UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark one) [X] Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30,
1999
[ ] Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934
333-65319
(Commission file number)
THE MURDOCK GROUP CAREER SATISFACTION CORPORATION
(Name of small business issuer in its charter)
UTAH 87-0562244
(State or other jurisdiction of (IRS Employer Classifi-
incorporation or organization) cation Code Number)
736104
(Primary Standard
Industrial ID number)
5295 SOUTH COMMERCE DRIVE, SUITE 300, SALT LAKE CITY, UTAH 84107
(Address of principal executive offices)
(801) 268-3232
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days. Yes [X] No [ ]
As of October 1, 1999, the issuer had 16,424,553 outstanding shares of class A
common voting shares and -0- outstanding shares of class B common non-voting
shares.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
Table of Contents
Part I
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statement of Operations 5
Condensed Consolidated Statement of Cash Flow 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Part II
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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Part I.
Item 1. Financial Statements
<TABLE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
- ----------------------------------------------------------------------------------
ASSETS
<CAPTION>
September 30, December 31,
1999 1998
------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 405 $ 4,289
Current portion of contracts receivable 834,435 543,344
Deferred offering costs -- 153,659
Other current assets 653,433 110,933
------------ ------------
Total current assets 1,488,273 812,225
------------ ------------
PROPERTY AND EQUIPMENT:
Computer equipment 293,797 247,573
Equipment, furniture and fixtures 221,266 162,014
Leasehold improvements 75,861 75,506
Capital leases for property and equipment 410,814 362,208
------------ ------------
1,001,738 847,301
Less: accumulated depreciation and amortization (298,072) (161,545)
------------ ------------
Net property, plant and equipment 703,666 685,756
------------ ------------
OTHER ASSETS:
Contracts receivable net of current portion 556,290 170,958
Deposits 352,639 311,378
Other assets 8,787,458 79,637
------------ ------------
Total other assets 9,696,387 561,973
------------ ------------
TOTAL ASSETS $ 11,888,326 $ 2,059,954
============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements
Are an integral part of these condensed consolidated balance sheets.
3
<PAGE>
<TABLE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
September 30, December 31,
1999 1998
------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 535,249 $ 349,168
Accrued liabilities 531,469 1,218,451
Short-term Debt 9,851,240 3,466,700
Current portion of long-term debt 1,356,216 858,316
Debt with related parties 132,095 845,389
Other current liabilities 168,035 274,773
------------ ------------
Total current liabilities 12,574,304 7,012,797
------------ ------------
LONG-TERM DEBT 1,863,914 2,578,600
SHAREHOLDERS' EQUITY (DEFICIT):
Common Stock - Class A, no par value, 100,000,000 shares authorized,
16,424,553, and 8,488,240 shares issued and outstanding, respectively 13,177,001 913,460
Common Stock - Class B, no par value, no share issued or outstanding -- --
Treasury Stock - Class A Common; 2,000,000 shares held (45) (45)
Accumulated deficit (15,726,848) (8,444,858)
------------ ------------
Total Shareholders' equity (deficit) (2,549,892) (7,531,443)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,888,326 $ 2,059,954
============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements
Are an integral part of these condensed consolidated balance sheets.
4
<PAGE>
<TABLE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
SERVICE REVENUE, inclusive of interest charged $ 398,826 $ 696,975 $ 1,884,921 $ 2,348,420
Less: Contract cancellations 23,492 354,581 96,543 646,042
Contract discounts 23,491 155,951 84,912 274,070
------------ ------------ ------------ ------------
Net Service Revenues 351,843 186,443 1,703,466 1,428,308
DIRECT COST OF SERVICES 100,126 715,515 591,068 1,454,086
------------ ------------ ------------ ------------
GROSS PROFIT 251,717 (529,072) 1,112,398 (25,778)
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, general and administrative 1,005,284 796,536 4,516,060 1,941,480
New products research and development 424,359 318,375 605,775 718,701
Depreciation and amortization 56,336 29,397 157,521 76,074
------------ ------------ ------------ ------------
Total operating expenses 1,485,979 1,144,308 5,279,356 2,736,255
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (1,234,262) (1,673,380) (4,166,958) (2,762,033)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (1,070,269) (330,406) (3,374,004) (702,864)
Write-off of non-trade receivables -- (419,348) (110,128) (419,348)
Other income 256,273 7,324 369,100 102,139
------------ ------------ ------------ ------------
Total other, net (813,996) (742,430) (3,115,032) (1,020,073)
NET LOSS (2,048,258) (2,415,810) (7,281,990) (3,782,106)
LOSS PER SHARE $ (0.13) $ (0.24) $ (0.66) $ (0.41)
============ ============ ============ ============
WEIGHTED AVERAGE CLASS A SHARES 15,245,233 9,981,505 11,017,873 9,184,370
============ ============ ============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements
Are an integral part of these condensed consolidated balance sheets.
