drive, Suite
300, Salt Lake City, Utah 84107. Our telephone
numbers are (801) 268-3232 and 1-888-888-0892, the
fax number is (801) 268-3289, and our web site is
www.themurdockgroup.com.
Shares We offer 2 million shares at $4 per share. The
shares offered are Class A common voting shares,
the only class of shares currently outstanding. See
"The Shares."
Bonds We offer $3 million in bonds in increments of
$1,000. Bonds mature in 4 years, when the principal
plus interest at 15% compounded annually will be
paid. The bonds are unsecured, and may be called
(that is, prepaid) by the company at any time. No
sinking fund will be established for repayment of
the bonds. See "The Bonds."
Selling Shareholders Four of our current shareholders (KC Holmes, CEO;
Heather Stone, President; Brad Stewart, Chief
Financial Officer; and Stanford Smith, in-house
General Counsel) are offering 181,500 of their own
shares for sale as part of this offering. If all of
these shares are sold, these officers will receive
$726,000 (less a pro rata share of sales
commissions). These shares will be sold pro rata
with the company's shares.
Sales of Shares & Bonds We are making this offering through our own
officers, and seeking the participation of
NASD-licensed selling agents, on a "best efforts"
basis. There will be no stabilizing transactions.
See "Plan of Distribution."
Risks of Investment There are substantial risks involved in an
investment in the company. These risks are related
to our business operations, our financial
condition, our management, and our shares and
bonds. See "Risk Factors."
Voting control Our officers and directors currently own 86.32% of
total outstanding shares (not including treasury
shares). If all offered shares are sold, this
percentage will be reduced to 66.29%, but our
officers and directors will still be able to
control company policy and perpetuate themselves in
management. See "Management."
Dividends We plan to reinvest all profits, if any, in the
company for a period of at least 5 years. No
dividends will be paid during this period.
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Dilution The book value per share on the date of this
prospectus is ($.3397). Investors in the shares
will pay $4 per share for 20.85% of company
ownership (if all shares are sold), experiencing
dilution of 92%. See "The Shares."
Use of Proceeds We will spend the proceeds of this
offering to open several offices in the West ern
States over the next 12 months, retire and
restructure debt, and meet normal operating
expenses. There is no minimum amount which must be
raised before we will begin spending the proceeds.
See "Use of Offering Proceeds."
Trading Market Our shares are not currently listed for trading on
any exchange. We will apply to list our shares on
the Nasdaq SmallCap Market (subject to meeting
applicable requirements), but cannot guarantee that
our application will be approved. Our proposed
trading symbol is "JOBS." We will not seek to list
the bonds for trad ing. See "The Shares."
Financial Condition Detailed audited financial statements are set forth
in the section "Financial State ments." They
include a "going concern" footnote because we have
incurred sub stantial operating losses since
inception. We believe we can overcome losses by
moving Salt Lake City staff to other offices,
allocating infrastructure investment across
multiple locations, reducing charge-off expense,
and reducing interest expense. See "Management's
Discussion and Analysis of Financial Condition and
Results of Operations."
Annual Report We will send purchasers of our shares and bonds an
annual report containing audited financial statements
approximately five months after the close of each
fiscal year.
Reporting Company We will file quarterly, annual, and other reports
with the Securities and Exchange Commission as
required by the Securities laws. These reports will
be available on our web site,
www.themurdockgroup.com.
Offering Period This offering will continue until subscriptions for
all shares and bonds are received, until 9 months
from the effective date of the offering, or until
we terminate the offering, whichever event first
occurs. See "Plan of Distribution."
Transfer Agent and The transfer agent and registrar for our shares is
Registrar Interwest Transfer Company, Inc., at 1981 East
Murray Holladay Road, Suite 100, Salt Lake City,
Utah 84117, phone (801) 272-9294, fax (801)
277-3147. We will act as registrar for the bonds.
How to Invest in Send us your check, money order, or credit card
Our Shares or Bonds number, and a completed subscription agreement
(which you will find at the back of this
prospectus), or give your funds and subscription
agreement to a broker participating in this
offering. We will mail your shares or bonds to you
or your broker as requested.
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Risk Factors
An investment in our shares or bonds involves a high degree of risk; you should
purchase these securities only if you can afford to lose your entire investment.
Before making a decision to invest, consider carefully the following risk
factors, in addition to the other information in this prospectus.
Risks Related to Our Business Operations
We Are a Relatively New Company
Since we commenced operations in August, 1996, we have been engaged principally
in the development of our career-related products and refinement of our
marketing approach, in addition to capital raising activities. As a result, we
have an extremely limited operating history upon which you can evaluate our
prospects.
To invest, you must be willing to assume virtually all the risks of a "startup"
company. We have not experienced any months of profitability (see "Financial
Statements"). Until we achieve profitability, we are dependent on raising
capital by sales of shares or borrowing to continue operations.
You must consider our prospects in light of the risks, expenses, and
difficulties frequently encountered in the establishment of a new business in an
emerging industry, and in the development and commercialization of a new
service. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Our Business Could Be Hurt By Competition
The employment industry is highly competitive, and most of our competitors are
established companies having far more financial resources, experience, and
market share than we do.
Most companies in the employment industry are temporary employment agencies and
recruitment firms. We work for the job seeker, who pays us an up-front flat fee
(which may be financed). We believe we have developed a unique market niche by
using broad-based media to promote our career advancement and job search
training services to people in the middle income range. We cannot guarantee that
this business concept will prove successful.
Any of our competitors, most of whom have far greater resources than we, might
independently develop services that are substantially equivalent or superior to
ours. Such competitors potentially include the nationwide firms of Bernard
Haldane and Cornell Business Associates (CBA).
Although we have taken steps to protect our intellectual property rights, and
continually develop innovative services, we believe our future success will
depend primarily on our ability to expand rapidly throughout the United States,
deterring potential competition by establishing widespread name recognition for
"The Murdock Group."
Management of Potential Growth
We plan to further expand our operations following the offering, which could
place a significant strain on our limited managerial, operational, and financial
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resources. Specifically, we anticipate the opening of several new offices in
major cities in the Western United States within the year following the date of
this prospectus.
We cannot be sure that we will be able to manage this expansion effectively,
that new employees required to staff these offices will work together
effectively, that we can attract and retain qualified personnel, or that our
systems, procedures, and controls will be adequate to support business
operations.
We estimate that each office will require expenditures of approximately $500,000
before it can cover its own operating costs, but since our first branch office
in Seattle opened only recently (September 18, 1998), we cannot be sure of these
estimates.
Delays, budget overruns, failure to attract customers in the new market,
inability to produce sales or successfully deliver our services, and numerous
other factors could keep us from generating a profit. See "Business Operations."
Our Intellectual Property Might Be Copied
We rely primarily on copyright laws to protect the intellectual property used in
our products and services, but we do not register copyrights in any of our
materials. We could be damaged by a significant amount of unauthorized copying
of our products and services.
Although we are not aware that any of our products and services are materially
infringing the rights of others, it is possible they are. If so, we could be
forced to modify our products and services, possibly at substantial cost. We
might be subject to lawsuits alleging that we are infringing on the property
rights of others.
We have applied for trademark protection for our name, the names of our
principal current services, and the phrase "The Fastest Way to a Better Job." It
is possible, however, that third parties will infringe or misappropriate our
registered trademarks or similar proprietary rights.
Competitors may employ a strategy of non-meritorious litigation as a method of
direct competition, and our limited financial resources could prove insufficient
to mount a successful defense against such tactics.
Year 2000 Compliance
Some early mainframes and computer programs used only the final two digits for
the year in the date field while maintaining the first two digits of each year
constant. As a result, some computer applications may be unable to interpret the
change from the year 1999 to the year 2000, commonly referred to as the "Year
2000 Problem."
Our computer needs are met by a network of desktop personal computers, and to
the best of our knowledge after substantial testing, none of our software
applications will experience year 2000 problems.
Risks Related to Our Financial Condition
We Have Had Substantial Losses in the Past, and Could Again in the Future
We lost $139,780 in 1996, $1,728,372 in 1997, and $1,444,726 during the first 5
months of 1998. Although we had net revenues during each of these periods
($27,456, $, 478,803 and $890,168 respectively), we spent more than we made
primarily to cover the costs of research and development associated with our
services. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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While we believe that we can operate profitably if each of our offices can
generate the same relative revenue our Salt Lake City office has produced in
1998 to date, we cannot be sure that our operations will be profitable.
Our audited financial statements include a "going concern" footnote because we
have incurred substantial operating losses since inception. We believe that a
major contribution of losses to date were incurred while developing our
proprietary job-search technology into a training system capable of servicing a
larger volume of customers. This system is now operating.
Our comments on operating results are set forth in the prospectus section
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations."
Substantial Indebtedness
We have financed our operations to date primarily by borrowing money, often at
above normal rates of interest. As ofMay 31, 1998, such liabilities total
approximately $4,232,389 and bear interest at rates from 10.5% to 36%. These
obligations will mature over a period of 12 to 60 months beginning in May 31,
1999 (see "Financial Statements").
Unless we can meet these obligations, possibly by improving net earnings,
raising capital through this or other offerings, refinancing, or otherwise, we
may become insolvent and lose all invested capital.
Depending upon the amount of capital raised pursuant to this prospectus, we plan
to substantially reduce or eliminate these liabilities, along with the interest
payment burdens they impose (see "Use of Proceeds").
On May 31, 1998, we had an accumulated deficit of approximately $3,312,878 and a
working capital deficit of approximately $1,616,280.
We have incurred losses ever since we began business. Such losses have resulted
principally from limited operations revenue and costs associated with the
design, development and implementation of our services, including general and
administrative expenses and marketing activities.
We plan to increase our level of operating expenses significantly to continue to
enhance services and finance expansion to additional cities. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Clients May Be Unable or Unwilling to Make Note Payments
A majority of our clients (approximately 90%) agree to pay the fees due to us by
executing a promissory note. To generate cash to meet our operating expenses, we
generally borrow against these notes at an average discount of 4% (see "
Business Operations"). These notes are for a term of 2 years, and bear interest
at 19.9% compounded annually. Currently, 14% of these notes are past due.
Repayment of the Bonds
We must retire the bonds, together with interest compounded annually at 15%, 4
years from the date of sale. This will create an additional liability on our
balance sheet and impose a burden on our cash flow as the maturity date nears.
Since we are not establishing a sinking fund to finance repayment of the bonds,
it is possible that we will not have enough income, or the ability to raise or
borrow enough money, to repay the principal and interest as the bonds become
due.
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Future Additional Capital Requirements
Based on current plans and assumptions relating to our operations, we estimate
that the net proceeds of this offering, together with anticipated revenue from
operations, should be sufficient to fund our contemplated cash requirements for
approximately 12 months.
If our plans change, our assumptions prove to be inaccurate, or our funds from
operations prove to be insufficient, we could be required to seek additional
financing before this 12-month period is over.
Because of our plans for rapid expansion, we expect that we will need additional
capital at the end of this 12-month period. We have no commitments from any
third parties for any future funding and cannot be sure that we will be able to
obtain financing in the future.
We cannot guarantee that sufficient funding will be available from this offering
to fund all our development, debt retirement, and operational needs. If we
require additional financing, we may seek such financing through bank borrowing,
debt, additional equity financing, or otherwise.
Any additional equity financing may be dilutive to our shareholders. Debt
financing, if available, may involve restrictive covenants with respect to
dividends, raising future capital and other financial and operational matters.
If we cannot obtain additional financing as needed, we may be required to
curtail growth plans, significantly reduce operating costs, or cease operations
completely. See "Use of Proceeds."
Risks Related to Our Management
We Are Controlled by Two Major Shareholders
Even if all of the shares offered by this prospectus are sold, two of our
officers and directors (KC Holmes and Heather Stone, brother and sister) will
own over 56% of the voting stock. They can elect all Directors (there are no
cumulative voting rights), perpetuate themselves in office, and otherwise
exercise control of the company. See "Management."
Conflicts of Interest
Our management is subject to various conflicts of interest arising out of their
relationship with the company. All agreements and arrangements between our
management and us are not the result of arms' length negotiations.
This prospectus was prepared, and an opinion of counsel rendered, by our
in-house General Counsel Stanford Smith. He is also a shareholder.
Managing Expansion
Managing rapid expansion will pose many challenges to our business. We will face
greater overhead, increased marketing and support costs, exposure to legal risk,
and exposure to other general hazards associated with entry into new markets.
In order to manage this growth, we must improve and expand our operating
systems, augment financial and management systems, and hire, train, and manage
new employees. We may not be able to manage these changes effectively, which
could result in significant losses.
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We cannot be certain that our expansion plans will succeed, and even if we do
open more offices they may not be profitable.
Dependence on Management Team
Our success depends primarily on the expertise and know-how of our management,
none of whom has managed a company in the employment business (see
"Management").
In particular, our CEO, KC Holmes, and our President, Heather Stone, have played
a substantial role in the development and management of our business. Their
services will be crucial for the successful management of our expansion plans.
If they leave us, or if they are unable to perform their duties, our chances for
success could be significantly reduced. We do not have employment agreements
with them, but we believe that their ownership stake in the company (56% if this
offering is successful) will motivate them to remain with us.
Indemnification of Our Officers
Our bylaws say we will indemnify our officers and directors against all claims
arising out of our business operations to the maximum extent permitted by law,
so long as there is no intentional wrongdoing. The Securities and Exchange
Commission and state securities regulators believe that this provision violates
public policy and should not be enforced.
Risks Related to the Shares and Bonds
Share Price
The offering price of our shares ($4 per share) has been arbitrarily determined
by our Board of Directors. It is based upon their estimate of future operating
results, and bears no relationship to our current operating results, book value,
net worth, or financial statements.
The Board considered several factors, including an evaluation by management of
the history of and prospects for the industry in which we compete, and our
prospects for earning. These factors are largely subjective, and we make no
representation as to any objectively determinable value of the shares. We cannot
be sure that any subsequent purchaser of shares will be willing to pay this
price or more for shares.
We Plan to Retain Any Earnings and Pay No Dividends
We have never declared a dividend and do not presently intend to pay any
dividends. Future dividends, if any, will depend on our profitability, financial
condition, capital requirements and other considerations determined by the Board
of Directors. Any future agreements with lenders may also restrict our ability
to pay dividends.
We presently intend to retain earnings, if any, for use in the operation and
expansion of the business, and therefore do not anticipate paying any cash
dividends in the foreseeable future. No dividends will be paid until the bonds
are repaid, and other future debt or other covenants may restrict the payment of
dividends.
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Immediate and Substantial Dilution
The book value of one of our shares (company assets minus liabilities, divided
by the number of shares outstanding) is ($.3397) per share as of May 31, 1998.
This is so partly because current shareholders paid much less than $4 for their
shares. If all shares offered by this prospectus are sold, the book value will
increase to $.6681 per share.
We are asking you to pay $4 for each share you buy. The percentage difference
between your $4 before the purchase of a share, and the book value of your share
immediately after purchase, is called "dilution." If all shares offered by this
prospectus are sold, you will experience dilution of 83%; your $4 will decline
in value by $3.3319.
This means you will bear a disproportionately larger share of any company loss,
and receive a disproportionately smaller share of any company gain. In addition,
your proportionate ownership of the company can be further diluted by the
issuance of more shares at prices below what you will have paid.
We have granted options to certain people to acquire shares at less than the
public trading price, if in fact the shares become publicly tradable (see "The
Shares"). Exercise of these options will further dilute your shares.
Shares to be Sold to Employees at a Discount
We will allow our employees and their immediate families to purchase as many
shares offered by this prospectus as they wish at a discount of 10% from the
sales price ($3.60 per share rather than the $4 per share paid by other
investors). Since we will not pay any sales commissions on these shares, the net
proceeds to the company will be the same as with shares sold to other investors.
No Underwriter Has Committed to Purchase Our Shares
This offering will be sold by company officers. We will attempt to recruit
members of the National Association of Security Dealers to participate in the
offering on a "best efforts" basis, but may not succeed. Even if we are able to
recruit brokers, they may not be able to sell any of the shares or bonds (see
"Plan of Distribution").
No Stabilization Transactions
We have not engaged anyone to stabilize, maintain or otherwise affect the price
of shares including generating stabilizing bids.
In general, purchases of shares for the purposes of stabilization (or to reduce
a short position) could cause the share price to be higher than it might be if
no such purchases were made. In the absence of transactions that stabilize the
price, our share price could be hurt by adverse market conditions (see "Plan of
Distribution").
Penny Stock Regulations
If the shares become subject to the "penny stock rules" adopted pursuant to
Section 15(g) of the Securities Exchange Act of 1934, our shares would probably
experience reduced levels of trading activity. The "penny stock rules" apply to
companies whose shares trade at less than $5 per share or whose tangible net
worth is less than $5,000,000 ($2,000,000 if the company has been operating for
three or more years).
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These rules require, among other things, that brokers who trade penny stock to
persons other than established customers must complete certain documents before
any penny-stock transaction can occur. Specifically, the broker must determine
whether the investor can bear the potential financial loss and must provide the
investors with SEC documentation about the risks associated with penny stocks.
Many broker-dealers deem these precautions burdensome and choose not to trade
penny stocks. This could result in reduced trading activity in the secondary
market, which might make the shares difficult or impossible to sell.
If we sell most of the shares offered by this prospectus, we believe we can
qualify our shares for listing on the Nasdaq SmallCap Market. If we succeed, our
shares will not be subject to the penny stock rules.
You May Not Be Able To Sell Your Shares
At present there is no public market for our shares or bonds. Holders of these
securities may be unable to liquidate their investment in the event of emergency
or for any other reason. These securities may not be acceptable as collateral
for loans. Consequently, you must consider the shares and bonds to be a
long-term investment.
If we fail to arrange for public trading of the shares, or sell the company for
cash or merge with a non-public company, your investment may be illiquid
indefinitely.
While we do not currently meet the requirements (such as income, stockholders'
equity and number of public shares outstanding) to have our shares listed on the
Nasdaq SmallCap Market, we hope to qualify if this offering is successful.
If we fail to meet these standards, we plan to apply for a listing of our shares
on the NASD OTC Bulletin Board. Until any listing, we believe we can arrange
with an NASD broker-dealer to provide a matching service for persons wishing to
buy or sell shares when this offering has ended.
Persons interested in buying or selling our shares would provide such
broker-dealer with information about the number of shares and desired price, and
the broker-dealer would notify both sides if and when there was a match and
would assist in closing the transaction.
At present, however, there is no agreement between us and a registered
securities broker-dealer. The price of the shares after the completion of this
offering can vary due to general economic conditions and forecasts, the
company's general business condition, the release of our financial reports, and
sales of shares that were outstanding prior to this offering (see "The Shares").
No Trading Market for Bonds
We will not seek to list the bonds for trading in any public market. Bonds are
an illiquid investment which you must hold for 4 years, receiving no interest or
principal until the maturity date.
Earlier Investors Might Sell Shares, Affecting the Trading Price
Whenever any shares are sold, it could cause the price of your shares to keep
from rising, or to go down.
On the date of this prospectus, 10,000,800 shares were outstanding. We sold
these shares in private transactions relying on exemptions from registration
under the Securities Act. Of these shares, 2,000,000 were repurchased by the
company and are held as treasury shares.
These shares are all "restricted securities" within the meaning of Rule 144
(adopted pursuant to the Securities Act of 1933), and can be resold only after
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registration, or compliance with this rule or another exemption from
registration. Rule 144 permits the sale of these restricted shares, but only if
all the following qualifications are met:
They have been held for at least 1 year;
They are sold a little at a time (no more than the greater of 1% of the
outstanding shares, or the average weekly trading volume of the shares
during the 4 weeks preceding the sale, within a 3 month period);
We have made current information about the company publicly available (as we
plan to do by filing reports required by the Securities Exchange Act of
1934);
The shares are sold through a broker-dealer; and
The seller files a Form 144 with the Securities and Exchange Commission (if
more than 500 shares or $10,000 of shares are sold).
Rule 144 has many other provisions, and we suggest that you discuss it with your
attorney if you have any questions. The 1-year holding period has expired for
most of the currently outstanding shares, and the owners of these shares could
begin selling immediately, potentially depressing the market price (see "The
Shares").
We May Be Unsuccessful In Listing Our Shares for Public Trading
There has been no public market for the shares prior to this offering. Although
we will apply for listing of the shares on the Nasdaq SmallCap Market at the
conclusion of this offering, there can be no assurance that an active public
market for our shares will develop or be sustained.
Listing standards include (with other requirements) the following:
$4 million in net tangible assets
A public float of 1 million shares, with a minimum market value of $5
million
A number of qualitative corporate governance requirements
If the company fails to be listed on (or maintain qualification for its shares
to trade on) the Nasdaq SmallCap Market, the shares could be subject to certain
rules of the Securities and Exchange Commission relating to "penny stocks." Such
rules require broker-dealers to make a suitability determination for purchasers
and to receive the purchaser's prior written consent for a purchase transaction,
thus restricting the ability of purchasers and broker-dealers to sell the stock
in the open market.