5
<PAGE>
<TABLE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- -----------------------------------------------------------------------------------
<CAPTION>
For the nine Months
Ended September 30,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss (7,281,990) (3,782,106)
Adjustments to reconcile net loss to
net cash used in operating activities
Nonmonetary stock transactions 798,000 521,785
Depreciation and amortization 157,521 93,376
Change in operating assets and liabilities:
Contracts receivable (676,422) 5,432
Deferred offering costs 153,659 (94,658)
Deposits (41,261) (209,052)
Other assets (649,124) (481,672)
Accounts payable 186,081 93,362
Accrued liabilities (686,982) 70,506
Other liabilities (106,738) (497,140)
------------ ------------
Net cash used in operating activities (8,147,256) (4,280,167)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (154,439) (344,000)
Net cash used in investing activities (154,439) (344,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 16,823,178 8,025,978
Principle payments on debt (11,368,718) (3,732,447)
Proceeds from sale of stock 2,830,382 340,000
------------ ------------
Net cash provided by financing activities 8,284,842 4,633,531
NET INCREASE (DECREASE) IN CASH (16,853) 9,364
============ ============
CASH - BEGINNING OF PERIOD 17,258 1,604
============ ============
CASH - END OF PERIOD $ 405 $ 10,968
============ ============
</TABLE>
The accompanying notes to condensed consolidated financial statements
Are an integral part of these condensed consolidated balance sheets.
6
<PAGE>
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Nature Of Operations
The accompanying condensed consolidated financial statements include the
accounts of The Murdock Group Career Satisfaction Corporation and its
subsidiary, myjobsearch.com (the "Company"), which have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally required in financial statements,
prepared in accordance with generally accepted accounting principles, have been
omitted pursuant to such rules and regulations.
The financial statements reflect all adjustments (consisting only of normal
recurring adjustments) which, in the opinion of management, are necessary to
fairly present the financial position, results of operations and cash flows for
the periods presented.
The results of operations for the three months and nine months ended September
30, 1999 are not necessarily indicative of the results to be expected for the
full fiscal year. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K for the year ended December 31,
1998.
Note 2 - Operations
The Murdock Group Career Satisfaction Corporation (the Company) is a job-search
and employment training company. The Company is focused to service 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. Substantially 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 miscellaneous
intangible assets from an individual operating as a sole proprietorship DBA The
Murdock Group.
Envision Career Services L.L.C., DBA The Murdock Group ("Envision"), owned a
majority share of the corporation prior to the business combination with the
Company on May 31, 1998, and Envision's dissolution. Envision originally
conducted the business activities explained above which now continue in the
surviving corporate entity.
On June 1, 1999, the Company authorized (i) the creation of a Delaware
subsidiary called myjobsearch.com ("MJS"), (ii) the transfer to MJS all the
Company's developmental materials for and interest in the web site
myjobsearch.com in exchange for 20,000,000 common shares of MJS.
MJS elected Company officers KC Holmes, Heather Stone, and Lance Heaton to serve
on MJS's initial board of directors and serve as initial officers.
MJS issued 13,624,485 shares to the shareholders of the Company on the basis of
one MJS share for each Company share held. The shares were sold at par value,
$.001 per share, raising $13,624 in an offering made under Rule 505 of
Regulation D adopted pursuant to the Securities Act of 1933. This offering
closed on June 30, 1999.
7
<PAGE>
On July 30, the Subsidiary made an offering at $.15 per share under Rule 505,
raising a total of $379,050 from 9 purchasers of 2,527,000 shares. This offering
closed on July 31, 1999.
MJS is currently in development and to date has not recognized any revenue.
During 1999 the Company established a real-estate division whereby the Company
has acquired a significant amount of land. The Company has hired a real-estate
professional to manage the division. See Liquidity and Capital Resources.
Note 3 - Revenue Recognition
The Company provides services under various types of contracts. Revenue is
recognized as service is rendered, based on the contract type. In August 1998,
the Company began the delivery of its new product, The Job Search System. The
Company delivers approximately 85% of its service within 30 days of the signed
contract for this service. The Company provides approximately 15% of its service
equally over the next 90 days. Accordingly, the Company recognizes 85% of the
revenue on these contracts in the month of sale, and 5% each month for the
following three months.
Previously, the Company sold services using various types of contracts. These
contracts were One-Year Contracts, Flex Contracts, and Guarantee Contracts. At
September 30, 1999, all revenue associated with these various types of contracts
had been recognized.
Revenue is recognized completely in the month it is 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.
Note 4 - Going Concern
The accompanying financial statements have been prepared based on continuation
of the Company as a going concern. However, the Company has sustained
substantial operating losses since inception, and has used substantial amounts
of working capital in its operations.
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 portion of losses to date were incurred while
developing the Company's proprietary job-search technology into a training
system that services a larger volume of customers. In addition the Company has
incurred significant interest costs associated with funding the operating
losses.
The Company has completed development of the training system and believes that
it now has a product that can operate profitably on a branch level. In September
1998, the Company opened an office in Seattle, and in February 1999, an office
in Portland. These offices were closed on June 16, 1999, to (i) improve the
registrant's cash position by eliminating branches which consistently produced
negative cash flow, and (ii) facilitate reworking of the branch operating model
to increase cash flow by developing alternatives to the 2-year client notes
currently accepted for product sales.
The Company believes it can eventually 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, human
resources, accounting, and operations staff. Management also anticipates a
reduction in cancellations, discounts, and write-offs with the new product.
In summary, management's plan for overcoming losses includes increasing revenues
from new offices, reducing expenses, allocating infrastructure investment across
multiple new office locations, reducing cancellations, discounts, and
8
<PAGE>
write-offs, reducing interest expense, and possible proceeds from its investment
in or dividends from MJS.
Note 5 - Public Offering
The Company filed a registration statement for an initial public offering of its
securities on October 6, 1998; the offering was declared effective by the
Securities and Exchange Commission (SEC) on January 28, 1999.
The offering consisted of the intended sale of 2,500,000 shares of class A
common stock at $5 per share, and $3,000,000 in 4-year bonds. During the period
between the declaration of effectiveness and May 9, 1999, the Company received
$3,211,930 from sale of shares and $12,000 from the sale of bonds. These
proceeds were used to retire debt.
Based on these sales results, the Company did not believe that it would be able
to sell enough shares and bonds to pay off the majority of its debt or qualify
its shares for listing on the Nasdaq SmallCap Market, two of the primary goals
of the public offering. Consequently, the Company decided to terminate the
offering and offer recission to investors in the public offering. On May 10,
1999, the SEC declared effective the Company's post-effective amendment no. 2
deregistering all unsold securities, and the Company contemporaneously
terminated its offering in all states where it was registered.
On September 7, 1999, the Company completed a recission offer to all purchasers
of its shares and bonds in the public offering. This offering was made under
Rule 505 of Regulation D adopted pursuant to the Securities Act of 1933.
Subscribers received a return of their cash contribution plus interest at 9%
from their date their subscription agreements were accepted.
Item 2. Management's Discussion and Analysis or Plan of Operation
General
The Murdock Group Career Satisfaction Corporation is a career advancement and
employment consulting company located in Salt Lake City, Utah. The Company
targets its services to professionals and others with several years of
experience who are seeking to clarify their career direction or their current
job situation.
The Company's system utilizes job-search training workshops, consultants, and
access to a comprehensive job-search resource center. It also provides full
service hiring assistance to corporations, which includes training and
outplacement.
The Company has incurred significant losses to date developing its proprietary
job-search technology into a training system that can service a larger volume of
customers than its original one-on-one coaching. The Company completed
development of this system and believes that it now has a product that can be
marketed profitably.
In September 1998, the Company opened its second branch office in Seattle,
Washington. In February 1999, it opened a third branch office in Portland,
Oregon. These offices were closed on June 16, 1999, to (i) improve the Company's
cash position by eliminating branches which consistently produced negative cash
flow, and (ii) facilitate reworking of the branch operating model to increase
cash flow by developing alternatives to the 2-year client notes currently
accepted for product sales.
The Company plans to refine its operating model and open additional branches in
the future. Additional profitable branches will allow the Company to allocate
administrative costs across multiple locations, thereby improving the
utilization of its infrastructure.