Volatility of Stock Trading Prices
If the company's operating results are below the expectations of public market
analysts and investors, it is probable that the price of the shares will
decline.
The stock market has recently experienced significant price and volume
fluctuations. These have affected the market prices of stocks of many companies,
and have often been unrelated to the operating performance of such companies.
General market fluctuations may also adversely affect the market price of our
shares.
Our shares may well fall below the initial public offering price. Factors such
as quarterly fluctuations in financial results, announcements of new products
and services by us or our competitors, and changes in financial estimates by
securities analysts, may cause the market price of our shares to fluctuate,
perhaps substantially.
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Our Shares May Be Delisted from the SmallCap Market
Even if our shares initially qualify for trading on the Nasdaq SmallCap Market,
we will have to maintain certain minimum financial requirements for continued
listing. Continued inclusion requires that we meet the following minimum
requirements:
$2 million in net tangible assets, a $35 million market capitalization, or
net income of $500,000 in two of the three prior years;
500,000 shares in the public float valued at $1 million or more;
Two active market makers for the shares;
At least 300 shareholders; and
Other qualitative requirements.
If we are unable to meet Nasdaq's maintenance requirements, our shares may be
delisted from Nasdaq. If so, we would seek to conduct trading in the
over-the-counter markets in the so-called "pink sheets" or the NASD's
"Electronic Bulletin Board."
As a result, the liquidity of the shares could be impaired, not only in the
number of securities which could be bought and sold, but also through delays in
the timing of the transactions, reductions in security analysts' and the news
media's coverage of the company, and lower prices for the company's securities
than might otherwise be reached.
Conclusion
For all the reasons described above, this is a highly speculative investment. We
strongly urge you to consult your own business and investment advisors, tax
advisors, attorneys, and accountants before investing in our shares or bonds.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The Murdock Group Career Satisfaction Corporation is a career advancement
and employment consulting company with offices in Salt Lake City, Utah and
Seattle, Washington. We provide services to professionals with several years
of experience who are seeking to clarify their career direction or their
current job situation.
Our system utilizes job-search training workshops, consultants, and access
to a comprehensive job-search resource center. We also provide full-service
hiring assistance to corporations, which includes training, recruiting, and
outplacement.
Losses to date were incurred while we developed our proprietary job-search
technology into a training system that can service a larger volume of
customers. We have completed development on this system and believe that we
now have a product that can be marketed profitably.
On September 14, 1998, we relocated 14 employees from the Salt Lake City
office to open an office in Seattle. We plan to open additional offices in
1999.
We plan to allocate administrative costs across multiple locations, thereby
reducing the financial impact of our investment to date in infrastructure
items such as computer technology and human resources, accounting, and
operations staff. We anticipate a reduction in charge-off expense with the
new product, and expect that completion of the public offering will enable
us to restructure or pay off most of our high-interest debts, thereby
reducing monthly interest expense.
In summary, our plan for overcoming losses includes moving Salt Lake City
staff to offices, allocating infrastructure investment across multiple
locations, reducing charge-off expense, and reducing interest expense.
Results of Operations
May 31,1998 Compared to May 31, 1997
From January 1, 1998, to May 31, 1998, service revenues were $890,168,
compared to $64,022 for the corresponding period of the prior fiscal year.
The revenue increase was primarily due to -
A better-defined sales process;
Increased newspaper and radio advertising;
Completion of proprietary systems that enabled the products and
services to be delivered in volume, and
Enhanced company recognition in the marketplace.
Contract cancellations and write-offs increased to $444,266, compared to
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$26,294 for the corresponding period of the prior fiscal year. The cancellations
and write-offs were the result of concessions we made to customers while
pilot-testing and implementing our new intellectual property, and are beginning
to decrease.
Cost of services increased to $776,150, compared to $94,175 for the
corresponding period of the prior fiscal year. Gross profit as a percentage of
service revenues increased to 12.8% for the five-month period ended May 31,
1998, compared to a negative gross profit of (32.0%) for the corresponding
period of the prior fiscal year. The increase in gross profit is primarily a
result of increased sales which served to reduce the per-sale overhead.
General and administrative expenses increased to $568,316 during the period from
January 1, 1998, to May 31, 1998, compared to $132,380 for the corresponding
period of the prior fiscal year. Because of increased sales and additional
offices, G & A expenses should continue to drop as a percentage of sales for the
fiscal year ended December 31, 1998 and thereafter.
New products research and development expenses increased to $447,776 for the
period from January 1, 1998, to May 31, 1998, compared to $91,645 for the
corresponding period of the prior fiscal year. The increase in R&D for the five
months ended May 31, 1998 was a result of expenses related to the development of
new intellectual property and training systems that allow the mainstream
professional to access previously elitist job-search concepts and techniques.
This systematization also enabled the company to efficiently service a larger
volume of customers than could be serviced the prior year.
Interest expense increased to $299,602 for the period from January 1, 1998, to
May 31, 1998, compared to $58,097 for the corresponding period of the prior
fiscal year. The increase in interest expense is a result of higher outstanding
debt balances during the five-month period ended May 31, 1998.
December 31, 1997 Compared to December 31, 1996
The Company began operations August 5, 1996 as a startup and development-stage
entity. Operating results for the five-month period ended December 31, 1996 are
not representative of or comparable to the first full year of operations which
ended December 31, 1997.
Financial Condition
Liquidity and Capital Resources
We suffered recurring losses from operations since 1996, and as of May 31, 1998
had an accumulated deficit of $3,312,878.
The operating losses are due to large research and development expenses incurred
while developing our proprietary job-search technology into a training system
capable of servicing a larger volume of customers.
On May 31, 1998, we had an accumulated deficit of approximately $3,312,878 and a
working capital deficit of approximately $1,616,280. Since inception, we have
had continuing negative cash flow from operations. We have funded our operations
primarily through borrowing.
We anticipate that our liquidity and capital resources will increase
substantially when this offering is completed. If the offering is not completed
we will continue to have to borrow money and raise additional capital until the
time when operations are profitable and the company can support itself. We
borrowed $194,679 in 1996, $1,628,619 in 1997, and $2,194,405 in 1998.
The independent certified public accountants who have audited our financial
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statements have included an explanatory paragraph in their report questioning
our status as a going concern. We have completed development on the training
system and anticipate that we now have a product that can be serviced
profitably.
Capital Expenditures
Capital expenditures amounted to approximately $149,469 through May 31, 1998
compared to $417,432 in 1997. The majority of these expenditures were related to
expanding our offices and staff to accommodate our rapid growth.
Research and Development
Research and Development expenditures amounted to $447,776 from January 1, 1998,
through May 31, 1998, compared to $91,645 for the same period in 1997. The
majority of the R & D expenses were incurred while developing our proprietary
job-search technology into a training system that serviced a larger volume of
customers.
The Company believes that most of its large R & D projects are completed and
that the R & D projects from now on will be smaller and require less money to
fund.
Other
Inflation has not had and is not expected to have a significant impact on our
operations.
We have evaluated our information technology for Year 2000 issues and do not
anticipate any material disruption in our operations.
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Use Of Proceeds
The table below shows how we plan to spend the proceeds of this offering if all
shares and bonds are sold. If fewer shares and bonds are sold, we will allocate
proceeds first to opening additional offices, second to debt retirement, and
third to working capital.
There is no minimum amount which must be raised before we begin spending the
proceeds, and no escrow account will be established.
<TABLE>
<CAPTION>
Item Amount Percent
<S> <C> <C>
Offering Proceeds
Proceeds from Sale of Company Shares (1) 8,000,000 68.22%
Proceeds from Sale of Shareholders Shares (2) 726,000 6.19%
Proceeds from Sale of Bonds (3) 3,000,000 25.58%
--------- ---------
Total Gross Proceeds 11,726,000 100.00%
Less Sales Commissions (4) 1,172,600 10.00%
Less Expenses of Offering (5) 100,000 0.85%
Less Proceeds to Selling Shareholders (6) 653,400 5.57%
------- --------
Net Proceeds to Company 9,800,000 83.57%
Expenditure of Proceeds
Opening Additional Offices (7) 3,500,000 29.85%
Debt Retirement (8) 4,000,000 34.11%
Working Capital (9 ) 2,300,000 19.61%
--------- ---------
Total Application of Net Proceeds 9,800,000 83.57%
</TABLE>
Footnotes:
(1) We are offering 2 million shares at $4 per share for a total of $8 million.
(2) Four of our shareholders are selling some of their own stock in the company
at $4 per share, paying a proportionate share of sales commissions. These
shares will be sold pro rata with the shares offered by the company. KC
Holmes, CEO, will sell 75,000 shares; Heather Stone, President, will sell
75,000 shares; Brad Stewart, CFO, will sell 14,000 shares; and Stanford
Smith, in-house General Counsel, will sell 17,500 shares, for a total of
181,500 shares.
(3) We are offering $3 million in bonds, to be sold in increments of $1,000.
Bonds mature 4 years from the date of purchase, when we will repay the
principal plus interest at 15% compounded annually (see "The Bonds").
(4) We will seek to contract with certain broker-dealer members of the National
Association of Securities Dealers to market shares and bonds in exchange
for a cash sales commission of 10% of the proceeds raised by them (see
"Plan of Distribution"). Several company officers (KC Holmes, Heather
Stone, Kirk Fischer, Lance Heaton, and Steven Anderson) will also sell
shares and bonds. No sales commissions will be paid on sales made by them.
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Because we cannot predict how many shares will be sold by the
broker-dealers and how many by our officers, we have deducted 10% from all
sales illustrated in the table. Actual commissions paid may be less (and
proceeds to the company may consequently be more).
(5) This amount represents the estimated expenses we will pay for registration
fees, accounting fees, costs of printing, fees associated with listing the
shares for trading, fees to the transfer agent, postage, and other offering
costs. The legal work for this offering was performed by our in-house
General Counsel, Stanford Smith, who will receive no compensation beyond
his salary.
(6) This is the amount to be paid to our four selling shareholders after they
have borne their pro rata share of sales commissions (see "The Shares").
(7) We plan to open offices in several major cities in the Western United
States over the next 12 months, spending an average of $500,000 per office.
These funds will be used primarily to help cover the costs of leasing
office space and equipment, advertising our services, and meeting payroll
for 15-20 people for approximately 6 months (see " Business Operations").
(8) As of May 31, 1998, we have incurred $4,232,389 in debt. The interest rate
and maturity of these obligations is set forth in "Financial Statements."
After covering the costs of opening additional offices, we plan to retire
as much of this debt as possible, giving priority to obligations bearing
the highest interest.
(9) We will use these funds to cover our normal operating expenses if income is
inadequate.
Future conditions may prompt us to change these proposed uses of proceeds if
unanticipated events or opportunities arise. We may use a portion of the
proceeds to acquire other businesses or products which will help us expand
operations more effectively.
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The Company
History
We are The Murdock Group Career Satisfaction Corporation, a Utah corporation
organized November 5, 1997, to carry on an existing business concept.
In 1983, Denis Murdock formed a sole proprietorship called "The Murdock Group"
in Virginia to provide job search assistance to senior executives. He moved the
business to Salt Lake City, Utah, in 1987.
The assets of this business, including all intellectual property rights, were
purchased in June 1996 by Envision Career Services, L.L.C., a company formed by
our founders KC Holmes and Heather Stone. Envision conducted its operations
under the name "The Murdock Group." The company purchased all membership
interests of Envision on May 31, 1998, and Envision was dissolved.
Our Approach to the Career Consulting Business
We have built our business on three major approaches:
Bypassing the competitive top-level corporate executive market and targeting
instead mid-range business professionals with several years of experience;
Popularizing career services through broad-based media including radio and
newspaper advertising; and
Pricing career consulting services affordably, and making financing
available.
Our mission statement is - "The Murdock Group will be the finest and largest
job search and employment consulting service in the world--helping millions
make better money doing something they care about."
Expansion Plans
Our headquarters (employing 23 people) and primary business office (employing
17) are located in Salt Lake City, Utah. The combined offices occupy 30,000
square feet of office space. We opened our Seattle office on September 18, 1998,
with 5,700 square feet of office space and 14 employees.
We plan to open additional offices across the United States, beginning in the
Western cities of Las Vegas, Portland, Seattle, Denver, Houston, Dallas, San
Francisco, and Phoenix. We also plan to create and market over the internet a
number of products and services related to the employment industry.
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Business Operations
The information below summarizes our current business operations; future
operations may differ.
Two Divisions
We have organized our business operations into two major divisions:
Career Satisfaction Division. This division targets individuals,
providing the TMG Job Search System and CareerChoice System to train
clients how to make wise career choices and find a great job. The core
purpose of this division is to help individuals achieve tangible
improvement in their work situations by choosing the right career and
finding employment quickly in that field.
Corporate Productivity Division. This division targets companies,
providing recruiting, hiring training, outplacement and other services
that improve the employment and termination processes. The core purpose
of the Corporate Productivity Division is to help companies improve
productivity by teaching them how to hire the right people doing the
right jobs.
We have spent two years developing a comprehensive job search system that is
deliverable to mainstream professionals on a large scale. At a cost of $37,904
in 1996, $556,854 in 1997, and $447,776 for 5 months of 1998, we have conducted
extensive research and development, and field-tested multiple products to
develop a sales and delivery system that is duplicable on a national level. The
product offering is now ready for delivery.
Products
Each of our offices currently offers five employment-related products:
1. TMG Job Search System
The TMG Job Search System accounts for 90% of our revenue. It sells for $2,995 -
$3,495 and can be financed over 2 years. It includes a full-service job search
training, career advancement, and motivation system taught in small groups. The
package also includes access to a fully staffed resource center containing job
leads, computer workstations, publications, and other job search tools.
The Job Search system includes the following features:
30 days of access to Career Insight Sessions which enable clients to learn
and practice key aspects of the system including networking, interviewing,
and negotiating.
4 months of access to one-on-one coaching from our job search
professionals, including interview coaches, marketing specialists, and
others.
4 months of access to career counseling from experienced career consultants
who provide personalized attention to each client's specific needs.
4 months of access to 1-hour follow-up sessions to reinforce skills,
troubleshoot problems, or ask specific questions.
4 months of access to our extensive Resource Center, which includes on-call
specialists to assist clients with job search advice, job board postings,
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contact databases, business databases, and job search publications as
well as a computer center (for on-line research, database access, and
job search document creation), phone/fax center, and training center.
We invite clients and their spouses or partners to attend an orientation Launch
meeting that provides an overview of the TMG Job Search System. Clients are also
introduced to the Resource Center and its databases, internet recruiter lists,
job postings board, and career library. We explain to clients that their efforts
will directly impact the success of their search, and require them to dedicate
productive time each week to their program.
The Career Insight Sessions noted above are small seminars (5-12 participants)
which cover the following topics:
Launch (2 hours). Provides an introduction to career management and an
overview of the entire Job Search System, which will form the foundation of
the client's job search.
Defining the Target (4 hours). Helps clients clarify their career
objectives.
Creating a Powerful Resume (4 hours). Produces resumes and provides
techniques for getting results.
Making the Right Connections (4 hours). Enables clients to access the
unadvertised job market by connecting with decision makers.
Direct Approaches that Get Interviews (4 hours). Teaches methods for turning
more of a client's contacts and leads into interviews.
Interviews that Get Job Offers (4 hours). Improves the client's ability to
convert interviews into job offers.
Negotiating a Better Job Offer (4 hours). Hones a client's ability to
negotiate better terms in a job offer.
2. CareerChoice System
The CareerChoice System sells for $1,395 (which can be financed). It targets
customers who typically have been working in the same position for several
years, and now feel stuck in a job, a company, or an entire line of work that is
not fulfilling. These individuals often cannot afford to start over in their
careers, and wonder if they are qualified to do anything else. The CareerChoice
System also helps people just entering the workforce and seeking direction.
CareerChoice clients spend 8-10 hours with a personal career consultant who
administers a variety of tests and helps clients understand their career options
and plan specific, tangible career change. Activities include the following:
Diagnosing career situation, concerns, needs, expectations, goals, and
objectives.
Analyzing Meyers-Briggs Type Indicator, Strong-Campbell Interest Inventory,
Entrepreneurial Test, and personality assessments.
Assessing qualifications: education, experience, strengths, weaknesses,
skills, interests, financial requirements, geographical preferences, and
overall marketability.
Determining long-term career direction.
Determining short-term job market positioning-job functions, level of
income, responsibility and authority; and target industries.
Developing a career mission statement that incorporates long-term direction
and short-term job market positioning.
Understanding salary data and job availability.
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3. Outplacement Services
We offer full and partial outplacement services to companies who lay off
employees and wish to limit their liability by helping employees find new jobs
as quickly as possible. Outplaced employees are provided with selected training
and resources from the TMG Job Search system. We quote prices based upon the
number of employees serviced and the type of services to be performed.
We offer employers a variety of programs to train laid-off workers in job search
skills:
The Full-Service Program costs $2,995 per person and includes four months of
personal coaching, workshops, resume preparation, and access to our Resource
Center.
The Quick Start Program costs $1,195 per person and includes the above
services for one month.
A 3-day Training Program on the employer's site costs $4,500 per group (up
to 15 people) and includes our workshops.
A 3-day Training Program in our offices costs $395 per person and includes
our workshops.
4. Hiring Training
We teach a series of "Hiring Basics" courses to the companies who wish to
upgrade the hiring skills of their management team. There are four separate
half-day courses, taught for $125 each. Courses rotate weekly and are taught
either at our offices or the client's site. These seminars cover topics such as
Hiring Secrets, Finding Great Candidates, Successful Interviewing, and
Negotiating the Offer.
5. Recruiting Services
Our full-service recruiting staff helps companies define hiring needs, finds the
correct individuals, and then assists those companies through the hiring
process. Our fees are paid by the employer, and are approximately 10-30% below
market rates. Job openings are added to our job postings database free of
charge.
Marketing
The Market
We believe that the market for career-related services will continue to grow as
job insecurity and changes in the employment market compel individuals to take
control of their own careers. We believe that this desire for individuals to
seek satisfaction in their employment has created a significant market for the
types of products and services we provide.
Target Customer
The target customers for Career Satisfaction products (TMG Job Search System and
CareerChoice System) are individual employees-whether they are currently working
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for themselves or others, preparing to work, or searching for work. The typical
customer works full time and has some college or professional training. Usually,
customers have at least 5 years of experience in the work force and are not top
executives in an organization.
The target customers for the Corporate Productivity Division products
(outplacement, hiring training, and recruiting) are companies requiring
assistance with employment issues.
Advertising
We attract clients through a variety of advertising methods. Approximately 25%
of individuals who come in to the office for a sales appointment purchase the
service. The average total advertising cost of generating a sale is $275.
Direct mail. We have experimented with direct mail for the Career
Satisfaction Division products in the Salt Lake City area.
Internet World Wide Web Site (www.themurdockgroup.com): We use the website
to advertise our products and services.
Radio. We use 60-second radio spots to advertise our services. Radio ads
account for about 75% of our advertising budget.
Newspaper. We advertise in the classified section of the local newspapers
weekly.
Referrals from Satisfied Job Seekers. Our current customers are one of our
best referral sources. As we acquire more customers, we increase our
potential for profitability.
Referrals from Satisfied Employers. Leads for the Corporate Productivity
Division are generated from companies who are satisfied with the job
applicants we have sent to them. We offer employers a free Job Postings
Membership which gives them access to our database of qualified
professionals. Companies who subscribe receive discounts on recruiting,
hiring training, and outplacement.
Steps in the Sales Process
Individuals who respond to our Career Satisfaction Division advertising are
handled as follows:
Pre-Qualification of Callers. We interview callers, explain our approach and
fee structure, and set an appointment with a career advisor. Callers are
pre-qualified over the phone to verify that they have the requisite
foundation (a college degree or marketable work experience) and financial
resources to pay our fees.
Meeting with Career Advisor. The client visits our offices for the scheduled
appointment, and spends an hour with a career advisor. The advisor explains
our services and takes the client on a tour of the facility to meet various
specialists and examine resources (such as the training rooms, job postings
board, computerized databases, and career library). The advisor emphasizes
that we are working for the client, not for any potential employer and that
we charge a flat fee (we do not charge based upon future wages, as do many
employment agencies).
Our Corporate Productivity Division sales representatives visit companies who
respond affirmatively to our direct mailings or telephone calls.
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Financing
Clients unable to pay in cash or by credit card are given the opportunity to pay
a deposit and execute a promissory note to the company. We perform credit checks
on each. Currently, approximately 90% of our clients execute a note.
Competition
In our view, the job acquisition industry is large and fragmented into many
niches with some competitors being successful only in certain niches, and with
no company having acquired dominance in the industry.
Many competitors have products and services that are marketed as being similar
to ours, but we believe that our customers can quickly distinguish the
difference between our products and services and those of our competitors.
We compete primarily with a large number of privately-owned companies. Some of
our competitors have greater financial, marketing, distribution, technical and
other resources than we do.
Our two major competitors for career consulting services are well established
nationally. Both were founded by career industry experts who still run the
company:
Bernard Haldane was founded in 1945 after World War II to assist returning
veterans in the job market. Bernard Haldane primarily services executives
who earn over $100,000 per year, and charges a fee of 8% of the executive's
salary (generally more than twice our fee).
Cornell Business Associates (formerly Cornell Bockelman) was founded in the
1980's and also primarily services executives. It too charges an 8% fee. CBA
has sales offices around the country, but flies customers to a California
location for 1-2 days of consulting.
In addition, Robert Half offers staffing, permanent placement, recruiting, and
consulting services. Right Management Consulting is involved in career
development/management and consulting. Provant provides training, career
development, and product sales.
The principal competitive factors in obtaining customers appear to be a strong
sales and marketing program, life- changing and unique principles, competitive
pricing, and good customer service. We believe our strong emphasis on providing
these factors will be an important competitive advantage.
Operations
Property
We lease class A office space for all our operations, believing that a
professional appearance is important when providing services to professionals.
Our headquarters and Salt Lake City office are located at 5295 So. Commerce
Drive, Suite 400, Salt Lake City, Utah 84107. we occupy 30,000 square feet, for
which we pay $41,000 per month. The lease term expires on roughly 2/3 of this
space in June, 1999, at which time we plan to renegotiate. The lease term for
the balance of the space expires in 5 years.
The Seattle office located at 10900 NE 8th Street, Suite 810, Bellevue,
Washington 98004-4405 has 5,700 square feet for which we currently pay $13,000
per month. The lease term expires on September 30, 2003.
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Employees
As of September 30, 1998, we had 58 full-time employees. Our employees are not
represented by a labor union and are not subject to any collective bargaining
arrangement. We have never experienced a work stoppage and believe that we have
good relations with our employees.
Our headquarters operations (located in the same building as the Salt Lake City
office) employs 23 people. The Salt Lake City office employs 17 people, and the
Seattle office employs 14 people.
Government Regulation
Our business is subject to regulation under the Telemarketing and Consumer Fraud
and Abuse Prevention Act and state laws applicable to telemarketing activities.
We believe that we are in substantial compliance with these laws and their
regulations.
Any claim that we were not in compliance could result in judgments or consent
agreements that might require us to modify our marketing program. In the worst
cases, enforcement of fraud laws can result in forcing a business to close and
subject the business, and its management and employees, to criminal prosecution
and civil damage actions.
Intellectual Property and Proprietary Rights
We rely on a combination of copyright and trademark laws and contractual
provisions to protect our proprietary rights.
We have applied for trademark registration for "The Murdock Group," "The Murdock
Group Career Satisfaction Corporation," and "The Fastest Way to a Better Job."
We will continue to evaluate the registration of additional service marks and
trademarks, as appropriate.
Litigation may be necessary to protect our proprietary technology. Any such
litigation may be time-consuming and costly. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
services or to obtain and use information that we regard as proprietary.
In addition, there are few barriers to entry into the market for our services.
It is possible that one or more of our competitors, most of whom have far
greater resources than we do, will independently develop technologies that are
substantially equivalent or superior to ours.
Litigation
As of the date of this prospectus there is no litigation pending or threatened
against us.
29
<PAGE>
Management
The following table sets forth the names, ages, and current positions of our
officers and directors. Brief biographies for each are set forth after the
table.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Age Company Office Board of Directors
KC Holmes 31 Chief Executive Officer Director
Heather J. Stone 29 President, Secretary Chairman of the Board, Director
Richard O. Flack 54 VP of Operations
Steven W. Anderson 40 VP Career Satisfaction Division
Chris L. Kenney 36 VP Corporate Productivity Division
Christopher E. Leonard 25 Chief Information Systems Officer
Brad L. Stewart 41 Chief Financial Officer*
Stanford S. Smith 53 General Counsel
</TABLE>
*Mr. Stewart begins work at the company on October 16, 1998.
Directors
Our current directors are:
KC Thane Holmes, Director, Chief Executive Officer, age 31. Mr. Holmes received
a B.A. degree from Brigham Young University in Psychology with a minor in
Business and Accounting in 1992.
Prior to founding Envision Career Services, L.L.C. and acquiring The Murdock
Group in 1996, he served as a technical sales representative for Provider
Solutions, an Elk Ridge, Utah based software developer from 1995 to 1996, and an
account executive and technical engineer for Ameritech Library Services of
Provo, Utah, a creator of custom software for America's largest libraries, from
1991 to 1995.
He is an owner of Open Seas Trading company, a marketing business, a former
owner of a Provo-based real estate investment firm, and a former owner of
Classic Coupons, a Provo-based coupon business. He is a licensed real estate
agent and certified Oracle Database Developer.
Heather J. Stone, Director, President, age 29. Ms. Stone received an M.B.A. from
the University of Phoenix with a focus on marketing and strategic planning in
1992, and a B.A. in English from Brigham Young University in 1990.
She served as Director of Product Management for ViewSoft, Inc., a Provo-based
software firm, from 1994 to 1996, and a Product Line Manager for Novell, Inc., a
networking software firm, for several years. She was a technical writer for
Clyde Digital Systems (RAXCO), an Orem, Utah-based software company, from 1987
to 1991. She has contributed articles to technical journals and won several
writing awards.
Mr. Holmes and Ms. Stone are brother and sister.
We plan to add additional members to our Board of Directors to meet the Nasdaq
SmallCap Market requirement for two outside directors. We are working to obtain
insurance coverage for our directors and officers, and will add these directors
when coverage is available. Directors are elected annually.
30
<PAGE>
Officers
The backgrounds of our CEO KC Holmes and our President Heather Stone appear in
"Directors" above. Additional officers include the following:
O. Richard Flack, Vice President of Operations, age 54. Prior to joining The
Murdock Group, Mr. Flack received a B.A. in Marketing in 1966 from the
University of Utah, and served as General Manager of Valley Fair Mall from 1968
to 1997. He served as the president of the West Valley Area Chamber of Commerce.
Mr. Flack joined The Murdock Group in June, 1997, after going through The
Murdock Group program as a client.
Steven W. Anderson, Vice President, Career Satisfaction Division, age 40. Mr.
Anderson joined The Murdock Group in October 1997 to assume sales and marketing
functions from KC Holmes, the founder. He earned a B.A. in Organizational
Communications from Brigham Young University in 1984 and an M.B.A. from
Pepperdine in 1990. He worked as a Director of Marketing for Dunn Edwards
Corporation from 1995 to 1997, and as Director of Marketing for Sinclair-Glidden
from 1988 to 1995.
Chris L. Kenney, Vice President, Corporate Productivity Division, age 36. Mr.
Kenney earned degrees in Data Processing from Utah Technical College in 1984,
and Information Management from Brigham Young University in 1987. He managed
operations in customer support and third-party sales for Clyde Digital Systems
from 1987 to 1990, in sales for Fresh Technology Group from 1990 to 1991, in
product management for Raxco/Axent Technologies from 1993 to 1995, and in
product line management and network engineering for Ameritech Library Services
from 1995 to 1998.
Brad L. Stewart, Chief Financial Officer, age 41. From 1996 to the present he
served as Executive Vice President and Chief Operating Officer of Marker
International, a public company. He directed Marker's initial public offering
and a secondary offering while serving as its Vice President and Chief Financial
Officer from 1991 to 1996. From 1986 to 1991 he managed the audit department for
the Phoenix, Arizona, office of Arthur Anderson, after serving as a senior
accountant in its Atlanta, Georgia, office from 1983 to 1986. He received a B.S.
in accounting from Brigham Young University in 1983.
Christopher E. Leonard, Chief Information Systems Officer, age 25. Mr. Leonard
received a B.S. in English with a minor in Philosophy from the University of
Puget Sound in Tacoma, Washington in 1995. He co-founded Coastlink Corporation,
a corporate Internet Service Provider in Salt Lake City, Utah, in 1996. Later
that year he began Coastlink Consulting, a network consulting company. He
specializes in the use of technology to gather, organize, store and distribute
all types of information.
Stanford S. Smith, In-house General Counsel, age 53. Mr. Smith obtained his J.D.
degree from the University of Utah College of Law in 1971, and has practiced
corporate law in the Salt Lake City, Utah area since that time, with an emphasis
in the legal issues related to high-growth companies. He has served as a
lecturer in strategic planning for the international consulting firms Shipley
Associates and James A. Bent & Associates. Mr. Smith is a former member of the
Utah House of Representatives, and a former adjunct professor of business law at
the University of Utah College of Business.
Executive Compensation
Our Chief Executive Officer, KC Holmes, and our President, Heather Stone, each
received total compensation of $72,000 during our last fiscal year, which ended
on December 31, 1997. No officer or director received compensation in excess of
$100,000 during 1997.
We have not paid bonuses or granted perquisites to our executive officers. Brad
Stewart, our CFO, is the only employee who has been granted stock options (see
"Management"). All our employees, including the officers and directors, receive
medical, dental, and disability insurance paid by the company.
31
<PAGE>
Director Compensation
Our Board of Directors consists of two members, KC Holmes and Heather Stone, who
serve without special compensation. During the next 90 days we plan to add two
outside directors, and one officer, to our Board. We plan to hold board meetings
quarterly, paying outside directors approximately $2,500 per meeting.
Standing Committees of Directors
After we have added two outside directors to the Board, we plan to establish an
Audit Committee and Compensation Committee, each to be composed of one inside
director and two outside directors.
The Audit Committee will make annual recommendations to the Board of Directors
respecting the appointment of our independent public accountants, discuss and
review the scope and the fees of the prospective annual audit and review the
results thereof with the independent public accountants.
It will also review and approve non-audit services of the independent public
accountants, review compliance with existing major accounting and financial
policies, review the adequacy of our financial organization and review
management's procedures and policies relative to the adequacy of our internal
accounting controls.
The Compensation Committee will review and approve annual salary and bonus
ranges for all executive officers, and recommend to the Board of Directors the
terms and conditions of employee benefit plans.
Principal Shareholders
The following table shows certain information known to us regarding the
beneficial ownership of the shares as of September 30, 1998. It illustrates
share ownership as adjusted to reflect the sale of the shares being offered, for
(i) each Shareholder known by us to own beneficially 5% or more of the
outstanding shares of its shares; (ii) each director; and (iii) all directors
and executive officers as a group.
We believe that these beneficial owners, based on information they have
furnished, have sole investment and voting power with respect to their shares,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
Directors, Executive Shares Owned Percentage of Shares Owned Percentage of
Officers, and Owners of 5% Before Offering Shares Before After Offering (3) Shares After
or More of the Shares (1) the Offering (2) the Offering (4)
<S> <C> <C> <C> <C>
KC Holmes* 3,038,842 35.92% 2,963,842 28.33%
Heather Stone* 3,038,842 35.92% 2,963,842 28.33%
Richard Flack 12,000 0.14% 12,000 0.11%
Steven Anderson 12,000 0.14% 12,000 0.11%
Chris Kenney 5,000 0.06% 5,000 0.05%
Christopher Leonard 12,800 0.15% 12,800 0.12%
Lance Heaton 300,000 3.55% 300,000 3.87%
Brad Stewart* 84,000 .99% 70,000 .67%
Stanford S. Smith* 612,718 7.24% 595,218 5.69%
------- ------- --------- ------
All Directors and Officers 7,303,484 86.32% 6,634,702 63.42%
as a Group
</TABLE>
32
<PAGE>
* Selling Shareholders
Footnotes:
(1) The business address of each person named is 5295 South Commerce Drive,
Suite 300, Salt Lake City, Utah 84107.
(2) This does not include 2,000,000 shares held in the company treasury.
(3) Assumes sale of all 2,181,500 shares (2,000,000 company shares and
181,500 from selling shareholders).
(4) Purchasers of the shares will receive treasury shares (except for shares
of the selling shareholders and 14,000 newly issued shares). There will
be no treasury shares outstanding after the offering if all shares are
sold.
Indemnification of Officers and Directors
As allowed by the Utah Business Corporations Act, our Bylaws provide that the
liability of the officers and directors of the company for monetary damages
shall be eliminated to the fullest extent permissible under Utah law.
We did this to eliminate the personal liability of an officer or director for
monetary damages in an action brought by or in the right of the company for
breach of duty to the company or its shareholders. It does not, however,
indemnify directors for intentional wrongdoing.
This provision does not limit or eliminate the rights of the company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
We understand that the Securities and Exchange Commission takes the position
that insofar as the foregoing provision may be invoked to disclaim liability for
damages arising under the Securities Act, the provision is against public policy
as expressed in the Securities Act and is therefore unenforceable. Such
limitation of liability also does not affect the availability of equitable
remedies such as injunctive relief or rescission.
We are now working to obtain directors' and officers' liability insurance. When
this is in place, we will add two outside directors.
Legal Proceedings
We are not aware of any legal proceedings within the last 5 years against any
director, officer, significant employee, or candidate for any such position,
which involve a petition under the Bankruptcy Act or any State insolvency law or
of any receiver, fiscal agent or similar officer appointed by a court -
For the business or property of such person or any partnership in which
he was general partner or within 2 years before the time of such filing,
or
For any corporation or business association of which he was an executive
officer within 2 years before the time of such filing.
Nor are we aware of any of any officer or director being convicted in a criminal
proceeding.
33
<PAGE>
The Shares
Shares
The authorized capital stock of the company consists of 100,000,000 shares Class
A Common Stock at no par value. Our Articles of Incorporation also authorize us
to issue 100,000,000 shares of Class B Non-Voting Common Stock, but we have not
issued any of these shares.
As of September 30, 1998, we had 30 shareholders, holding a total of 8,460,740
shares (not including 2,000,000 in treasury shares).
The Class A shares have the following characteristics:
Holders are entitled to one vote per share on all matters submitted to a
vote of our shareholders and may not cumulate votes for the election of
directors.
Holders have the right to receive dividends when, as, and if declared by
the Board of Directors from funds legally available for this purpose.
Upon liquidation of the company, holders are entitled to share pro rata
in any assets available for distribution to shareholders after payment of
all company obligations, including the bonds.
Holders have no preemptive rights (first rights to acquire any additional
shares issued by the company) and have no rights to convert their shares
into any other securities.
All shares now outstanding are fully paid for and nonassessable.
Shares are not redeemable
Determination of Offering Price
Prior to this offering there has been no market for our shares. The offering
price has been determined by our Board of Directors based upon its estimate of
future earnings prospects, and not upon any determination of current value (see
"Plan of Distribution").
Dilution
On the date of this prospectus, we had a net tangible book value of $2,874,419,
or $-.3397 per share. The net tangible book value per share is equal to a
company's total tangible assets, less its total liabilities and divided by its
total number of shares of shares outstanding.
If we sell all 2,000,000 shares we are offering, our net tangible book value at
the conclusion of the offering will be approximately $6,925,581, or $.6621 per
share. This represents an immediate increase in net tangible book value of
$1.0018 per share to existing shareholders and an immediate dilution of $3.3379
per share to new investors purchasing shares in this offering.
The following table illustrates the per share dilution in net tangible book
value per share to new investors:
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Initial offering price per share. $ 4.00
Net tangible book value before offering. $ -2,874,419
Net tangible book value per share before the offering. $ -.34
Increase in net tangible book value per share attributable to the cash payment by new investors. $ 6,925,581
Net tangible book value per share after offering. $ .66
Dilution per share to new investors. $ 3.34
</TABLE>
Trading Market
The shares are not currently listed for trading on any exchange. We will apply
to list our shares for trading on the Nasdaq SmallCap Market at the conclusion
of this offering (subject to selling the 2 million shares we are offering by
this prospectus), but cannot guarantee that our application will be approved.
Our proposed trading symbol is "JOBS."
Selling Shareholders
As shown on the table below, four of our current shareholders are offering
181,500 of their own shares for sale as part of this offering. If all of these
shares are sold, these officers will receive $726,000 (less a pro rata share of
sales commissions). These shares will be sold pro rata with our shares.
<TABLE>
<CAPTION>
Name Number of Shares Proceeds of Sale %of Shares Owned After
to be Sold Completion of Offering
<S> <C> <C> <C>
KC Holmes, CEO 75,000 $300,000 28.33%
Heather Stone, President 75,000 $300,000 28.33%
Brad Stewart, CFO 14,000 $ 56,000 .67%
Stanford Smith, General Counsel 17,500 $ 70,000 5.69%
------ ------- ------
Total 181,500 $726,000 63.02%
</TABLE>
Shares Eligible For Future Resale
Upon completion of this offering, assuming the sale of all shares, we will have
outstanding 10,460,740 shares.
Of these shares, the 2,181,500 shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act
(except any shares owned by an "affiliate" of the company, which will be subject
to the resale limitations of Rule 144 adopted under the Securities Act).
In general, under Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares for at least one year, including "affiliates" as
that term is defined under the Securities Act, is entitled to sell, within any
3-month period, a number of shares that does not exceed the greater of (i) one
percent (1%) of the then outstanding shares of the shares or (ii) the average
35
<PAGE>
weekly trading volume in the shares during the four calendar weeks immediately
preceding the date on which the notice of sale is filed with the Commission.
Sales under Rule 144 are subject to certain requirements relating to manner of
sale, notice and availability of certain current public information about the
company. A person (or persons whose shares are aggregated) who is not deemed to
have been an "affiliate" of the company at any time during the 90 days
immediately preceding the sale and who has beneficially owned shares for at
least three years is entitled to sell such shares under Rule 144(k) without
regard to these limitations.
The postoffering fair value of our shares, whether or not any secondary trading
market develops, is variable and may be impacted by the business and financial
condition of the company, as well as factors beyond our control.
Sales of substantial amounts of shares in any public market could cause lower
market prices and even make it difficult for us to raise capital through a
future offering of equity securities.
Stock Options
As of September 30, 1998, options to acquire our shares were held by 4
individuals and trusts.
Martin Collins, a former employee and founder of the company, has an
option to acquire 800,000. He may acquire these shares at a discount of
20% from the market trading price, if any, during 1998, and a discount of
15% during 1999.
RetaFawson, B&S Family Trust, and Argentum Family Trust, none of which
are affiliated with us, purchased our convertible bonds for an aggregate
price of $240,000 in May of 1998. This gave them the option of acquiring
shares at a discount of 20% from the public offering price if our shares
were registered with the SEC, but only during the offering period. During
a 6-month period following such the listing of shares on a public
exchange, these bonds may be converted to shares at a discount of 20%
from the average share trading price during the 30-day period prior to
exercise of the option. During the period from 7 to 18 months after the
listing date, these bonds may be converted to shares at a discount of 10%
similarly calculated.
BradStewart, our Chief Financial Officer, has an option to acquire
100,000 shares at $4 per share, vesting at the rate of 25,000 per year
for four years.
Transfer Agent and Registrar
The transfer agent and registrar for our shares is Interwest Transfer Company,
Inc., at 1981 East Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117,
phone (801) 272-9294, fax (801) 277-3147.
36
<PAGE>
The Bonds
Bond Characteristics
We are offering $3,000,000 in company bonds to be sold in increments of $1,000.
The bonds have a 4-year term, and will bear interest at 15% per annum compounded
annually and paid with the principal at maturity.
We may call the bonds (that is, prepay and retire them) at any time upon
30-day's written notice to a bond holder. All principal and accrued interest
with respect to a called bond must be paid within 15 days of the call date.
Payment of the principal and interest on the bonds is secured solely by company
assets. We will not establish a sinking fund (that is, an accumulating pool of
capital intended to repay bond principal and interest) for retirement of the
bonds. Bond holders will be dependent upon our ability to generate income, or
otherwise obtain sufficient capital, to pay the principal and interest of the
bonds at the time of maturity.
No master indenture has been adopted in connection with the bonds and no trustee
has been appointed to protect the rights of bond holders. If we default upon
payment to any bond holder, such holder must proceed individually, or join with
other unpaid bond holders, collect any damages from us. We have not obligated
ourselves to cover the expenses of such collection efforts.
We will not seek to list the bonds for trading in any public market. Bonds are
an illiquid investment which you must hold for 4 years, receiving no interest or
principal until the maturity date.
We will not pay any dividends to our shareholders until all these bonds have
been retired.
Rights in Liquidation
There are no voting rights associated with the bonds. If you purchase bonds, you
will be a general unsecured creditor, not an owner, of the company.
In the event we dissolve, company creditors (including the bond holders) must be
fully paid before any liquidating distributions are made to Shareholders.
37
<PAGE>
Plan Of Distribution
Offering of Securities
We are offering the shares and bonds at the offering price set forth on the
cover page of this prospectus, with a minimum investment of $1,000 required.
We plan to seek the support of NASD member firms which are recognized market
makers with the intention of obtaining their assistance in the creation of a
viable market in the shares for the benefit of our shareholders.
Our Board of Directors has arbitrarily set the price at which the shares are
offered. The price has no relationship to our book value per share, our current
earnings, or other generally accepted measurement of value.
Agreement with a Broker-Dealer
We plan to enter agreements with registered securities broker-dealers, in which
they will agree to use their best effort to sell our shares and bonds in
exchange for a cash sales commission of 10% of the proceeds they raise.
We will agree to indemnify these firms against liabilities incurred as a result
of any untrue statement of a material fact contained in the prospectus, or as a
result of the omission of a material fact necessary in order to make the
statements in the prospectus, in light of the circumstances, not misleading.