9
<PAGE>
With the completion of the new proprietary job-search technology training system
the Company has experienced a reduction in client cancellations and discounts
and improved collection of client receivables.
MJS owns and operates an Internet site that aggregates much of the job-search
information on the Internet into one location for the job seeker. MJS also
provides tools for the job seeker to enhance the job search process. MJS has
links to over 3 million jobs, Fortune 500 HR departments, most newspaper
classified ads for employment in the country, over 2 thousand recruiters and
thousands of other interviewing, resume and networking resources.
Results of Operations: Three months ended September 30, 1999 compared to three
months ended September 30, 1998.
Net service revenues increased to $351,843 for the three-month period ended
September 30, 1999, compared to $186,443 for the corresponding period of the
prior year. The increase in net service revenues was primarily a result of
reduction in the rate of cancellations and a reduction in the amount of
discounts given to customers. Service revenues decreased to $398,826 for the
three-month period ended September 30, 1999, compared to $696,975 for the
corresponding period of the prior year. The decrease in service revenue was
primarily a result of the type of contract sold. These contracts do not provide
guarantees for the customer and as a result make the service more difficult to
sell. Also, the Company requires clients to attend certain career training
workshops before the client's contract is accepted. This has resulted in
reductions in both service revenues and cancellations. The Company has also
tightened its credit policy with a focus on selling to those customers with the
ability to pay for the service.
Direct cost of services decreased to $100,126 for the three-month period ended
September 30, 1999, compared to $715,515 for the corresponding period of the
prior fiscal year. The decrease in direct cost of services is a result of lower
sales and improved delivery of the company's product using a group setting as
compared to one-on-one coaching. The Company has also focused on costs
associated with the delivery of the product to the client and reduced such costs
where possible. Gross profit as a percentage of net service revenues improved to
72% for the three-month period ended September 30, 1999, compared to a negative
284% for the corresponding period of the prior year. The improvement in gross
profit as a percentage of sales was primarily a result of the delivery of the
Company's new product in a group setting and the target reduction of expenses
where possible.
General and administrative expenses, which include selling expense, increased to
$1,005,284 for the three-month period ended September 30, 1999, compared to
$796,536 for the corresponding period of the prior fiscal year. The increase in
general and administrative expense is a direct result of a one-time write-off of
deferred offering costs of approximately $200,000 associated with the Company's
initial public offering for the three-month period ended September 30, 1999,
which were not incurred during the corresponding period of the prior year. In
addition the Company incurred approximately $90,000 in expenses associated with
the closing of the Seattle and Portland branches.
New products research and development expenses increased to $424,359 for the
three-month period ended September 30, 1999, compared to $318,375 for the
corresponding period of the prior year. The increase in research and development
for 1999, was a direct result of the Company engaging in the start-up of its
subsidiary, myjobsearch.com. All of the new product research and development
expenses for the three-month period ended September 30, 1999 were related to the
start-up of MJS.
Interest expense increased to $1,070,269 for the three-month period ended
September 30, 1999, compared to $330,406 for the corresponding period of the
prior year. The increase in interest expense was a result of higher outstanding
debt balances, increased rates on funds borrowed and certain costs incurred with
obtaining financing. See Liquidity and Capital resources.
10
<PAGE>
Results of Operations: Nine months ended September 30, 1999 compared to nine
months ended September 30, 1998.
Net service revenues increased to $1,703,466 for the nine-month period ended
September 30, 1999, compared to $1,428,308 for the corresponding period of the
prior year. The increase in net service revenues was primarily a result of an
improvement in the rate of cancellations and a reduction in the amount of
discounts given to customers. Service revenue decreased to $1,884,921 for the
nine month period ended September 30, 1999, compared to the $2,348,420 for the
corresponding period of the prior year. The decrease in service revenue was
primarily a result of the type of contract sold. These contracts do not provide
guarantees for the customer and as a result make the service more difficult to
sell. Also, the Company requires clients to attend certain career training
workshops before the client's contract is accepted. This has resulted in
reductions in both service revenues and cancellations. The Company has also
tightened its credit policy with a focus on selling to those customers with the
ability to pay for the service.