Based on the number of unsold shares and bonds, we will periodically allocate
our securities among these participating broker-dealers
No Stabilizing Transactions
We have not engaged anyone to stabilize, maintain or otherwise affect the price
of shares including generating stabilizing bids.
In general, purchasing shares for the purposes of stabilization or to reduce a
short position could cause the share price to be higher than it might be if no
such purchases were made. In the absence of transactions that stabilize the
price, our share price could be hurt by market conditions.
Sales by Our Officers
Some of our officers (KC Holmes, Heather Stone, Kirk Fischer, Lance Heaton, and
Steven Anderson) will also sell shares and bonds. No sales commissions will be
paid for sales made by them.
Shares to be Sold to Employees at a Discount
We will allow our employees and their immediate families to purchase as many
shares offered by this prospectus as they wish at a discount of 10% from the
38
<PAGE>
sales price ($3.60 per share rather than the $4 per share paid by other
investors). Since we will not pay any sales commissions on these shares, the net
proceeds to the company will be the same as with shares sold to other investors
by participating brokers.
Shares to be Sold by Shareholders
Four of our current shareholders are selling a total of 181,500 shares for their
own account. The company will not receive any proceeds from the sale of their
shares. KC Holmes, CEO, will sell 75,000 shares; Heather Stone, President and
Chairman of the Board, 75,000, Brad Stewart, CFO, 14,000; and Stanford Smith,
In-house General Counsel, 17,500.
Offering Period
The offering will continue until subscriptions for all shares and bonds are
received, until 9 months from the effective date of the offering, or until we
terminate the offering, whichever event first occurs.
How to Subscribe
Please mail your check or money order payable only to "The Murdock Group,"
together with a completed subscription agreement, directly to us at 5295 South
Commerce Drive, Suite 300, Salt Lake City, Utah 84107, attention: share
purchase.
We will deposit the proceeds from the sale of shares and bonds to our bank
account by noon of the business day following receipt.
We reserve the right to reject any subscription in whole or in part, or to
accept subscriptions in any order, for any or no reason. If we accept your
subscription, we will mail you your share or bond certificate within 30 days of
the day we receive your subscription.
39
<PAGE>
Experts
The audited consolidated balance sheets of The Murdock Group Career Satisfaction
Corporation and Envision Career Services, L.L.C. as of May 31, 1998, and
December 31, 1997 and 1996, and the related statements of operations,
stockholders' deficit and cash flows for each of these years, included in this
prospectus, have been included herein in reliance on the report of David
Thomson, independent certified public accountant, given on the authority of that
firm as experts in accounting and auditing.
All legal matters in connection with this prospectus have been passed upon by
Stanford Smith, a shareholder and our In-house General Counsel.
Additional Information
A registration statement on Form SB-2 relating to these shares and bonds has
been filed with the Securities and Exchange Commission. This prospectus does not
contain all of the information set forth in the Registration Statement and its
exhibits and schedules.
You are welcome to examine the full registration statement, and all reports we
file with the Commission as required by the Securities Exchange Act of 1934.
These materials may be copied at the Commission's principal office located at
450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of a reasonable fee.
The Commission also maintains a site on the internet at www.sec.gov that
contains this information.
40
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
FINANCIAL STATEMENTS
MAY 31, 1998 AND MAY 31, 1997 (UNAUDITED) AND DECEMBER 31, 1997
AND 1996
WITH
INDEPENDENT AUDITOR'S REPORT
41
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
Table of Contents
Page
----
Independent Auditor's Report 43
Consolidated Balance Sheets 44-45
Consolidated Statements of Operations 46
Consolidated Statement of Stockholders' Equity 47
Consolidated Statements of Cash Flows 48
Notes to Consolidated Financial Statements 49-67
42
<PAGE>
[letterhead]
David T. Thompson P.C. Certified Public Accountant
- --------------------------------------------------------------------------------
Independent Auditor's Report
- ----------------------------
Board of Directors
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
I have audited the consolidated balance sheets of The Murdock Group Career
Satisfaction Corporation as of May 31, 1998 and December 31, 1997 and 1996 and
the related consolidated statements of operations, stockholders' equity and cash
flows for the five months ended May 31, 1998, for the year ended December 31,
1997 and from inception (August 5, 1996) to December 31, 1996. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on the financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of The Murdock Group
Career Satisfaction Corporation, as of May 31, 1998 and December 31, 1997 and
1996, and the consolidated results of their operations and their cash flows for
the periods indicated, in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company has experienced a consolidated net loss of
$1,444,726 for the five month period ended May 31, 1998 and has incurred
substantial net losses since its inception. At May 31, 1998, current liabilities
exceed current assets by $1,616,280 and total liabilities exceed total assets by
$3,310,768. These factors, and the others discussed in Note 8, raise substantial
doubt about the Company's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
/s/ David T. Thompson P.C.
--------------------------
David T. Thompson P.C.
Salt Lake City, Utah
September 16, 1998 (except as to the stock transactions Note 21 which is as of
September 24, 1998)
43
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONSOLIDATED BALANCE SHEETS
As of May 31, 1998 and December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 44,657 $ 1,604 $ 5,994
Current portion of contracts receivable - Note 3 485,734 246,860 10,756
Current portion of contracts receivable - related parties 6,608 5,273 --
Prepaid expenses and other 36,392 23,402 6,929
Current portion of amounts due from related parties - Note 9 19,543 1,800 --
--------------- --------------- ---------------
Total current assets 592,934 278,939 23,679
PROPERTY AND EQUIPMENT, at cost
Computer equipment 95,485 83,291 1,240
Equipment, furniture and fixtures 125,083 88,915 9,815
Leasehold improvements and other 23,944 4,195 2,035
Property and equipment held under capital leases 341,000 259,642 5,521
--------------- --------------- ---------------
585,512 436,043 18,611
--------------- --------------- ---------------
Less: accumulated depreciation and amortization (79,386) (39,875) (859)
--------------- --------------- ---------------
Total property and equipment, net 506,126 396,168 17,752
--------------- --------------- ---------------
OTHER ASSETS
Contracts receivable - less current portion - Note 3 196,751 320,499 24,653
Contracts receivable - related party - less current portion 5,780 7,033 2,245
Intangible assets, net - Note 2 63,651 59,294 65,278
Deposits and other assets 73,898 38,618 5,030
Investments and other assets 25,000 25,000 --
Amounts due from related parties, net - Note 9 28,439 28,846 9,440
--------------- --------------- ---------------
Total Other Assets 393,519 479,290 106,646
--------------- --------------- ---------------
TOTAL ASSETS $ 1,492,579 $ 1,154,397 $ 148,077
============== ============ ===============
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
44
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONSOLIDATED BALANCE SHEETS
As of May 31, 1998 and December 31, 1997 and 1996
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
1998 1997 1996
--------------- -------------- --------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Bank overdraft $ -- $ 38,223 $ --
Accounts payable 132,412 211,123 23,977
Accrued payroll costs and wages payable 221,715 201,620 7,497
Short-term debt - Note 15 1,144,000 113,000 130,353
Short-term debt - related parties - Note 16 83,774 128,571 64,326
Current portion of long-term debt - Note 17 44,211 18,307 --
Current portion of long-term debt - related parties - Note 18 305,000 -- --
Current portion of obligation under capital leases - Note 7 61,271 59,066 4,559
Other accrued liabilities 39,341 40,144 6,135
Unearned revenue - Note 2 177,490 501,801 51,010
--------------- -------------- --------------
Total current liabilities 2,209,214 1,311,855 287,857
--------------- -------------- --------------
LONG-TERM LIABILITIES
Long-term debt - Note 17 2,246,039 1,563,420 --
Long-term debt-related parties - Note 18 70,000 -- --
Convertible debenture - Note 13 100,000 -- --
Obligations under capital leases - Note 7 178,094 147,274 --
--------------- -------------- --------------
Total long-term liabilities 2,594,133 1,710,694 --
--------------- -------------- --------------
COMMITMENTS AND CONTINGENCIES - Note 6
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock - Class A, no par value, 100,000,000 shares
authorized; 10,000,800, 9,880,000 and 9,880,000 shares issued and
outstanding respectively 2,110 988 988
Common Stock - Class B, no par value, no shares issued and
outstanding -- -- --
Retained earnings (deficit) (3,312,878) (1,869,140) (140,768)
--------------- -------------- --------------
Total stockholders' equity (deficit) (3,310,768) (1,868,152) (139,780)
--------------- -------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,492,579 $ 1,154,397 $ 148,077
============== ============= ==============
</TABLE>
45
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Five Months Ended May 31, 1998 and 1997 (Unaudited), For the Year Ended
December 31, 1997, and From August 5, 1996 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
May 31, December 31, December 31,
------------------------------
1998 1997 1997 1996
--------------- -------------- --------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
SERVICE REVENUES, inclusive of interest charged $ 1,436,910 $ 105,862 $ 694,093 $ 33,662
Less: Contract cancellations (276,566) (26,294) (101,543) (3,665)
Contract write -offs (167,700) -- (73,027) --
Contract discounts (102,476) (15,546) (40,720) (2,541)
------------ ------------ ------------ ------------
Total, net 890,168 64,022 478,803 27,456
DIRECT COST OF SERVICES (776,150) (94,175) (667,402) (46,163)
------------ ------------ ------------ ------------
Gross profit (loss) 114,018 (30,153) (188,599) (18,707)
------------ ------------ ------------ ------------
OPERATING EXPENSES
General and administrative 568,316 132,380 631,539 70,810
New products research and development 447,776 91,645 556,854 37,904
Depreciation and amortization 38,230 4,537 32,796 2,578
------------ ------------ ------------ ------------
Total operating expenses 1,054,322 228,562 1,221,189 111,292
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (940,304) (258,715) (1,409,788) (129,999)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (299,602) (58,097) (248,387) (9,893)
Interest income 6,071 -- 126 112
Non-trade receivables write-off (210,891) (28,973) (70,323) --
------------ ------------ ------------ ------------
Total, net (504,422) (87,070) (318,584) (9,781)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (1,444,726) $ (345,785) $ (1,728,372) $ (139,780)
============ ============ ============ ============
EARNINGS PER SHARE $ (0.14) $ (0.05) $ (0.17) $ (0.01)
============ ============ ============ ============
WEIGHTED AVERAGE CLASS A SHARES 10,006,640 9,880,000 9,880,000 9,880,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
46
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Five Months Ended May 31, 1998, For the Year Ended December 31, 1997,
and From August 5, 1996 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
Common Stock Retained
----------------------------
# Shares Amount Earnings
---------------- --------------- ---------------
<S> <C> <C> <C>
BALANCE, August 5, 1996 (Inception) -- $ -- $ --
* Shares issued to initial stockholders at incorporation 9,880,000 988 (988)
Net loss -- -- (139,780)
---------------- --------------- ---------------
BALANCE, December 31, 1996 9,880,000 988 (140,768)
Net loss -- -- (1,728,372)
---------------- --------------- ---------------
BALANCE, December 31, 1997 9,880,000 988 (1,869,140)
* Shares issued pursuant to offering of promissory notes
at a value of $.01 per share during January 1998 150,000 1,500 --
* Cancellation of treasury shares, February 1998 at $.0001 per share (29,200) (3) --
* Shares issued to two individuals for services rendered at
$.01 per share 20,000 200 --
* Cancellation of treasury shares, March 1998 at $.0001 per share (20,000) (2) --
* Shares issued to trusts at $.01 per share 25,000 250 --
* Cancellation of treasury shares at $.0001 per share (25,000) (2) --
* Issuance of shares in exchange for members' interest in LLC 8,205,800 -- --
* Cancellation of shares received and dissolution of LLC (8,205,800) (821) 988
Net loss -- -- (1,444,726)
---------------- --------------- ---------------
BALANCE, MAY 31, 1998 10,000,800 $ 2,110 $(3,312,878)
================ =============== ===============
</TABLE>
* After the effect of recapitalization
The accompanying notes are an integral part of these consolidated financial
statements.
47
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Five Months Ended May 31, 1998 and 1997 (Unaudited), For the Year Ended
December 31, 1997, and From August 5, 1996 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
May 31, December 31, December 31,
-------------------------------
1998 1997 1997 1996
-------------- -------------- -------------- --------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,444,726) $ (345,785) $(1,728,372) $ (139,780)
Adjustments to reconcile net loss to net cash used
in operating activities
Nonmonetary stock transactions for expenses and other 2,110 -- -- --
Depreciation and amortization 46,677 6,301 45,550 3,581
Allowance for uncollectability 107,926 30,053 86,095 --
Change in operating assets and liabilities
Contracts receivable (115,126) (107,240) (531,950) (35,409)
Contracts receivable - related party (82) (120) (10,061) (2,245)
Prepaid expenses and other (12,990) (1,089) (16,473) (6,929)
Amounts due from related parties - current (17,743) -- (1,800) --
Intangible assets (11,523) -- (550) (68,000)
Deposits and other assets (35,280) (180) (33,588) (5,030)
Amounts due from related parties (107,519) (36,539) (105,501) (9,440)
Amounts payable (78,711) 21,574 187,146 23,977
Accrued payroll costs and wages 20,095 20,121 194,123 7,497
Other accrued liabilities (803) 2,513 34,009 6,135
Unearned revenue (324,311) 132,574 450,791 51,010
---------------- -------------- -------------- --------------
Net cash used in operating activities (1,972,006) (277,817) (1,430,581) (174,633)
---------------- -------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (149,469) (68,031) (417,432) (18,611)
Investments in securities and investment trust -- -- (25,000) --
---------------- -------------- -------------- --------------
Net cash used in investing activities (149,469) (68,031) (442,432) (18,611)
---------------- -------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 2,506,858 527,753 2,028,402 284,521
Principle payments on debt (304,107) (164,417) (198,002) (85,283)
---------------- -------------- -------------- --------------
Net cash provided by financing activities 2,202,751 363,336 1,830,400 199,238
---------------- -------------- -------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 81,276 17,488 (42,613) 5,994
CASH AND CASH EQUIVALENTS - BEG OF PERIOD (36,619) 5,994 5,994 --
---------------- -------------- -------------- --------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 44,657 $ 23,482 $ (36,619) $ 5,994
---------------- -------------- -------------- --------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 254,420 $ 35,621 $ 218,506 $ 26,632
---------------- -------------- -------------- --------------
Income taxes $ -- $ -- $ -- $ --
---------------- -------------- -------------- --------------
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Stock issued as compensation $ 200
----------------
Stock issued as debt issue cost $ 1,500
----------------
Debt exchange for corporate promissory notes $ 150,000
----------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
48
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
The Murdock Group Career Satisfaction Corporation (Company) is a
job-search and employment consulting company. The Company services
professionals with five or more years of experience who are
dissatisfied with their career direction or current job situation. The
Company offers job-search training workshops, consultants and coaches,
and access to a job-search resource center. The Company also provides
full-service hiring assistance, including training, recruiting, and
outplacement, to corporations. The Company's offices are located in
Salt Lake City, Utah. Subsequent to May 31, 1998 the Company signed a
lease for office space in Seattle, Washington and opened an office
there. All of the Company's revenue is from the services described
above. At its inception, the Company purchased assets, a copyright,
rights to the business name and goodwill from an existing company
called The Murdock Group, Inc.
Envision Career Services LLC. DBA The Murdock Group (Envision), owned a
majority share of the corporation prior to the business combination
with the Company and its dissolution. Envision originally conducted the
business activities explained above which now continue in the surviving
corporate entity.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles 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 reported periods.
Actual results could differ from those estimates.
Consolidation principles - The accompanying consolidated financial
statements include the accounts of the Companies as outlined in the
business combination as explained in note 4. Intercompany transactions
and balances have been eliminated in consolidation.
Net income per share - The computation of net income (loss) per share
of common stock is based on the weighted average number of shares
outstanding during the period presented.
Revenue Recognition - The Company provides most of its services under
various types of contracts for services to be rendered. Revenue for
these services is recognized as service is rendered, and the
recognition is based on contract type. One year contract revenue is
amortized evenly by month over a 12 month period. The portion of
revenue that is unrecognized remains as unearned revenue until services
have been rendered. A flex contract is amortized evenly by month over a
4-month period, and the unrecognized portion of revenue remains as
unearned revenue until it has been earned. Revenue for 60-day guarantee
and 90-day guarantee contracts is not recognized until the guarantee is
fulfilled. When the guarantee has been fulfilled, the entire portion of
revenue is recognized. Prior to fulfillment of the guarantee, it
remains as unearned revenue. Unearned revenue is all unrecognized
revenue for the above contract types, and is $177,490, $501,801, and
$51,010 for the periods ending May 31, 1998, December 31, 1997 and
1996, respectively. Revenue is recognized completely in the month it
its earned for those services requiring less than one month to
complete. Cash discounts, cancellations, and write-offs are recognized
based on certain criteria such as time since last payment made,
cancellation requests negotiated and granted, and contract price
reduction due to early cash payment.
49
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Cash and Cash Equivalents - The Company considers highly liquid
investments with an original maturity of three months or less to be
cash and cash equivalents. Cash and cash equivalents are recorded at
cost, which approximates market value.
Property and Equipment - Property and equipment are stated at cost and
depreciated using the straight-line method over their estimated useful
lives. Leasehold improvements are amortized over the terms of the
respective leases or the estimated economic lives of the assets,
whichever is shorter. The depreciation and amortization periods are as
follows:
Computer equipment and software 3-5 years
Office equipment 5 years
Art, furniture and fixtures 7 years
Leasehold improvements and other 5 years
Certain art works are artist originals and may or may not be
depreciated.
Upon retirement or other disposition of property and equipment, the
cost and related accumulated depreciation and amortization are removed
from the accounts. The resulting gain or loss is reflected in income.
Major renewals and betterments are capitalized while minor expenditures
for maintenance and repairs are charged to expense as incurred.
Intangible Assets - Intangible assets consist of the following amounts
as of May 31, 1998 and December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Goodwill $ 15,000 $ 15,000 $ 15,000
Copyright 53,000 53,000 53,000
Organization costs 550 550 -
Debt issue costs 11,523 - -
-------- ------- --------
Total 80,073 68,550 68,000
Less accumulated amortization (16,422) (9,256) (2,722)
-------- ------- --------
$ 63,651 $ 59,294 $ 65,278
======== ======= ========
</TABLE>
Goodwill and organization costs are being amortized using the
straight-line method over 5 years. The copyright is being amortized
using the straight-line method over 15 years. Debt issue costs are
being amortized using the straight-line method over 2 years.
Accounting for the Impairment of Long-Lived Assets - The Company
accounts for impairment of long-lived assets in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of long-lived Assets and for long-lived
Assets to be Disposed of." SFAS 121 requires that long-lived assets be
reviewed for impairment whenever events of changes in circumstances
indicate that the book value of the asset may not be recoverable. The
Company evaluates at each balance sheet date whether events and
circumstances have occurred that indicate possible impairment. In
accordance with SFAS No. 121, the Company uses an estimate of the
future undiscounted net cash flows of the related assets over the
remaining life in measuring whether the assets are recoverable.
50
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Income Taxes - Income taxes are provided for the tax effects of
transactions reported in the financial statements and consists of taxes
currently due plus deferred income taxes related primarily to the
difference between the corporation reporting income on the cash basis
for tax purposes and the reporting of income on the accrual basis of
accounting for financial statement purposes. Deferred income taxes
represent the future income tax consequence of those timing
differences, which will in the future be taxable or deductible when the
asset or liabilities are recovered or settled.
Concentrations of Credit Risk - The Company's financial instruments
that potentially subject the Company to concentrations of credit risk
consist principally of cash, contracts receivable and loans to related
parties. In the normal course of business, the Company provides credit
terms to its customers. The Company's contracts receivable are mainly
with individuals residing across the Wasatch Front of Utah. The Company
performs on going credit evaluations of its customers and maintains
allowances for possible losses, but typically does not require
collateral. Total contracts receivable net of allowances were $694,873,
$579,665 and $37,654 at May 31, 1998 and December 31, 1997 and 1996
respectively.
Unaudited and Audited Interim Information - In the opinion of
management, the unaudited financial statements reflect all adjustments,
consisting only of normal adjustments, necessary to present fairly, the
results of operations and cash flows for the five months ended May 31,
1997. The results of operations and cash flows for the five months
ended May 31, 1998 should not necessarily be taken as indicative of the
results of operations and cash flows for the entire year ending
December 31, 1998.
Research and Development Costs - Research and Development costs are
expensed as incurred.
NOTE 3 - CONTRACTS RECEIVABLE - NON RELATED
Contracts receivable consists of the following:,
May 31, December 31, December 31,
CURRENT 1998 1997 1996
------- ---- ---- ----
Contracts Receivable $ 773,098 $ 457,732 $ 25,768
Cancellation Allowance (155,941) (95,088) (7,491)
Write-Off Allowance (77,971) (75,777) --
Discount Allowance (53,452) (40,007) (7,521)
--------- --------- ---------
Net $ 485,734 $ 246,860 $ 10,756
========= ========= =========
May 31, December 31, December 31,
NON-CURRENT 1998 1997 1996
- ----------- ---- ---- ----
Contracts Receivable $ 283,550 $ 516,009 $ 35,677
Cancellation Allowance (57,866) (107,418) (11,024)
Write-Off Allowance (28,933) (88,092) --
--------- --------- ---------
Net $ 196,751 $ 320,499 $ 24,653
========= ========= =========
51
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - CONTRACTS RECEIVABLE - NON RELATED - CONTINUED
May 31, December 31, December 31,
TOTAL 1998 1997 1996
----- ---- ---- ----
Contracts Receivable $ 1,056,648 $ 973,741 $ 61,445
Cancellation Allowance (213,807) (202,506) (18,515)
Write-Off Allowance (106,904) (163,869) --
Discount Allowance (53,452) (40,007) (7,521)
----------- ----------- -----------
Net $ 682,485 $ 567,359 $ 35,409
=========== =========== ===========
NOTE 4 - BUSINESS COMBINATION
Effective May 31, 1998, the members of the limited liability company
(Envision) exchanged their membership interest for shares of stock in
The Murdock Group Career Satisfaction Corporation (Murdock), a Utah
Corporation. Envision's members conveyed all of their membership
interest to Murdock in exchange for 8,205,800 shares of Murdock stock.
As a result of the transaction, Envision's membership interests in
Envision were terminated and Envision was dissolved. As a result of the
exchange, a majorit of Murdock stock was owned by Envision members and
they assumed the operating control of the combined entity, Murdock.
Where the ownership and operating control in the combined entity reside
in shareholders of the acquired corporation, generally accepted
accounting principles require that the Envision be treated as the
purchaser for accounting presentation. Therefore, consolidated
historical data of Envision from inception has been combined and shown
in these financial statements until the liquidation of Envision.
Envision's equity has been adjusted to reflect the above accounting
treatment.
NOTE 5 - INVESTMENTS AND OTHER ASSETS
The securities investments held by the Company have been classified as
available-for-sale securities. Securities are recorded at fair value
and are recorded in the investments and other assets section on the
balance sheet. Any change in the fair value of the securities during
the periods shown are excluded from earnings and is recorded as a
separate component of equity. The Company paid nothing for the
securities held and it is believed that the fair value of the
securities at the periods shown was also zero so no change in value has
been recorded in the financial statements and there are no unrealized
holding gains or losses.
The Company has a 10% interest in a trust that does investing. It paid
$25,000 for its ownership interest. Investments in companies or
entities in which the Company has less than a 20% interest are carried
at cost. Dividends received from those companies are included in other
income.
NOTE 6 - NONCANCELABLE OPERATING LEASES
The Company leases office facilities under noncancelable operating
leases. Management expects that, in the normal course of business, leases that
expire will be renewed or replaced by other leases.
52
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - NONCANCELABLE OPERATING LEASES - CONTINUED
Future minimum lease payments under noncancelable operating leases are
as follows:
Calendar Year Ending May 31, Amount
------------------------------ --------
1999 $493,970
2000 190,563
2001 200,177
2002 213,410
2003 203,390
Thereafter --
--------
$1,301,510
Fiscal Year Ending December 31, Amount
------------------------------- ----------
1998 $ 361,823
1999 343,036
2000 195,960
2001 208,108
2002 218,800
Thereafter 73,960
----------
$1,401,687
Facility rental expense for the periods ending May 31, 1998, December
31, 1997 and 1996 totaled approximately $112,133, $135,146, and $7,735
respectively.
NOTE 7 - CAPITAL LEASES
The Company is the lessee of computer software, hardware and office
furniture and fixtures under capital leases expiring in various years
through the year 2003 and thereafter. The assets and liabilities under
capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair value of the asset. The assets are
amortized (or depreciated) over the lower of their related lease terms
or their estimated productive lives. Amortization (or depreciation) of
assets unde capital leases is included in depreciation expense for May
31, 1998, December 31, 1997 and 1996.
Following is a summary of property held under capital leases:
May 31 December 31, December 31,
1998 1997 1996
---- ---- ----
Computer equipment $ 205,759 $ 140,256 $ 5,521
Equipment, furniture and fixtures 86,811 70,956 --
Leasehold improvements and other 48,430 48,430 --
--------- --------- ---------
Less: accumulated amortization 341,000 259,642 5,521
(or depreciation) (42,313) (20,295) (184)
--------- --------- ---------
$ 298,687 $ 239,347 $ 5,337
========= ========= =========
53
<PAGE>
THE MURDOCK GROUP r
CAREER SATISFACTION CORPORATION r
r
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS r
NOTE 7 - CAPITAL LEASES - CONTINUED
Minimum future lease payments under capital leases for each of the next
five years and in the aggregate at May 31, 1998 and December 31, 1997 are:
Calendar Year Ending May 31, Amount
---------------------------- ------
1999 $110,547
2000 104,837
2001 67,193
2002 35,714
2003 19,573
Thereafter 10,426
--------
Total Minimum Lease Payments 348,290
Less: Executory costs -
---------
Net minimum lease payments 348,290
Less: Amount representing interest (108,925)
Present value of net minimum lease payment 239,365
Less current portion (61,271)
---------
Long-term portion $ 178,094
=========
Fiscal year ending December 31, 1997 Amount
------------------------------------ ------
1998 $97,938
1999 70,674
2000 61,050
2001 39,106
2002 28,484
2003 --
---------
Total minimum lease payments 297,252
Less: Executory costs -
---------
Net minimum lease payment 297,252
Less: Amount representing interest (90,912)
---------
Present value of net minimum lease payments 206,340
Less current portion (59,066)
---------
Long-term portion $ 147,274
=========
Interest rates on capitalized leases average 28% to 32% and are imputed
based on the lower of Company's incremental borrowing rate at the
inception of each lease or the lessor's implicit rate of return.
54
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained substantial operating losses since inception.. In
addition, the Company has used substantial amounts of working capital
in its operations. Further, at May 31, 1998, current liabilities exceed
current assets by $1,616,280, and total liabilities exceed total assets
by $3,310,768.
In view of these matters, realization of a major portion of the assets
in the accompanying balance sheet is dependent upon continued
operations of the Company, which in turn is dependent upon the
Company's ability to meet its financing requirements, and the success
of its future operations.
Management believes that a major contribution of losses to date were
incurred while developing the Company's proprietary job-search
technology into a training system that serviced a larger volume of
customers. The Company has completed development on the training system
and anticipates that it now has a product that can be serviced
profitably. In September 1998, the Company moved 13 employees out of
the Salt Lake City office to open a satellite office in Seattle because
that additional staff was no longer needed to service the newer, more
efficient product. Other satellite offices are planned for first
quarter 1999. See the Subsequent Events Note 20 for more information.
The Company intends to allocate administrative costs across multiple
locations, thereby reducing the financial impact of the Company's
investment to date in infrastructure items such as computer technology
and human resources, accounting, and operations staff. Management also
anticipates a reduction in charge-off expense with the new product.
Management expects that completion of the public offering described in
Note 11 will enable the Company to restructure or pay off the majority
of its high- interest debts, thereby reducing monthly interest expense.
To summarize, management's plan for overcoming losses includes moving
staff to satellite offices, allocating infrastructure investment across
multiple locations, reducing charge-off expense, and reducing interest
expense.
NOTE 9 - DUE FROM RELATED PARTIES
Amounts due from related parties consists of the following:
May 31, December 31, December 31,
1998 1997 1996
---- ---- ----
Loans to officers, directors and LLC
members. The loans are unsecured
with interest at 8% $ 308,829 $ 86,095 $ 9,440
Less allowance for uncollectibility
due to personal guarantees on other
Company debts (308,829) (86,095) --
55
<PAGE>
THE MURDOCK GROUP r
CAREER SATISFACTION CORPORATION r
r
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS r
r
NOTE 9 - DUE FROM RELATED PARTIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Loan due from subsidiary stockholder,
director and LLC member, due March 31,
1999. The loan is unsecured with interest
at 8% 15,149 -- --
Loan due from employee at 6% interest,
due July 14, 2000, unsecured 4,666 -- --
Loan to an affiliated company through a
revolving line of credit dated November 30,
1996, loans carry interest at 10%, loan
balance is unsecured -- 28,846 --
Loan to stockholder, former employee
and consultant (See Note 10) 21,123 -- --
Employee advances, no interest and
unsecured, paid by payroll deductions 7,044 1,800 --
-------- -------- ---------
Total 47,982 30,646 9,440
Less current portion (19,543) (1,800) --
-------- -------- ---------
Long-term portion $ 28,439 $ 28,846 $ 9,440
======== ======== =========
</TABLE>
NOTE 10 - RELATED PARTY TRANSACTIONS
The Murdock Group regularly purchases computer hardware, software, and
services from Coastlink Consulting, which is a sole proprietorship
registered in the State of Utah. The owner of Coastlink Consulting is
also an employee of The Murdock Group.
The Murdock Group has a consulting agreement with an owner and employee
of The Pinebrook Group, which is a sole proprietorship registered in
the State of Utah. The owner employee of Pinebrook is also a
shareholder in The Murdock Group Career Satisfaction Corporation.
During January of 1998, the Company sold $375,000 of Promissory notes
and issued 150,000 Class A shares to related parties pursuant to a
private placement memorandum. The Company is paying interest of 12% to
18% on these notes.
Interest paid to related parties at May 31, 1998 and December 31, 1997
and 1996 approximately $40,161, $23,670 and $3,521 respectively.
56
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - PROPOSED PUBLIC OFFERING
The Company is preparing a prospectus for an initial public offering,
consisting of the sale of Company shares and the issuance of bonds
(repaying principal and 15% interest compounded annually at the end of
4 years). In addition, three of the corporations stockholders are
seeking to sell shares. The Company is planning to pay a sales
commission on the sale of its shares and its bonds. Direct costs of the
offering are estimated to be $100,000. The shares and bonds issued will
be those of the corporation remaining after the business combination
(See Note 3).
NOTE 12 - EMPLOYEE LEASING COMPANY
The Company is not the employer of record for the employees in the
Company. The Company uses an employee leasing company named Employers
Solutions Group (ESG). ESG is the official employer of record and all
benefits are administered on its plans. This includes, but is not
limited to, medical and dental insurance, flex days off, 401k plan,
cafeteria plan, and all applicable payroll taxes, filings and
notifications. ESG bills the Company for the services it provides.
NOTE 13 - CONVERTIBLE BONDS
The Company has sold a $100,000 Convertible Bond to a Trust pursuant to
a Regulation D Offering utilizing a Disclosure Memorandum dated April
29, 1998. The bond is convertible to Class A common shares of the
Company (the "Shares") upon the terms set forth below.
If and when a public offering of Shares is approved by an appropriate
securities regulatory agency, and upon Company receipt the Bond
holder's notice of intent to convert, the Bond may be converted to
Shares at a discount of 20% from the offering price, but only until
such date, if any, that the Shares are listed for trading on a public
exchange.
After the Listing Date, and upon Company receipt of a conversion notice
from the bondholder, the Bond may be converted into Shares only upon
the following terms:
During a 6-month period commencing on the Listing Date, the Bond
may be converted to Shares at a discount of 20% from the average
Share trading price during the 30-day period prior to Company
receipt of the conversion notice.
During the period from 7 to 18 months after the Listing Date, the
Bond may be converted to Shares at a discount of 10% from the
average Share trading price during the 30-day period prior to
Company receipt of the conversion notice.
The Bond may be converted to Shares only in increments of $1,000. No
fractional Shares will be issued. Converted Bonds will be canceled upon
issuance of Shares to the converting Bond holder.
The Bond is callable by the Company at any time upon 30-day written
notice (the "Exercise Period") to the Bond holder. During the Exercise
Period such Bond holder may elect to convert the Bond to Shares upon
the discount terms set forth above. If the Company does not receive a
conversion notice from such Bond holder within the Exercise Period, the
Company shall pay to such holder all principal and accrued interest
with respect to such Bond within 30 days of the end of the Exercise
Period.
57
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - CONVERTIBLE BONDS - CONTINUED
As of the present date, the Company's shares have not been approved for
public sale. Accordingly, no conversion notices have been received.
NOTE 14 - INCOME TAXES
Income tax provision consists of the following:
Current income taxes payable $ -
Deferred tax benefit (20,702)
Allowance for realization 20,702
-----------
$ -
-----------
Deferred income tax liability or benefit results from timing
differences in the recognition of revenues and expenses for tax and financial
purposes. The source of the timing differences is using the cash basis of
accounting for income tax and accrual accounting for the basis of financial
income. The Company has set up an $20,702 allowance for the tax benefit at May
31, 1998.
Due to the nature of the business combination, the corporation has no
net operating losses which can be carried forward or back.
58
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NOTE 15 - SHORT-TERM DEBT
May 31, Dec. 31, Dec. 31,
Short-term debt consists of the following: 1998 1997 1996
--------------- -------------- -----------
<S> <C> <C> <C> <C>
Note for purchase of Copyright, dated August 1, 1996, with no stated interest rate,
due April 1, 1997, unsecured. $ - $ - $ 53,000
Note with an Individual on September 6, 1996 with 22% interest. Due June 1,
1997. Secured by personal guarantee of officer, director and LLC member - - 20,000
Note with an individual dated October 18, 1996 with 20% interest. Due November
18, 1996, with option to extend for additional 30-day increments, secured by
personal guarantee of officer, director and LLC member. - - 5,000
Note with an individual on November 1, 1996 with 18% interest. Due October
31, 1997. Secured by personal property and personal guarantee of officer,
director and LLC member. - - 52,353
Note with an individual dated December 31, 1997 with interest of $1,000 per
week outstanding. Due January 5, 1998. Secured by a personal guarantee
of officer, director and LLC member. - 11,000 -
Note with a company dated December 20, 1997 with 8% interest. Due date
February 20, 1998. This loan is unsecured. - 25,000 -
Note with an investment group dated December 30, 1997 with no
interest rate or due date stated. Unsecured. - 12,000 -
Note with a trust - dated November 28, 1997 with 48% interest, due
January 30, 1998. Unsecured. - 15,000 -
Note with two individuals dated May 20, 1998 with 24% interest. Interest only
payments of $10,000 per month for 6 months. Balloon payment of $500,000
due December 31, 1998. Secured by $500,000 in Accounts Receivable and a
personal guarantee by majority owners and members. New accounts receivable
must be substituted every 4 to 6 weeks as accounts receivable which originally
secured the loan become paid off, paid down, canceled, renegotiated, or
written off. 500,000 - -
Note with an investment Group dated April 14, 1998 with no interest rate or due
date stated. Unsecured. 4,000 - -
Note with a Trust, dated April 28, 1998, 36% interest. Interest only payments of
$4,500 per month for 12 months. Balloon of $150,000 due April 28, 1999.
Secured by $150,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renogotiated,
or written off, since the loan inception. 150,000 - -
</TABLE>
59
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - SHORT-TERM DEBT - CONTINUED
<TABLE>
<CAPTION>
May 31, Dec. 31, Dec. 31,
Short-term debt consists of the following: 1998 1997 1996
--------------- -------------- ---------------
<S> <C>
Note with a Trust dated January 19, 1998, 36% interest. Interest only payments of
$1,500 per month for 12 months. Payment of $50,000 due January 19, 1999.
Secured by $70,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 50,000 - -
Note with a Trust dated April 28, 1998, 24% interest. Interest only payments of
$800 per month for 12 months. Payment of $40,000 due April 28, 1999.
Secured by $40,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 40,000 - -
Note with a Trust dated May 8, 1998, 24% interest. Interest only payment
of $1,000 per month for 12 months. Payment of $50,000 due May 8,1999.
Secured by $50,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 50,000 - -
Note with a Trust dated May 8, 1998, 24% interest. Interest only payments
of $1,000 per month for 12 months and payment of $25,000 due May 8,
1999. Secured by $25,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 25,000 - -
Note with a Trust dated May 13, 1998, 24% interest. Interest only payments of
$500 per month for 12 months. Payment of $25,000 due May 13, 1999
Secured by $25,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 25,000 - -
Note with a Trust dated April 3, 1998, 36% interest. Interest only payments
of $4,500 per month for 12 months. Payment of $150,000 due April 3,1999.
Secured by $150,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 150,000 - -
Note with a Trust dated April 3, 1998, 36% interest. Interest only payments
of $4,500 per month for 12 months. Payment of $150,000 due April 3,
1999. Secured by $150,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. 150,000 - -
Note with Trust dated June 10, 1997, 24% interest. Interest only payments
of $1,000 per month for 12 months. Payment of $50,000 due June 10,
1998. Secured by $50,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, renegotiated,
or written off, since the loan inception. - 50,000 -
---------- --------- ---------
$ 1,144,000 $ 113,000 $ 130,353
========== ========= =========
</TABLE>
60
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION COPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - SHORT TERM DEBT WITH RELATED PARTIES
<TABLE>
<CAPTION>
Related party short-term debt consists of the following: May 31, Dec. 31, Dec. 31,
1998 1997 1996
--------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Note with LLC Members' personal relation dated August 1, 1996
with 10% interest. Due February 7, 1997. Unsecured. $ - $ - $ 10,000
Note with LLC Members' personal relation dated August 1, 1996
with 10% interest. Due July 30, 1997. Unsecured. - - 5,000
Loan with individual, no stated interest rate or due date, secured by
personal guarantee by officer, director and LLC member. - - 15,000
Loan with a corporate officer and LLC member, with interest of 8%,
Unsecured. - - 13,090
Note with an individual on August 1, 1996 with 20% interest. Due March 1997,
Unsecured. - - 20,000
Revolving line of credit with an affiliated company, with 12% interest on
month end balance. Unsecured. 32,685 - 1,236
Note with an employee dated November 28, 1997 with interest at 25%,
and no due date stated. Unsecured. - 20,000 -
Note with an employee dated November 20, 1997, no interest rate or due
date stated. Unsecured. 200 15,101 -
Note with an employee dated October 16, 1997 with no interest rate or
due date stated. Unsecured. - 5,655 -
Note with an employee dated December 31, 1997, no interest rate or due
date stated. Unsecured. - 19,000 -
Note with LLC Member's personal relation dated November 3, 1997 with
10% interest, no due date stated. Unsecured. - 5,000 -
Note with LLC Member's personal relation dated November 20, 1997,
with 10% interest, no due date stated. Unsecured. - 10,000 -
Short-term line of credit with an employee's parents, with 10 1/2% interest,
due December 30, 1998. Unsecured. 50,889 36,683 -
Short-term note with employee and employee's parents, dated May 21, 1997.
with 22% interest. Per agreement, interest is reinvested monthly. Balloon
payment of principal and interest due at end of agreement. - 17,132 -
-------- --------- --------
$ 83,774 $ 128,571 $ 64,326
======== ========= ========
</TABLE>
61
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION COPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
May 31, Dec. 31, Dec. 31,
1998 1997 1996
-------------- --------------- ------------
<S> <C> <C> <C>
Notewith a Trust dated June 1, 1997 ,18% interest. Interest only payments of
$900 per month for 36 months. Balloon payment of $60,000 due June 1, 2000.
Secured by $60,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down, cancelled,
renegotiated, or written off, since the loan inception. $ 60,000 $ 60,000 $ -
Note with a Trust dated July 28, 1997, 18% interest. Interest only payments of
$5,625 per month for 24 months. Balloon payment of $375,000, due August 1,
1999. Secured by $375,000 in Accounts Receivable.
Accounts receivable which originally secured this loan may have been paid
off, paid down, cancelled, renegotiated, or written off since the loan
inception. 375,000 375,000 -
Note with a finance group dated December 24, 1997, 30% interest. Interest only
payments of $1,250 per month for 24 months. Balloon payment of $50,000 due
December 24, 1999. Secured by personal guarantee of
majority owner and LLC members. 50,000 50,000 -
Note with a finance group dated December 22, 1997, 30% interest. Interest
only payments of $1,250 per month for 24 months. Balloon payment of
$50,000 due December 22, 1999. Secured by personal guarantee of
majority owner and LLC members. 50,000 50,000 -
Note with a Trust, dated February 1, 1997, 24% interest. Interest only payments
of $2,000 per month for 36 months. Balloon payment of $100,000 due
February 1, 2000. Secured by $100,000 in Accounts Receivable.
Accounts receivable which originally secured this loan may have been paid off,
paid down, cancelled, renegotiated, or written off since the loan inception. 100,000 100,000 -
Note with a Trust, dated March 1, 1997, 24% interest. Interest only payments of
$2,000 per month for 36 months. Balloon payment of $100,000 due March 1,
2000. Secured by $100,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off,
paid down, cancelled, renegotiated, or written off since the loan inception. 100,000 100,000 -
Note with a Trust, dated March 1, 1997, 24% interest. Interest only payments of
$2,000 per month for 36 months. Balloon payment of $100,000 due April 1,
2000. Secured by $100,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off,
paid down, cancelled, renegotiated, or written off since the loan inception. 100,000 100,000 -
</TABLE>
62
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION COPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - LONG-TERM DEBT - CONTINUED
<TABLE>
<CAPTION>
May 31, Dec. 31, Dec. 31,
1998 1997 1996
------------ ---------- ----------
<S> <C> <C> <C>
Note with a Trust, dated April 10, 1997, 30% interest. Interest only payments of
$2,500 per month for 36 months. Balloon payment of $100,000 due May 1,
2000. Secured by $100,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off,
paid down, cancelled, renegotiated, or written off since the loan inception. 100,000 100,000 -
Note with a Trust, dated July 15, 1997, 18% interest. Interest only payment of
$975 per month for 36 months. Balloon payment of $65,000 due July 15, 2000.