Direct cost of services decreased to $591,068 for the nine-month period ended
September 30, 1999, compared to $1,454,086 for the corresponding period of the
prior year. The decrease in direct cost of services is a result of lower sales
and improved delivery of the Company's product using a group setting as compared
to one-on-one coaching. The Company has also focused on costs associated with
the delivery of the product to the client and reduced such costs where possible.
Gross profit as a percentage of net service revenues improved to 65% for the
nine-month period ended September 30, 1999, compared to a negative 2% for the
corresponding period of the prior year. The improvement in gross profit as a
percentage of sales was primarily a result of the delivery of the Company's new
product in a group setting and the target reduction of expenses where possible.
General and administrative expenses, which include selling expense, increased to
$4,516,060 for the nine- month period ended September 30, 1999, compared to
$1,941,480 for the corresponding period of the prior year. The increase in
general and administrative expense is a result of costs of approximately
$1,200,000 associated with the opening and subsequent closing of the Seattle and
Portland branch offices during the nine-month period ended September 30, 1999.
The Company also recorded expenses related to the issuance of stock to key
employees of approximately $800,000 for the nine-month period ended September
30, 1999 and recorded a one-time write-off of deferred offering costs of
approximately $200,000 associated with the Company's initial public offering.
New products research and development expenses decreased to $605,775 for the
nine-month period ended September 30, 1999, compared to $718,701 for the
corresponding period of the prior year. The decrease in research and development
for 1999, was a result of the Company completing its new job search system. The
Company incurred approximately $425,000 in product research and development
related to MJS during the nine-month period ended September 30, 1999. There were
no research and development expenses for MJS during the corresponding period
ended September 30, 1998.
Interest expense increased to $3,374,004 for the nine-month period ended
September 30, 1999, compared to $702,864 for the corresponding period of the
prior year. The increase in interest expense was a result of higher outstanding
debt balances, increased rates on funds borrowed and certain costs associated
with obtaining financing. See Liquidity and Capital resources.
Liquidity and Capital Resources
The Company has suffered recurring losses from operations since its inception in
1996, and as of September 30, 1999, had an accumulated deficit of $15,726,848.
The accumulated deficit reflects losses associated with the development and
startup of operations and significant costs for research and development for the
Company's propriety job-search technology and training system and costs
associated with the startup of the Company's subsidiary, myjobsearch.com.
11
<PAGE>
Once the branch model is perfected, this technology should enable the Company to
effectively service a large volume of customers in each office and provide a
model to expand operations into other locations. We have also experienced losses
from interest expense associated with the large amount of debt the Company has
incurred which carry high interest rates.
During the nine-month period ended September 30, 1999, the Company has acquired
several parcels of land primarily with its common stock. Several parcels have
also required cash down payments of approximately 20% and the assumption of
debt. As of September 30, 1999 the Company has acquired land valued at
approximately $8.6 million. To purchase this land the company has incurred new
debt in the amount of approximately $1.5 million in either cash down payments or
debt assumptions and issued stock of the Company valued at approximately $7.1
million. The acquired land will be used as collateral to secure new favorable
debt to replace the Company's short-term, high interest rate debt.
At September 30, 1999, the Company had a working capital deficit of
approximately $11,086,031. This working capital deficit is a result of funding
operating losses primarily through short-term borrowings. The interest rates
associated with these short-term borrowings are significantly higher than prime
interest rates. The Company feels that with its recent land acquisitions, it can
significantly reduce the short term, high interest rate debt with more favorable
lower interest rate debt. Some of the land may also be sold to reduce the
Company's total debt and fund future operations.
The Company filed a registration statement for an initial public offering of its
securities on October 6, 1998; it was declared effective by the Securities and
Exchange Commission (SEC) on January 28, 1999.
The offering consisted of the intended sale of 2,500,000 shares of class A
common stock at $5 per share, and $3,000,000 in 4-year term bonds. During the
period between the declaration of effectiveness and May 9, 1999, the Company a
collected a total of $3,211,930 from sale of shares and $12,000 from the sale of
bonds. These proceeds were used to retire debt.
Based on these results, the Company did not believe that it would be able to
sell enough shares and bonds to pay off the majority of its debt or qualify its
shares for listing on the Nasdaq SmallCap Market, two of the primary goals of
the public offering. Consequently, the Company decided to terminate the offering
and may offer recission to investors in the public offering. The SEC declared
effective the Company's post-effective amendment no. 2 deregistering all unsold
securities on May 10, 1999, and the Company contemporaneously terminated its
offering in all states where it was registered.