Secured by $65,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down,
renegotiated, or written off since the loan inception. 65,000 65,000 -
Note with a Trust, dated August 15, 1997, 18% interest. Interest only payments
of $1,350 per month for 36 months. Balloon payment of $90,000 due August
15, 2000. Secured by $90,000 in Accounts Receivable. Accounts receivable
which originally secured this loan may have been paid off, paid down,
renegotiated, or written off since the loan inception. 90,000 90,000 -
Note with Trust, dated September 25, 1997, 18% interest. Interest only payments
of $2,625 per month for 24 months. Balloon payment of $175,000 due
September 25, 1999. Secured by $175,000 in Accounts Receivable. Accounts
receivable which originally secured this loan may have
been paid off, paid down, renegotiated, or written off since the loan inception. 175,000 175,000 -
Note with Trust, dated October 21, 1997, 18% interest. Interest only payments of
$2,475 per month for 24 months. Balloon payment of $165,000 due October 21,
1999. Secured by $165,000 in Accounts Receivable. Accounts receivable which
originally secured this loan may have been paid off, paid down,
renegotiated, or written off since the loan inception. 165,000 165,000 -
Note with an individual, dated February 26, 1997, 18% interest. Monthly
principal and interest payments of $361.52 per month for 36 months with a
maturity dateof February 26, 2000. Secured by $20,000 in Accounts Receivable and by
personal guarantees of majority owners and members. Accounts receivable
which originally secured this loan may have been paid off, paid down,
renegotiated, or written off since the loan inception. 6,471 7,736 -
</TABLE>
63
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION COPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - LONG-TERM DEBT - CONTINUED
<TABLE>
<CAPTION>
May 31, Dec. 31, Dec. 31,
1998 1997 1996
----------- ---------- ---------
<S> <C> <C> <C>
Note with a Trust dated July 21, 1997, 24% interest. Interest only payments of
$720 per month for 24 months. Balloon payment of $36,000 due August 1,
1999. Secured by $36,000 in Accounts Receivable. Accounts receivable which
secured this loan may have been paid off, paid down, renegotiated, or
written
off since the loan inception. 31,000 36,000 -
Note with a finance group, dated February 13, 1998, 30% interest. Interest only
payments of $1,250 per month for 24 months. Balloon payment of $50,000 due
February 13, 2000. Secured by personal guarantees of majority owners'
and LLC members. 50,000 - -
Note with a finance group , dated February 5, 1998, 30% interest. Interest only
payments of $2,500 per month for 24 months. Balloon payment of $100,000
due February 5, 2000. Secured by personal guarantees of owners and
LLC members. 100,000 - -
Note with a finance group, dated March 23, 1998, 30% interest. Interest only
payments of $3,750 per month for 24 months. Balloon payment of $150,000
due March 23, 2000. Secured by personal guarantees of majority
owners and LLC members. 150,000 - -
Note with a finance group, dated April 17, 1998, 30% interest. Interest only
payments of $5,250 per month for 24 months. Balloon payment of $210,000 due
April 17, 2000. Secured by personal guarantees of majority owners and LLC
members. 210,000 - -
Note with a finance group, dated August 15, 1997. No stated interest rate. Monthly
princpal and interest payments of $999 per month for 60 months. Secured by
various furniture and computer equipment. - 30,012 -
Note with a finance group, dated October 1, 1997. No stated interest rate. Monthly
principal and interest payments of $1,987 per month for 60 months. Secured by
various computer equipment. - 77,979 -
Note with a finance group, dated May 8, 1998. 18% interest. Monthly principal and
interest payments of $667 per month for 72 months. Secured by computer
software. 28,333 - -
Note with a finance group, dated May 26, 1998. 18% interest. Monthly principal and
interest payments of $690 per month for 72 months. Secured by artwork. 29,310 - -
</TABLE>
64
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION COPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - LONG-TERM DEBT - CONTINUED
<TABLE>
<CAPTION>
May 31, Dec. 31, Dec. 31,
1998 1997 1996
------------ ---------- ---------
<S> <C> <C> <C>
Note witha finance group dated May 1, 1998. 18% interest. Monthly principal and
interest payments of $6,662 per month ($948 of which is applied to capital
leases payable) for 72 months. Secured by various furniture, computer
equipment, software and artwork. 255,136 - -
-------- -------- --------
TOTAL LONG-TERM DEBT 2,290,250 1,581,727 -
LESS CURRENT PORTION (44,211) (18,307) -
-------- -------- --------
LONG-TERM DEBT - NON-CURRENT PORTION $ 2,246,039 $ 1,563,420 $ -
============= ============= ========
</TABLE>
Following are maturities of long-term debt for each of the five years
ending May 31,
Amount
1999 $ 44,211
2000 $ 1,856,843
2001 $ 200,410
2002 $ 54,526
2003 $ 65,479
65
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 - LONG-TERM DEBT WITH RELATED PARTIES
Pursuant to a private offering, the Company sold 375 units to related
parties. Each unit consisted of a promissory note and 400 shares of the
Company's Class A common stock. The promissory note has an interest of
16% and matures 1 year from the date of issuance. The holder has an
option to extend the maturity date for an additional year. If the
option is exercised, the Company is obligated to pay the holder
interest of 18% for the two-year period. As of May 31, 1998, the
Company's obligations are as follow:
Promissory note issued in conjunction with offering $ 375,000
Less current portion (305,000)
---------
Long-term debt to related parties $ 70,000
=========
NOTE 19 - ASSETS USED AS COLLATERAL
At May 31, 1998 and December 31, 1997 and 1996 $166,382, $68,375 and $0
respectively of fixed assets not held under capital leases were
collateral for debt. At May 31, 1998 and December 31, 1997 $248,229,
$377,275 respectively of contracts receivable were not used as
collateral for debt. The remainder were used as collateral for debt. At
December 31, 1996 $0 of contracts receivable were used as collateral
for debt.
NOTE 20 - SUBSEQUENT EVENTS
The Company has finished the build-out of the leased space on the
fourth floor at its Salt Lake City office. The Company has signed a 5
year lease for office space in Bellevue, Washington for $12,415 per
month and opened its Seattle Office. The Company has released a new
job-search product, now selling for $2,995 to individuals in Utah and
Washington. The Company has released a new outplacement product, now
selling to corporations in Salt Lake City, Utah.
The Company has incurred $1,128,000 of additional short-term debt with
interest ranging from 24% to 36%. The debt is guaranteed by two
officers, who are also directors and shareholders. $472,000 of this
amount is also secured by the Company's contracts receivable, including
$200,000 in specific contracts receivable which must be periodically
reviewed for any non-performing, paid off or paid down contracts and
replaced by other contracts sufficient to maintain the $200,000
required balance.
The Company has incurred $70,000 of additional long-term debt with
interest of 18%. The debt is secured by furniture and fixtures. The
Company has signed $35,041 in new capital leases with terms of 24 to 36
month. The Company has received $140,000 for the issuance of two
convertible bonds with terms identical to those outlined in note 13.
The Company purchased 800,000 shares of Class A common stock from an
individual who is a former employee and founder at the founder's price
of $80 that he originally paid for those shares. In conjunction with
this purchase the Company has granted him an option to acquire up to
800,000 Company shares of Class A Common Stock as follows:
During 1998, The option may be exercised to acquire shares from the
Company at a discount of 20% from the market trading price, if any.
66
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 - SUBSEQUENT EVENTS - CONTINUED
During 1999, The option may be exercised to acquire shares from the
Company at a discount of 15% from the market trading price, if any.
The Company is in the process of providing 349,500 shares of Class A
common stock as a bonus and founders stock to employees and related
parties. The shares are coming out of the 800,000 shares described
above leaving a balance of 450,500 shares held by the Corporation.
Existing shareholders are contributing up to 1,545,900 shares of their
Class A common stock to the Company. These shares along with the
450,500 shares mentioned above will be sold by the Company in its
initial public offering.
NOTE 21 - STOCK TRANSACTIONS
The company has issued 375,940 shares of its Class A common stock in a
private placement in exchange for $500,000 of existing corporate debt
and cash.
The Chief Financial Officer, has been issued 84,000 shares of Class A
common stock and has been granted an option to acquire 100,000 shares
at $4 per share vesting at the rate of 25,000 per year for four years.
NOTE 22 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The book value of the Company's financial instruments approximates fair
value. The estimated fair values of financial instruments have been
determined using appropriate market information and valuation
methodologies.
67
<PAGE>
Subscription Agreement
Please issue shares and/or bonds in the amount(s) and name(s) shown below. My
signature acknowledges that I have received and had an opportunity to read the
prospectus by which the shares are offered, that I am purchasing for in
vestment, and that the amount of my investment is not more than 10% of my net
worth.
Date: ____________________________ Signature: _______________________
Enclosed please find payment for
$_______________for shares at $4 per share (minimum investment, $1,000), and/or
$_______________ in bonds (sold in increments of $1,000).
Please register the shares and/or bonds in the following name(s) and amount(s):
As (check one):
__ Individual
__ Joint Tenants
__ Trust
__ Tenants in Common
__ Corporation
__ Other
For each person who will be a registered share or bond holder, we require the
following information:
Name (printed):
Mailing Address:
City, State, and Zip Code:
Telephone Number, including area code:
Social Security or Taxpayer ID Number:
Please attach any special mailing instructions other than shown above. No
subscription is effective until we accept it. We will mail you a signed copy of
this agreement for your records.
Subscription accepted on the ___ day of
___________, 199__ By The Murdock Group
Career Satisfaction Corporation
-------------------------------------------
KC Holmes, Chief Executive Officer
68
<PAGE>
(Back Cover)
Until _____, 1999 (90 days after the date of this prospectus), all dealers
effecting transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
obliga tion of dealers to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or sub scriptions.
69
<PAGE>
Part II. Information Not Required In Prospectus
Item 24. indemnification of directors and officers.
The registrant's Bylaws provide that the registrant shall indemnify any officer,
director or former officer or director, to the full extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act,
indemnification may be permitted to direc tors, officers or persons controlling
the registrant pursuant to the foregoing section, the registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as ex pressed in the Securities Act and
is therefore unenforceable.
Item 25. Other expenses of issuance and distribution.
Expenses of the registrant in connection with the issuance and distribution of
the securities being registered are esti mated as follows, assuming all offered
securities are sold:
Item Cost
SEC filing fee $ 3,553
Blue sky fees and expenses 17,000
Accountant's fees and expenses 30,000
Transfer agent's fees 1,000
Printing & mailing expenses 10,000
Nasdaq SmallCap listing fee 7,000
Marketing expenses 20,000
Miscellaneous 11,447
------
Total $100,000
The registrant will bear all expenses shown above.
70
<PAGE>
Item 26. Recent sales of unregistered securities.
The following information is given for all securities that the registrant sold
within the past three years without regis tering the securities under the
Securities Act. All shares referenced are Class A Common Voting Shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shareholder Issuance Number of Registration Exemption Claimed
Date Shares
Envision Career 11/5/97 280,000 These shares were issued to Envision as a founder of the registrant at the time of
Services, L.L.C. incorporation, in a transaction exempt from registration under Section 4(2) of the
Securities Act of 1933 (the "Act"). Envision sold all its membership interests to
registrant, and dissolved, on May 31, 1998.It distributed its shares (in amounts adjusted
to reflect prior sales to the registrant's treasury) to KC Holmes - registrant's CEO,
Heather Stone - registrant's president, Peanut Holdings - a non- affiliated trust, and
Minimum Holdings, a non-affiliated trust. No underwriter was involved in this transaction
and no sales commissions were paid.
Marty Collins 11/5/97 800,000 These shares were issued to Mr. Collins as a founder of the registrant at the time of
incorporation, in a transaction exempt from registration under Section 4(2) of the Act.
No underwriter was involved in this transaction and no sales commissions were paid.
Stanford Smith 11/5/97 800,000 These shares were issued to Mr. Smith as a founder of the registrant at the time of
incorporation, in a transaction exempt from registration under Section 4(2) of the Act.
No underwriter was involved in this transaction and no sales commissions were paid.
Rachel Peterson 1/6/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Daryl Guiver 1/7/98 4,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
David Cannon 1/7/98 8,400 These shares were issued to the named employee of registrant pursuant to a transaction
and John F. exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
Cannon transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
</TABLE>
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Dick Flack 1/7/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Dominic Ingo 1/7/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Dominic Militello 1/7/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Paul Benincosa 1/7/98 24,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Steve Richter 1/7/98 22,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Chris Leonard 1/8/98 2,800 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
</TABLE>
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Bev-Anne Frost 1/12/98 6,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Cameron 1/12/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
Jaccard exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Cameron Lewis 1/12/98 8,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Daren Gates 1/12/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Dave Atkinson 1/12/98 2,400 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Marty Lloyd 1/12/98 8,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
</TABLE>
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Mike Burnett 1/12/98 2,800 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Randy Burnham 1/12/98 13,200 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Rhett Kasparian 1/12/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Scott Holmes 1/12/98 2,000 These shares were issued to the named officer of a limited liability company affiliated
with registrant in a transaction exempt from registration under the Act pursuant to
Regulation D, Rule 506. In this transaction, the officer loaned money to the registrant
for 1 year at 16% interest, and received, in addition to a promissory note, 400 shares
for each $1,000 loaned. This officer is a brother of the registrant's CEO; he received a
Disclosure Memorandum dated January 2, 1998, which contained audited financial
statements. A filing with the SEC was made on Form D. No underwriter was involved in this
transaction and no sales commissions were paid.
Steve Anderson 1/12/98 2,000 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
Wade Hyatt 1/12/98 4,400 These shares were issued to the named employee of registrant pursuant to a transaction
exempt from registration under the Act under the terms of Regulation D, Rule 506. In this
transaction, the employee loaned money to the registrant for 1 year at 16% interest, and
received, in addition to a promissory note, 400 shares for each $1,000 loaned. The
employee received a Disclosure Memorandum dated January 2, 1998, which contained audited
financial statements. A filing with the SEC was made on Form D. No underwriter was
involved in this transaction and no sales commissions were paid.
</TABLE>
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Serenity Trust 4/3/98 12,500 These shares were issued to a trust as inducement to make a $100,000 loan made to the
registrant. The trustee was a sophisticated businessman who was given the opportunity to
meet with all the registrants officers and examine all books and records, including
audited financial statements. The registrant believes this is a transaction exempt from
registration under Section 4(2) of the Act. No underwriter was involved in this
transaction and no sales commissions were paid.
Dogbreath Trust 4/3/98 12,500 These shares were issued to a trust as inducement to make a $100,000 loan made to the
registrant. The trustee was a sophisticated businessman who was given the opportunity to
meet with all the registrants officers and examine all books and records, including
audited financial statements. The registrant believes this is a transaction exempt from
registration under Section 4(2) of the Act. No underwriter was involved in this
transaction and no sales commissions were paid.
Lance Heaton 8/31/98 300,000 These shares were issued to an officer of registrant for consideration of 1/10 mill per
share. He is a sophisticated businessman who was familiar with all books and records,
including audited financial statements, and is an employee. The registrant believes this
is a transaction exempt from registration under Section 4(2) of the Act. No underwriter
was involved in this transaction and no sales commissions were paid.
Wayne Ross 9/21/98 375,940 These shares were issued pursuant to a transaction exempt from registration under the Act
under the terms of Regulation D, Rule 506. In this transaction, an accredited investor
paid $1.33 per share. He received a Disclosure Memorandum dated September 21, 1998, which
contained audited financial statements. No underwriter was involved in this transaction
and no sales commissions were paid.
Brad Stewart 9/23/98 84,000 These shares were issued to an officer of registrant for no charge at the time he was
hired as CFO. He is a sophisticated businessman who was familiar with all books and
records, including audited financial statements. The registrant believes this is a
transaction exempt from registration under Section 4(2) of the Act. No underwriter was
involved in this transaction and no sales commissions were paid.
</TABLE>
Item 27. Exhibits
The exhibits listed below are filed as part of this Registration Statement
pursuant to Item 601 of Regulation SB.
Exhibit No. Description
3.1 Articles of Incorporation dated November 5, 1997
3.2 Bylaws dated November 5, 1997
4.1 Stock certificate
4.2 Bond certificate
5 Opinion of Stanford Smith regarding legality of shares and
bonds
10.1 Purchase of The Murdock Group by Envision Career Services,
L.L.C. dated July 26, 1996
10.2 Exchange Agreement between The Murdock Group and Envision
dated May 31, 1998
75
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23.1 Consent of David Thomson, C.P.A.
23.2 Consent of Stanford Smith, legal counsel
99.1 Subscription Agreement (appears in prospectus)
99.2 Form of Convertible Bond dated April 29, 1998
Item 28. Undertakings.
(a) The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(d) Provide to broker-dealers participating in this offering certificates in
such denominations and registered in such names as required by such participants
to permit prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that claims for indemnification
against such liability (other than the payment by the company of the expenses
incurred or paid by a Director, Officer or controlling person of the company in
the successful defense of any such action, suit or proceeding) is asserted by
such Director, Officer or controlling person in connection with the securities
being registered, the company, unless in the opinion of its counsel the matter
has been settled by controlling precedent, will submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1993 Act and will be governed by the final
adjudication of such issue.
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Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the Salt Lake City,
Utah.
The Murdock Group Career Satisfaction Corporation September 29, 1998
/s/_______________________________________________
KC Holmes, Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated.
/s/_____________________________________________ September 29, 1998
KC Holmes, Director, Chief Executive Officer
/s/_____________________________________________ September 25, 1998
Heather J. Stone, Director, Chairman, President,
Secretary, Principal Financial Officer
77
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Index of Exhibits
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Description Page No.
3.1 Articles of Incorporation dated November 5, 1997 79
3.2 Bylaws dated November 5, 1997 81
4.1 Stock certificate 91
4.2 Bond certificate 92
5 Opinion of Stanford Smith regarding legality of shares and bonds 93
10.1 Purchase of The Murdock Group by Envision Career Services, LLC dated July 26, 1996. 94
10.2 Exchange Agreement between The Murdock Group and Envision dated May 31, 1998. 100
23.1 Consent of David Thomson, C.P.A., independent auditor 102
23.2 Consent of Stanford Smith, legal counsel 103
99.1 Subscription Agreement (appears in prospectus) 104
99.2 Form of Convertible Bond dated April 29, 1998 105
</TABLE>
78
Exhibit 3.1
Articles of Incorporation of
The Murdock Group Career Satisfaction Corporation
We, the undersigned natural persons of the age of twenty-one years or more,
being the Directors and Shareholders of a corporation under the Utah Revised
Business Corporation Act, Chapter 10 of Title 16 of the Utah Code of 1953, as
amended, adopt the following Articles of Incorporation for such corporation:
Article I. Name
The name of this corporation is Murdock Group Career Satisfaction Corporation.
Article 2. Duration
The period of its duration is perpetual.
Article 3. Purposes
A. This corporation is organized for any and all lawful purposes for which
corporations may be organized under this Act, but is primarily organized to
engage in career-related businesses.
B. The corporation shall have and exercise all powers necessary or convenient
for the carrying out of any or all of the purposes for which it is organized.
Article 4. Stock
A. The aggregate number of shares which the corporation shall be authorized to
issue is 100,000,000 shares of "Class A Common Voting Shares" with no par value,
and 100,000,000 shares of "Class B Common Non-Voting Shares" with no par value.
Classes A and B shall have the same rights and preferences, except that Class B
shares shall have no voting rights.
B. Fully paid stock of this corporation shall not be liable to any call and
shall be nonassessable, and shall not be subject to any preemptive rights.
Article 5. Registered Agent
The name of the registered agent and the address of the registered office of the
corporation are as follows: K.C. Holmes, 5295 South 300 West, 3rd Floor, Salt
Lake City, Utah 84107.
/s/Mr. K.C. Holmes
-------------------
Mr. K.C. Holmes
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Article 6. Directors
The number of directors constituting the Board of Directors of this corporation
shall be not less than two (2) nor more than seven (7), as determined by vote of
the board. The names and addresses of the members of the initial Board of
Directors, who are to serve until their successors are elected and qualify, are
as follows:
K.C. Holmes, 5295 South 300 West, 3rd Floor, Salt Lake City, Utah, 84107.
Heather Stone, 5295 South 300 West, 3rd Floor, Salt Lake City, Utah 84107.
Article 7. Incorporation
The incorporator is K.C. Holmes, 5295 South 300 West, 3rd Floor, Salt Lake City,
Utah 84107, who has signed these Articles of Incorporation under penalty of
perjury.
Dated this 5th day of November, 1997.
/s/Mr. KC Holmes.
-----------------
Mr. K.C. Holmes
80
Exhibit 3.2 Bylaws
Bylaws of Murdock Group Career Satisfaction Corporation
Article I. Office
The Board of Directors shall designate and the Corporation shall maintain a
principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation may also have offices in such other places
as the Board may from time to time designate. The location of the initial
principal office of the Corporation shall be designated by resolution.
Article II. Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at such
place within or without the State of Utah as shall be set forth in compliance
with these Bylaws. The meeting shall be held on the third Tuesday of February of
each year. If such day is a legal holiday, the meeting shall be on the next
business day. This meeting shall be for the election of Directors and for the
transaction of such other business as may properly come before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by statute, may be
called by the President upon written request of the holders of 50% or more of
the outstanding shares entitled to vote at such special meeting. Written notice
of such meeting stating the place, the date and hour of the meeting, the purpose
or purposes for which it is called, and the name of the person by whom or at
whose direction the meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day, and hour of the
meeting, and in the case of a special meeting, the purpose or purposes for which
the meeting is called, which shall be delivered not less than ten or more than
fifty days before the date of the meeting, either personally or by mail to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the books of the
Corporation, with postage thereon prepaid. Attendance at the meeting shall
constitute a waiver of notice thereof.
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4. Place of Meeting
The Board of Directors may designate any place, either within or without the
State of Utah, as the place of meeting for any annual meeting or for any special
meeting called by the Board of Directors. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Utah, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal office of the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more than fifty days
prior to any meeting as the record date for the purpose of determining
shareholders entitled to notice of and to vote at such meetings of the
shareholders. The transfer books may be closed by the Board of Directors for a
stated period not to exceed fifty days for the purpose of determining
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At a meeting resumed after any such
adjournment at which a quorum shall be present or represented, any business may
be transacted which might have been transacted at the meeting as originally
noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting, may vote at
such meeting in person or by proxy. Except as may otherwise be provided in the
Articles of Incorporation, every shareholder shall be entitled to one vote for
each share standing in his name on the record of shareholders. Except as herein
or in the Articles of Incorporation otherwise provided, all corporate action
shall be determined by a majority of the votes cast at a meeting of shareholders
by the holders of shares entitled to vote thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person or by proxy
executed in writing by the shareholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the Secretary of the Corporation before or
at the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by a majority of the shareholders entitled to vote with respect
to the subject matter thereof.
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Article III. Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by its Board of
Directors. The Board of Directors may adopt such rules and regulations for the
conduct of their meetings and the management of the Corporation as they
appropriate under the circumstances. The Board shall have authority to authorize
changes in the Corporation's capital structure.
2. Number, Tenure and Qualification.
The number of Directors of the Corporation shall be a number between one and
nine, as the Directors may by resolution determine from time to time. Each of
the Directors shall hold office until the next annual meeting of shareholders
and until his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without other notice
than by this Bylaw, immediately following after and at the same place as the
annual meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order of the
Chairman of the Board or the President. The Secretary shall give notice of the
time, place and purpose or purposes of each special meeting by mailing the same
at least two days before the meeting or by telephone or telegraphing the same at
least one day before the meeting to each Director.
5. Quorum
A majority of the members of the Board of Directors shall constitute a quorum
for the transaction of business, but less than a quorum may adjourn any meeting
from time to time until a quorum shall be present, whereupon the meeting may be
held, as adjourned, without further notice. At any meeting at which every
Director shall be present, even though without any formal notice, any business
may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall have one vote.
The act of a majority of Directors present at a meeting shall be the act of the
full Board of Directors, provided that a quorum is present.
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7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in the case of
death, resignation, or removal of any Director, or if the authorized number of
Directors be increased, or if the shareholders fail at any meeting of the
shareholders at which any Director is to be elected, to elect the full
authorized number to be elected at that meeting.
8. Removals
Directors may be removed at any time by a vote of the shareholders holding a
majority of the shares outstanding and entitled to vote. Such vacancy shall be
filled by the Directors then in office, though less than a quorum, to hold
office until the next annual meeting or until his successor is duly elected and
qualified, except that any directorship to be filled by election by the
shareholders at the meeting at which the Director is removed. No reduction of
the authorized number of Directors shall have the effect of removing any
Director prior to the expiration of his term of office.
9. Resignation
A Director may resign at any time by delivering written notification thereof to
the President or Secretary of the Corporation. Resignation shall become
effective upon its acceptance by the Board of Directors; provided, however, that
if the Board of Directors has not acted thereon within ten days from the date of
its delivery, the resignation shall upon the tenth day be deemed accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
11. Compensation
By resolution of the Board of Directors, the Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or a
stated salary as Director. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the Directors are
incapacitated or otherwise unable to attend the meetings and function as
Directors, the remaining members of the Board of Directors shall have all the
powers necessary to function as a complete Board, and for the purpose of doing
business and filling vacancies shall constitute a quorum, until such time as all
Directors can attend or vacancies can be filled pursuant to these Bylaws.
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13. Chairman
The Board of Directors may elect from its own number a Chairman of the Board,
who shall preside at all meetings of the Board of Directors, and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors. The Chairman may by appointment fill any vacancies on the Board of
Directors.
Article IV. Officers
1. Number
The Officers of the Corporation shall be a President, one or more Vice
Presidents, and a Secretary Treasurer, each of whom shall be elected by a
majority of the Board of Directors. Such other Officers and assistant Officers
as may be deemed necessary may be elected or appointed by the Board of
Directors. In its discretion, the Board of Directors may leave unfilled for any
such period as it may determine any office except those of President and
Secretary. Any two or more offices may be held by the same person. Officers may
or may not be Directors or shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders. If the election of
Officers shall not be held at such meeting, such election shall be held as soon
thereafter as convenient. Each Officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. Resignations
Any Officer may resign at any time by delivering a written resignation either to
the President or to the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an Officer or agent shall not of itself
create contract rights. Any such removal shall require a majority vote of the
Board of Directors, exclusive of the Officer in question if he is also a
Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal, disqualification
or otherwise, or if a new office shall be created, may be filled by the Board of
Directors for the unexpired portion of the term.
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6. President
The President shall be the chief executive and administrative Officer of the
Corporation. He shall preside at all meetings of the stockholders and, in the
absence of the Chairman of the Board, at meetings of the Board of Directors. He
shall exercise such duties as customarily pertain to the office of President and
shall have general and active supervision over the property, business, and
affairs of the Corporation and over its several Officers, agents, or employees
other than those appointed by the Board of Directors. He may sign, execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds and
other obligations, and shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by the Bylaws.
7. Vice President
The Vice President shall have such powers and perform such duties as may be
assigned to him by the Board of Directors or the President. In the absence or
disability of the President, the Vice President designated by the Board or the
President shall perform the duties and exercise the powers of the President. A
Vice President may sign and execute contracts and other obligations pertaining
to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the stockholders and of
the Board of Directors and, to the extent ordered by the Board of Directors or
the President, the minutes of meetings of all committees. He shall cause notice
to be given of meetings of stockholders, of the Board of Directors, and of any
committee appointed by the Board. He shall have custody of the corporate seal
and general charge of the records, documents and papers of the Corporation not
pertaining to the performance of the duties vested in other Officers, which
shall at all reasonable times be open to the examination of any Directors. He
may sign or execute contracts with the President or a Vice President thereunto
authorized in the name of the Corporation and affix the seal of the Corporation
thereto. He shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and disbursement of
funds of the Corporation. He shall endorse on behalf of the Corporation for
collection checks, notes and other obligations, and shall deposit the same to
the credit of the Corporation in such bank or banks or depositories as the Board
of Directors may designate. He may sign, with the President or such other
persons as may be designated for the purpose of the Board of Directors, all
bills of exchange or promissory notes of the Corporation. He shall enter or
cause to be entered regularly in the books of the Corporation full and accurate
account of all monies received and paid by him on account of the Corporation;
shall at all reasonable times exhibit his books and accounts to any Director of
the Corporation upon application at the office of the Corporation during
business hours; and, whenever required by the Board of Directors or the
President, shall render a statement of his accounts. He shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
the Bylaws.
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10. Other Officers
Other Officers shall perform such duties and shall have such powers as may be
assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the Corporation shall be
fixed from time to time by the Board of Directors, except that the Board of
Directors may delegate to any person or group of persons the power to fix the
salaries or other compensation of any subordinate Officers or agents. No Officer
shall be prevented from receiving any such salary or compensation by reason of
the fact that he is also a Director of the Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or agent of the
Corporation shall execute to the Corporation a bond in such sums and with such
surety or sureties as the Board of Directors may direct, conditioned upon the
faithful performance of his duties to the Corporation, including responsibility
for negligence and for the accounting for all property, monies or securities of
the Corporation which may come into his hands.
Article V. Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the Corporation, and such authority may be general or confined
to specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or advance
shall be issued in its name, and no property of the Corporation shall be
mortgaged, pledged, hypothecated or transferred as security for the payment of
any loan, advance, indebtedness or liability of the Corporation unless and
except as authorized by the Board of Directors. Any such authorization may be
general or confined to specific instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be deposited from time
to time to the credit of the Corporation in such banks, trust companies or other
depositories as the Board of Directors may select, or as may be selected by an
Officer or agent of the Corporation authorized to do so by the Board of
Directors.
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4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidences of
indebtedness of the Corporation shall be signed by such Officer or Officers or
such agent or agents of the Corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposits to the
credit of the Corporation in any of its duly authorized depositories shall be
made in such manner as the Board of Directors may from time to time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be evidenced by an
appropriate instrument which shall be signed by the President or Vice President
and by the Treasurer or by the Secretary, and sealed with the seal of the
Corporation. The seal may be facsimile, engraved or printed. Where such bond or
debenture is authenticated with the manual signature of an authorized Officer of
the Corporation or other trustee designated by the indenture of trust or other
agreement under which such security is issued, the signature of any of the
Corporation's Officers named thereon may be facsimile. In case any Officer who
signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an Officer of the Corporation for any reason before
the same has been delivered by the Corporation, such bond or debenture may
nevertheless be adopted by the Corporation and issued and delivered as though
the person who signed it or whose facsimile signature has been used thereon had
not ceased to be such Officer.
Article VI. Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by certificates prepared by
the Board of Directors and signed by the President. The signatures of such
Officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or one of its employees. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled except that in case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock transfer
books of the Corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to transfer, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation, and on surrender for cancellation
of the certificate for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes.
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3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or more transfer
agents and registrars for the transfer and registration of certificates of stock
of any class, and may require that stock certificates shall be countersigned and
registered by one or more of such transfer agents and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any certificate
theretofore issued by it alleged to have been lost or destroyed. The Board of
Directors may require the owner of such a certificate or his legal
representative to give the Corporation a bond in such sum and with such sureties
as the Board of Directors may direct to indemnify the Corporation as transfer
agents and registrars, if any, against claims that may be made on account of the
issuance of such new certificates. A new certificate may be issued without
requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such consideration as
shall be fixed from time to time by the Board of Directors. In the absence of
fraud, the determination of the Board of Directors as to the value of any
property or services received in full or partial payment of shares shall be
conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record of any share or
shares of stock as the holder thereof, in fact, and shall not be bound to
recognize any equitable or other claim to or on behalf of this Corporation to
any and all of the rights and powers incident to the ownership of such stock at
any such meeting, and shall have power and authority to execute and deliver
proxies and consents on behalf of this Corporation in connection with the
exercise by this Corporation of the rights and powers incident to the ownership
of such stock. The Board of Directors, from time to time, may confer like powers
upon any other person or persons.
Article VII. Indemnification
To the maximum extent permitted by the laws of the State of Utah, no Officer or
Director shall be personally liable for any obligations of the Corporation or
for any duties or obligations arising out of any acts or conduct of said Officer
or Director performed for or on behalf of the Corporation. The Corporation shall
and does hereby indemnify and hold harmless each person and his heirs and
administrators who shall serve at any time hereafter as a Director or Officer of
the Corporation from and against any and all claims, judgments and liabilities
to which such persons shall become subject by reason of his having heretofore or
hereafter been a Director or Officer of the Corporation, or by reason of any
action alleged to have heretofore or hereafter taken or omitted to have been
taken by him as such Director or Officer, and shall reimburse each such person
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability, including power to defend such persons from all
suits or claims as provided for under the provisions of the Utah Business
Corporation Act; provided, however, that no such persons shall be indemnified
against, or be reimbursed for, any expense incurred in connection with any claim
or liability arising out of his own negligence or willful misconduct. The rights
accruing to any person under the foregoing provisions of this section shall not
exclude any other right to which he may lawfully be entitled, nor shall anything
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herein contained restrict the right of the Corporation to indemnify or reimburse
such person in any proper case, even though not specifically herein provided
for. The Corporation, its Directors, Officers, employees and agents shall be
fully protected in taking any action or making any payment, or in refusing so to
do in reliance upon the advice of counsel.
Article VIII. Notice
Whenever any notice is required to be given to any shareholder or Director of
the Corporation under the provisions of the Articles of Incorporation, or under
the provisions of the Utah Business Corporation Act, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Attendance at any meeting shall constitute a waiver of notice of such
meetings, except where attendance is for the express purpose of objecting to the
holding of that meeting.
Article IX. Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws adopted by a
majority of the entire Board of Directors at any regular or special meeting. Any
Bylaw adopted by the Board may be repealed or changed by the action of the
shareholders.
Article X. Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
Article XI. Dividends
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the Corporation.
Article XII. Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall bear the
name of the Corporation and the year of incorporation per sample affixed hereto.
Date: November 5, 1997
/s/_________________________________
Secretary of the Corporation
90
Exhibit 4.1
Language on Stock Certificate - Front
[logo]
The Murdock Group Career Satisfaction Corporation; Number of Shares;
Incorporated under the laws of the State of Utah
This certifies that __________ is the record holder of _________fully paid and
nonassessable shares, no par value, of The Murdock Group Career Satisfaction
Corporation. These shares are transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. This certificate is not valid until
countersigned by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
--------------------------------
Heather J. Stone, President
--------------------------------
KC Holmes, Chief Executive Officer
Language on Stock Certificate - Rear
A full statement of the designations and any preferences, conversion, and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue, and the differences in the
relative rights and preferences between the shares of each series to the extent
they have been set and the authority of the Board of Directors to set the
relative rights and preferences of subsequent series, will be furnished by the
Corporation to any stockholder on request and without charge.
For Value Received, ________________hereby sell(s), assign(s) and transfer(s)
unto____________, (please insert social security or other identifying number of
assignee) the shares of capital stock represented by the within certificate an
irrevocably constitutes and appoints_____________________ attorney to transfer
the said shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated:
The signature to this assignment must correspond with the name as written upon
the face of the certificate in every particular, without alteration or
enlargement or any change whatever. Signature must be guaranteed.
Signature(s) Guaranteed by___________________, a bank or stockbroker.
91
Exhibit 4.2
Language of Bond Certificate
This certificate evidences the obligation of The Murdock Group Career
Satisfaction Corporation (the "Company"), to pay to the person or firm
identified below the amount of this bond at maturity.
Bond Holder
Amount $__________ (in increments of $1,000).
Bond Number
Issuance Date
Maturity Date Four years from the issuance date. All principal and
accrued interest will be paid to the holder
registered on the books of the Company within 15 days
of the maturity date.
Interest 15% compounded annually and payable at maturity.
Callable Any bond is callable by the Company at any time upon
30-days written notice to a bond holder. All principal
and accrued interest with respect to a called bond
must be paid within 15 days of the call date.
Security Payment of the principal and interest on the bonds
shall be secured solely by Com pany assets. No sinking
fund will be established for retirement of the bonds;
bond holders will be dependent upon the Company's
ability to generate sufficient income, or otherwise
obtain sufficient capital, to pay the principal and
interest of the bonds at the time of maturity.
Voting Rights There are no voting rights associated with the bonds;
bond holders are unsecured creditors, not owners, of
the Company.
Dividends No dividends shall be paid to Company shareholders
until all bond principal and interest have been fully
paid.
Liability No Company shareholder, officer, or director shall be
personally responsible for payment.
Trading Market There is no trading market for these bonds.
Transfer Application for transfer of the bonds should be
addressed to the Company at 5295 South Commerce Drive,
Suite 300, Salt Lake City, Utah 84107. Transfers will
be made without charge.
---------------------------------
Authorized Officer of the Company
92
Exhibit 5
Stanford Stoddard Smith
1893 Maple View Drive
Bountiful, Utah 84010
(801) 295-1444
September 28, 1998
Board of Directors
The Murdock Group Career Satisfaction Corporation
5295 South Commerce Drive, Suite 400
Salt Lake City, Utah 84107
Dear Directors:
You have requested my opinion as to the legality of the securities being
registered by The Murdock Group Career Satisfaction Corporation (the "Company")
under the Securities Act of 1933, as amended (the "Act"), by filing a
registration statement on Form SB-2, relating to the offering of up to 2,181,500
shares of its shares (the "shares") and $3,000,000 in corporate bonds (the
"Bonds") as described in the registration statement.
In connection with your request for my opinion, you have provided me and I have
reviewed the company's Articles of Incorporation, Bylaws, resolutions of the
Board of Directors of the company concerning the offering, the registration
statement and such other corporate documents as I have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, it is my opinion that, when the registration
statement shall have become effective under the Act, when all required
registrations with state securities regulators shall have become effective, and
when the Shares and Bonds shall have been duly issued and delivered to the
purchasers against payment of the consideration therefor, the Shares will, when
sold, be legally issued, fully paid and nonassessable, and the Bonds will
constitute binding obligations of the Company.
+
Kind regards,
/s/Stanford S. Smith
--------------------
Stanford S. Smith
93
Exhibit 10.1
Agreement of Sale and Purchase Of Assets
This Agreement of Sale and Purchase Of Assets ("Agreement") is entered into as
of the 26th day of July 1996, and becoming effective on the date hereafter
referred to as the Closing Date, by and between Denis R. Murdock, dba The
Murdock Group, a sole proprietorship located at 5295 South 300 West, Suite 475,
Murray, UT 84107 (801) 268- 3232 ("Seller"), and Envision Enterprises, L.L.C., a
Utah Limited Liability Company, ("Purchaser").
Whereas, Seller owns and operates a career-outplacement consulting business
located in the Salt Lake City area;
Whereas, Seller is the author and owner of all rights in a copyrighted work
currently entitled "The Job Seeker's Bible";
Whereas, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser the Seller's Assets connected with the Seller's business upon the
terms described in this and related Agreements;
Whereas, Purchaser desires to purchase the copyright to "The Job Seeker's Bible"
and all previous versions of the work (hereunder jointly referred to as the
"Work") together with exclusive rights to publish, promote, reproduce and
distribute the Work, and Seller desires to sell to Purchaser the copyright to
the Work together with exclusive rights to publish, promote, reproduce and
distribute the Work, upon the terms described in this and related Agreements.
Now, Therefore, in consideration of the mutual agreements set forth herein, the
parties agree as follows:
1. Sale and Purchase of Business
a. Assets. Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller all of Seller's interest in all the business assets, goodwill and rights
owned by Seller and used in the operation of Seller's business, including (i)
the right to use Seller's business name, (ii) the assets listed in the Bill of
Sale and Assignment attached as Exhibit "A", and (iii) all memberships,
proprietary information, licenses, service marks, service names, trade names,
and copyrights, including the copyright to the Work. Seller shall transfer the
assets free and clear of all liabilities and liens except as provided by this
Agreement.
b. Consulting. Seller shall provide consulting and training services to
Purchaser as requested by Purchaser at its offices, including but not limited to
marketing, advertising, career counseling, financial counseling, consulting
skills, and all other abilities, skills and strategies of Seller relating to its
business in order to facilitate the most effective and efficient transfer of
successful business operations and administration, upon the terms and conditions
described in the Consulting Services Agreement attached as Exhibit B.
c.Transfer of Copyright. Seller shall sell to Purchaser the copyright to the
Work with exclusive rights to publish, promote, reproduce and distribute the
Work, upon the terms and conditions described in the Marketing, Royalty and
Publishing Agreement attached as Exhibit "C".
2. Payment for Seller's Assets
As full payment for Seller's assets, Purchaser shall, at the Closing, pay to
Seller the sum of $35,000.00 for those assets listed in the Bill of Sale and
Assignment attached as Exhibit "A".
3. Payment for Seller's Consulting
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As full payment for Seller's consulting, Purchaser shall, on or before November
1,1996, pay to Seller the sum of $15,000.00 for consulting services provided to
Purchaser according to the terms and conditions described in the Consulting
Services Agreement attached as Exhibit "B". All payments may be made by
Purchaser to Seller by personal or certified check or money order, and shall be
mailed to Seller's address at 2397 East Boyes Street, Salt Lake City, UT 84117,
or such other address as may be provided by Seller to Purchaser.
4. Payment of Advanced Royalties
In consideration for the sale and purchase of the copyright to the Work with
exclusive rights to publish, promote, reproduce and distribute the Work,
Purchaser shall, on or before January 1,1997, pay to Seller the sum of
$26,500.00 in advanced royalties relating to the sale of the Work. On or before
April 1,1997, Purchaser shall pay to Seller the sum of $26,500.00 in additional
advanced royalties, according to the terms and conditions described in the
Marketing, Royalty and Publishing Agreement attached as Exhibit "C". All
payments may be made by Purchaser to Seller by personal or certified check or
money order and shall be mailed to Seller's address at 2397 East Boyes Street,
Salt Lake City, UT 84117, or such other address as may be provided in writing by
Seller to Purchaser.
5. Security Interes
All payment obligations of Purchaser to Seller shall be secured by a security
interest in all assets listed in the Bill of Sale and Assignment attached as
Exhibit "A", and Purchaser hereby consents to the filing and signing of a UCC-1
Financing Statement, attached as Exhibit "D", and Purchaser shall pay all
filing, transfer and documentary fees payable in connection with this filing.
6. Personal Guarantees
Full payment obligations of Purchaser to Seller shall be personally guaranteed
by Heather Stone and KC Holmes pursuant to the terms of the Personal Guarantee
attached as Exhibit "E".
7. Closing
The date that this Agreement becomes effective is the date that the Closing
actually takes place ("Closing Date"). The Closing Date shall be on or before
10:00 a.m. on the 1st day of August, 1996, at Seller's office. If either party
is entitled not to close on the scheduled date because a condition has not been
met, that party may postpone the Closing Date by giving at least 24 hours notice
to the other party, until the condition has been met, but in no event to a date
later than the 1st day of August, 1996.
8. Seller's
Obligations at Closing
a. Deliver to Purchaser:
signed by Seller;
(1) Agreement
of Sale and Purchase of Assets (this Agreement)
(2) Bill of Sale and Assignment
signed by Seller in the form attached as Exhibit "A" and attached Schedules "A",
"B" and "C":
(3) Consulting Services Agreement signed by Seller in the form
attached as Exhibit "B";
(4) Marketing, Royalty and Publishing Agreement signed by Seller in the form
attached as Exhibit "C".
(5) Any other instruments of assignment and transfer necessary to vest in
Purchaser good and marketable title to Seller's Assets;
(6) All contracts and records relating to Seller's Assets, business history and
operational statistics;
(7)All documents required by this
Agreement, including word processing or desktop publishing diskettes of the
Work.
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<PAGE>
b. Seller shall facilitate in a timely manner the transfer of its building lease
to Purchaser under the same terms and conditions, subject to the normal
qualifications required by the building owners and property leasing managers.
c. Seller shall facilitate in a timely manner the transfer of its professional
memberships, including the Greater Salt Lake Chamber of Commerce and the Society
of Human Resource Management (SHRM) to Purchaser.
9. Purchaser's Obligations at Closing.
a. Deliver to Seller:
(1)Agreement of Sale and Purchase of Assets (this Agreement) signed by
Purchaser;
(2)Bill of Sale and Assignment signed by Purchaser in the form attached as
Exhibit "A" and attached Schedules "A", "B" and "C";
(3) Consulting Services Agreement signed by Purchaser in the form
(4)Marketing, Royalty and Publishing Agreement signed by Purchaser in the form
attached as Exhibit "C"; Exhibit "D";
(5) UCC-1 Financing Statement signed by Purchaser attached as
(6) Personal Guarantee signed by Heather Stone and KC Holmes attached as Exhibit
"E".
(7). Deliver to Seller all documents required by this Agreement.
b. Purchaser shall cooperate in a timely manner in providing any and all
information necessary to pursue the terms and conditions of this Agreement,
including the transfer of all leases to Purchaser.
10. Representations and Warranties by Seller.
a. Organization. Standing and Qualification. Seller is an individual doing
business as a sole proprietorship under the business name "The Murdock Group."
Seller is not a corporation or a partnership. Seller is authorized to carry on
its business as now conducted and to own and operate its properties in the
places where such properties are now located; and Seller is authorized and
licensed to do business in the city of Murray. The performance of this Agreement
by Seller will not result in a default or breach of any other agreement to which
Seller is a party. Seller has the authority to enter into this Agreement.
b. Financial and Statistical Records. The copies of the financial and
statistical records given to Purchaser and prepared by Seller are complete and
correct, have been prepared from the records of Seller in accordance with
generally accepted accounting principles and fairly present the financial
condition of Seller as of their dates and the results of its operations for the
periods covered thereby.
c. Taxes and Other Costs. All taxes and assessments imposed by any taxing
authority, whether federal, state, local, or otherwise which are due or payable
by Seller, and all interest and penalties thereon, have been paid in full. All
tax returns required to be filed have been accurately prepared and filed. Seller
has not been delinquent in the payment of any tax, assessment or governmental
charge or deposit and has no tax claim outstanding or proposed against it, and
there is no basis for any such claim. Seller's federal income tax returns have
been filed with the IRS, and the state income tax returns have been filed with
the State of Utah, for all years through 1995. There is no current extension
with respect to the date on which any tax return of Seller is due, or any waiver
or agreement by Seller for the extension for the assessment of any tax.
d. Litigation. There is no claim, order, investigation or other proceeding,
against Seller, its properties, or business or the transactions contemplated by
this Agreement, and Seller knows of no basis for the same.
e. Compliance With Laws.
Seller has complied with all laws applicable to its business. The ownership and
use of Seller's Assets as well as the conduct of its business will not conflict
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with the rights of any other person or entity, and will not cause a default
under any agreement to which Seller is a party. Seller is not aware of any
proposed laws, condemnations or other proceedings which would affect its
business or Seller's Assets.
f. Title to Assets. Seller has good title to Seller's Assets. None of Seller's
Assets are subject to any lien, lease, license, or adverse claim, except the
current lease on the postage meter and postage scale. Seller's Assets are in
good operating condition and repair, are suitable for the purposes used, and are
adequate for all current operations of Seller.
g. Copyrights. Seller owns or possesses the licenses or other rights to use all
copyrights, trademarks, service marks, service names, trade names, patents,
trade secrets and other proprietary rights relating to the Work and which are
necessary to conduct Seller's business as it is presently operated. Seller
represents that Seller is not infringing upon any copyrights, trademarks,
service marks, service names, trade names, patents, licenses, trade secrets or
other proprietary rights owned by any other person relating to the Work and
Seller's business, and there is no claim or action by any such person pending,
or threatened, with respect thereto.
h. Disclosure. All of Seller's representations made in this Agreement and its
related documents are true and contain no untrue statements and do not omit
important facts.
11.Representations and Warranties by Purchaser.
Purchaser is a Limited Liability Company organized and in good standing under
the laws of Utah and has full authority to enter into this Agreement and to
carry on its business and to own and operate its properties. Purchaser agrees to
file within 30 days of Closing Date the UCC-1 Financing Statement. All other
actions required to be taken by Purchaser relating to the signing of this
Agreement shall have been taken at or prior to the Closing. The performance of
this Agreement by Purchaser will not result in a default of any Agreement to
which Purchaser is a party. Purchaser has the authority to enter into this
Agreement. There is no claim, order, investigation or other proceeding against
Purchaser relating to the transaction contemplated by this Agreement, and
Purchaser does not know or have any reason to be aware of any basis for the
same. Purchaser shall keep Seller reasonably informed of current home address
and telephone number for Heather Stone and KC Holmes.
12. Access to Information and Documents.
Upon Purchaser's request, Seller shall give Purchaser access to Seller's
properties, documents and records and shall furnish copies of documents
requested by Purchaser before Closing Date.
13. Release and Use of Name.
Seller hereby exclusively assigns to Purchaser its right, title, interest,
ownership and goodwill in or to the name or trade name "The Murdock Group." At
Purchaser's request Seller shall sign whatever additional documents may be
necessary to release and allow Purchaser to use the name "The Murdock Group."
a. Seller hereby agrees that it shall not employ or
use in any manner the name or trade name "The Murdock Group."
b. Seller shall not instruct or authorize others to use, in any manner, the name
or trade name "The Murdock Group."
c. The parties understand and agree that Seller shall be authorized to use the
name or trade name "The Murdock Group" solely for the limited purpose of
collecting outstanding accounts receivable owed to Seller prior to the Closing
date until all collections of these outstanding accounts receivable are complete
and final.
d. Purchaser agrees and acknowledges that Seller may use the name "Murdock" in
connection with goods and services outside the field of career planning and job
search assistance.
14. Seller Indemnification.
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Seller hereby indemnifies and agrees to hold Purchaser harmless from:
a. Any loss suffered by Purchaser because a representation was not true, a
warranty was breached or a duty was not performed by Seller contained in this
Agreement or a related document;
b. Any loss suffered by Purchaser in connection with any of Seller's liabilities
which are not assumed by Purchaser in accordance with paragraph la of this
Agreement.
c. Any liabilities or debts of Seller, which exist as of the Closing Date or
which arise after that date but which are based upon any transaction, state of
facts or other condition which occurred on or before the Closing Date; provided
however, that Seller shall not indemnify Purchaser from any liabilities or debts
of Seller that have been assumed by Purchaser, including but not limited to,
office space lease, postage equipment lease, professional memberships, telephone
and utility expenses, liability insurance premiums, and advertising contracts.
d. Any claims, judgments and expenses, including legal fees, incurred for any of
the foregoing or for attempting to avoid or oppose the same or for enforcing
this indemnity.
15. Purchaser Indemnification.
Purchaser hereby indemnifies and agrees to hold Seller harmless from:
a. Any loss suffered by Seller because a representation by Purchaser was not
true, a warranty was breached by Purchaser or a duty was not performed by
Purchaser contained in this Agreement or a related document;
b. Any liabilities or debts of Seller assumed by Purchaser under this Agreement
referred to in paragraph 14c; and
c. Any claims, judgments and expenses, including legal fees, incurred for any of
the foregoing or for attempting to avoid or oppose the same or for enforcing
this indemnity.
16. Notices.
Any notices described under this Agreement shall be in writing and shall be
deemed given when personally delivered or mailed by first class mail, addressed
to the parties at the addresses set forth above.
17. Legal and Other Costs.
In the event any party defaults ("Defaulting Party") in its obligations under
this Agreement and the other party ("Non-Defaulting Party") seeks to enforce its
rights against the Defaulting Party, then the Defaulting Party shall promptly
pay to the Non-Defaulting Party all expenses, including attorney's fees,
incurred in connection with such enforcement. Any payment owed to the
Non-Defaulting Party because of the Defaulting Party's default shall bear
interest at 2% per month from the time the payment should have been made until
the time it actually is paid.
18. Miscellaneous.
a. All covenants and agreements contained herein shall be binding upon and inure
to the benefit of each party, its successors and assigns, and each individual
party hereto and his/her heirs, personal representatives, successors and
assigns. This Agreement may not be assigned by either party hereto without the
prior written consent of the non- assigning party.
b. This writing contains the entire agreement and understanding of the parties
concerning the subject matter hereof, and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, that may have related to the subject matter hereof in any way.
c. This Agreement shall not be modified, amended, waived or terminated except by
written agreement signed by all the parties.
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d. Each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be held to be invalid, illegal or unenforceable in any respect, such
provision will be ineffective only to the extent of such invalidity, illegality
or unenforceability, without invalidating the remainder of this Agreement or any
provision hereof.
e. This Agreement and any amendments shall be construed both as to validity and
performance and enforced in accordance with the laws of the State of Utah.
f. Each party shall cooperate and take such further action as may be reasonably
requested by any other party to carry out the provisions and purposes of this
Agreement.
g. No waiver of any default is valid unless in writing and signed by the waiving
party, and no such waiver shall be deemed a waiver of any subsequent default.
h. The paragraph headings are for the purposes of convenience only and are not
intended to define or limit the contents of the paragraphs.
i. Any information revealed pursuant to this Agreement or previously in the
course of negotiations shall be held in confidence and solely for the purpose of
consummating this Agreement in allowing the parties to exercise prudent care. If
this Agreement is not consummated, no further use shall be made of such
information (except to the extent such information was already known prior to
this Agreement) and the parties may be held accountable for any unauthorized
use. If this Agreement is not consummated, the parties shall return all
documents received from any party in connection with this Agreement. If this
Agreement is consummated, neither party shall disclose any information
concerning the other party's business or the terms of this Agreement except (i)
as approved by the other party, (ii) as necessary for the conduct of the
Purchaser's or Seller's business, (iii) as required by law, or (iv) as is
ascertainable from public information.
j. In the event of any action at law or equity between the parties arising out
of this Agreement, the unsuccessful party covenants and agrees to pay to the
successful party all costs and expenses thereof, including reasonable attorney's
fees and court costs, regardless of whether suit is commenced.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first above written.
SELLER:
/s/Denis R. Murdock
-------------------
Denis R. Murdock, doing business under the name "The Murdock Group"
PURCHASER:
Envision Enterprises, L.L.C.
/s/Heather Stone
------------------
Heather Stone, Member
/s/KC Holmes
-----------------
KC Holmes, Member
99
Exhibit 10.2
Exchange Agreement
This Agreement is reached by and between KC Holmes, Heather Stone, Peanut
Holdings, a trust, and Minimum Holdings, a trust, who collectively constitute
all of the members (the "Members") of Envision Career Services, L.L.C., a Utah
limited liability company ("Envision"), Murdock Group Career Satisfaction
Corporation, a Utah corporation ("Murdock"), and Envision, in consideration of
the mutual promises exchanged herein.
Recitals
Whereas, Murdock is a Utah corporation in good standing which was organized on
November 6, 1997, with 100,000,000 shares of class A voting common stock
authorized (the "Shares");
Whereas, Mr. Holmes and Ms. Stone with the approval of all Members, entered a
Shareholders Agreement dated December 30, 1997, with Murdock and its
shareholders pursuant to which the parties agreed that Murdock would, during
1998, combine with Envision in exchange for Shares;
Whereas, the parties desire to accomplish this transaction by causing Murdock to
issue Shares directly to the Members in exchange for their membership interest
in Envision, thereby acquiring all ownership of Envision;
Whereas, the parties intend that immediately after this transaction, the Members
will own and control more than 80% of the outstanding (non-treasury) shares of
Murdock, and that the transaction will qualify as a tax-free exchange under
applicable sections of the United States Internal Revenue Code;
It Is Therefore Agreed
1. Exchange of Shares for Membership Interests. The Members hereby convey all
their membership interests in Envision to Murdock in exchange for Shares as set
forth in the following table:
Name Shares Received
KC Holmes 3,672,209
Heather Stone 3,672,209
Peanut Holdings 430,691
Minimum Holdings 430,691
Total 8,205,800
2. No Warranties. Each party to this Agreement has had the opportunity to
examine fully the book, records, and Financial Statements of the others, and is
relying solely upon the results of its own investigation. No party makes any
warranty respecting the value, if any, of Envision membership interests, Murdock
Shares, or Envision's or Murdock's assets and liabilities.
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3. Complete Agreement. This Agreement constitutes the entire understanding
between the Members concerning the subject matter hereof, and supersedes any
prior agreements. No amendment, change, or variance from this Agreement shall be
binding on any party unless mutually agreed in writing by all parties.
4. Governing Law and Legal Action. This Agreement shall be interpreted and
construed under the laws relating to the construction and interpretation of
contracts of the State of Utah. In the event suit is brought to enforce any
provision of this Agreement, the successful party shall recover all costs of
suit, including attorney's fees, from the other party.
In Witness Whereof, the Members have subscribed their names to this Agreement,
as of this 31st day of May, 1998.
Murdock Group Career Satisfaction Corporation
/s/KC Holmes
------------
By KC Holmes, CEO
Envision Career Service, L.L.C.
/s/KC Holmes
-----------------
by KC Holmes, Authorized Member
Members
/s/KC Holmes
----------------
KC Holmes
/s/Heather Stone
----------------
Heather Stone
/s/
----------------
Trustee, Peanut Holdings
/s/
----------------
Trustee, Minimum Holdings
101
Exhibit 23.1
[Letterhead]
David T. Thompson P.C. Certified Public Accountant
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANT
To the Board of Directors
The Murdock Group Career Satisfaction Corporation
I have issued my report dated September 16, 1998 (except as to the stock
transactions Note 21 which is as of September 24, 1998), accompanying the
financial statements of The Murdock Group Career Satisfaction Corporation
included in the Registration Statement Form SB-2 and the related prospectus.
I consent to the use of my report, as stated above in the Registration
Statement. I also consent to the use of my name in the statement with respect to
me as appearing under the heading "Experts" in the Registration Statement.
David T. Thomson P.C.
/s/David T. Thomson P.C.
- ------------------------
Salt Lake City, Utah
October 1, 1998
P.O.Box 571605 Murray, Utah 84157 (801) 966-9481
102
Exhibit 23.2
Stanford Stoddard Smith
1893 Maple View Drive
Bountiful, Utah 84010
(801) 295-1444
September 28, 1998
Board of Directors
The Murdock Group Career Satisfaction Corporation
5295 South Commerce Drive, Suite 400
Salt Lake City, Utah 84107
Dear Directors:
I hereby consent to the use of my name in the Company's registration statement.
Kind regards,
/s/Stanford S. Smith
--------------------
Stanford S. Smith
103
Exhibit 99.1
Subscription Agreement
Please issue shares and/or bonds in the amount(s) and name(s) shown below. My
signature acknowledges that I have received and had an opportunity to read the
prospectus by which the shares are offered, that I am purchasing for investment,
and that the amount of my investment is not more than 10% of my net worth.
Date: ____________________________ Signature: ______________________
Enclosed please find payment for
$_______________for shares at $4 per share (minimum investment, $1,000), and/or
$_______________in bonds (sold in increments of $1,000).
Please register the shares and/or bonds in the following name(s) and amount(s):
As (check one):
__ Individual
__ Joint Tenants
__ Trust
__ Tenants in Common
__ Corporation
__ Other
For each person who will be a registered share or bond holder, we require the
following information:
Name (printed):
Mailing Address:
City, State, and Zip Code:
Telephone Number, including area code:
Social Security or Taxpayer ID Number:
Please attach any special mailing instructions other than shown above. No
subscription is effective until we accept it. We will mail you a signed copy of
this agreement for your records.
Subscription accepted on the ___ day of
___________, 199__ By The Murdock Group
Career Satisfaction Corporation
-------------------------------------------
KC Holmes, Chief Executive Officer
104
Exhibit 99.2
Convertible Bond Certificate dated April 29, 1998
This certificate evidences the obligation of The Murdock Group Career
Satisfaction Corporation (the "Company"), to pay to the person or firm
identified below the amount of this bond at maturity on the terms set forth in
the Company's Disclosure Memorandum and summarized below:
Bond Holder
Amount $__________ (in increments of $1,000, with a minimum
investment of $3,000).
Issuance Date
Maturity Date Two years from the Issuance Date above.
Bond Number
Interest 30% compounded annually and payable at maturity.
Convertible At the election of the bondholder, bonds may be
converted to the Company's class A common shares (the
"Shares") as follows: (i) if and when a public
offering of Shares is approved by an appropriate
securities regulatory agency, bonds may be converted
to Shares at a discount of 20% from the offering
price, but only until such date, if any, that the
Shares are listed for trading on a public exchange
(the "Listing Date"); (ii) after the Listing Date, and
upon Company receipt of a Co prescribed by the
Company, bonds may be converted into Shares only as
follows: (a) during a 6-month period commencing on the
Listing Date, bonds may be converted to Shares at a
discount of 20% from the average Share trading price
during the 30-day period prior to Company receipt of
the Conversion Notice, and (b) during the period from
7 to 18 months after the Listing Date, bonds may be
converted to Shares at a discount of 10% from the
average Share trading price during the 30-day receipt
of the Conversion Notice.
Callable Any bond is callable by the Company at any time upon
30-days written notice (the "Exercise Period") to a
bond holder. During the Exercise Period such bond
holder may elect to convert bonds to Shares upon the
discount terms set forth above. If the Company does
not receive a Conversion Notice from such bond Holder
within the Exercise Period, the Company shall pay to
such holder all principal and accrued interest with
respect to such bonds within 30 days of the end of
the Exercise Period.
Payment of the principal and interest on the bonds shall be secured solely by
Company assets. No sinking fund will be established for retirement of the bonds;
bond holders will be dependent upon the Company's ability to generate sufficient
income, or otherwise obtain sufficient capital, to pay the principal and
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interest of the bonds at the time of maturity. There are no voting rights
associated with the bonds; bond holders are creditors, not owners, of the
Company. No dividends shall be paid to Company shareholders until all bond
principal and interest have been fully paid. Bond holders shall be registered
upon the books of the Company, and shall be deemed unsecured creditors, not
owners, of the Company. No Company Shareholder, officer, or director shall be
personally responsible for payment.
The bond represented by this certificate have not been registered under the
Securities Act of 1933 or the laws of any state. This bond may not be
transferred in the absence of an effective registration or other compliance
under state and federal securities laws or an opinion of counsel satisfactory to
the Company that the proposed transfer is permissible under applicable laws and
regulations. Transfer of this bond requires the consent of the Company, which it
may withhold for any reason.
______________________________________
Authorized Officer of the Company