As a result of the small amount of capital raised in the Company's initial
public offering, the Company will be required to fund its cash needs from
borrowings or other methods. There is no assurance that the Company will be able
to borrow additional funds or secure the cash necessary to cover its needs.
As contained in the report of our Independent Auditor dated April 22, 1999, and
filed with the Company's Form 10-K for the year ended December 31, 1998 and
1997, there is substantial doubt of The Murdock Group's ability to continue as a
going concern.
Although the Company is looking at various alternatives which, among other
things, include restructuring the Company, obtaining new financing and looking
for equity partners, there can be no assurance that the Company will be
successful in such endeavors.
Inflation and year 2000 issues
Inflation has not had and is not expected to have a significant impact on our
operations.
The Company has evaluated its information technology for Year 2000 issues and
does not anticipate any material disruption in its operations.
12
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"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
With the exception of historical information (information relating to the
Company's financial condition and results of operations at historical dates or
for historical periods), the matters discussed in the Management's Discussion
and Analysis of Financial Condition and Results of Operations are
forward-looking statements that necessarily are based on certain assumptions and
are subject to certain risks and uncertainties.
These forward-looking statements are based on management's expectations as of
the date hereof, and the Company does not undertake any responsibility to the
date hereof, and the Company does not undertake any responsibility to update any
of these statements in the future.
Actual future performance and results could differ from those contained in or
suggested by these forward-looking statements as a result of the factors set
forth in this Management's Discussion and Analysis of Financial Condition and
Results of Operations, the Business Risks described in this Form 10-QSB and
elsewhere in the Company's filings with the Securities and Exchange Commission.
Part II
Item 1. Legal Proceedings
As of the date of this report there is no material litigation pending or
threatened against the Company.
Item 2. Changes in Securities and Use of Proceeds
The Company filed a registration statement for an initial public offering of its
securities on October 6, 1998; it was declared effective by the Securities and
Exchange Commission (SEC) on January 28, 1999. The offering consisted of the
sale of 2,500,000 shares at $5 per share, and $3,000,000 in 4-year term, 15%
bonds. In addition, four of the corporation's shareholders sought to sell
181,500 shares at $5 per share. No underwriter participated in the offering.
During the period between the declaration of effectiveness and May 9, 1999, the
Company received from 44 investors a total of $3,211,930 from sale of shares and
$12,000 from the sale of bonds. These proceeds were used to retire debt. Based
on these results, the Company did not believe that it would be able to sell
enough shares and bonds to pay off the majority of its debt or qualify its
shares for listing on the Nasdaq SmallCap Market, two of the primary goals of
the public offering.
Consequently, the Company decided to terminate the offering and offer recission
to investors in the public offering. The SEC declared effective the Company's
post-effective amendment no. 2 deregistering all unsold securities on May 10,
1999, and the Company contemporaneously terminated its offering in all states
where it was registered.
The following table describes the issuance of unregistered equity securities
during the period covered by this report:
13
<PAGE>
Issued To Date No. Shares Securities Act Exemption Relied Upon
Hauns Jacobsen 2 Aug 99 220,000 These shares were issued in exchange
for an 86 acre parcel of raw land in
Issued in Payson, Utah, which will be
exchange for partially developed and sold by the
real property registrant. The recipient is a
sophisticated businessman and
investor who was given the
opportunity to meet with all
registrant's officers and examine
all books and records, including
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. The recipient had access
to information on the company
necessary to make an informed
investment decision.
Howe Family Trust 3 Aug 99 2,686,668 These shares were issued in exchange
for an several parcels of land in
Issued in the State of Utah; a 1 acre parcel
exchange for on which stands a 27,000 square foot
real property commercial building; a 270 acre
parcel of raw ground in Eastland,
and a 70 parcel of raw land in
Bluff. These properties will be
partially developed and sold by the
registrant. The trustee of the trust
is a sophisticated businessman and
accredited investor (as defined in
Rule 501(a) of Regulation D) who was
given the opportunity to meet with
all registrant's officers and
examine all books and records,
including 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. The recipient had access
to information on the company
necessary to make an informed
investment decision.
Brad Bylund 24 Aug 99 293,400 These shares were issued in exchange
for an 40 acre parcel of raw land in
Issued in Genola, Utah, which will be
exchange for partially developed and sold by the
real property registrant. The recipient is a
sophisticated businessman who was
given the opportunity to meet with
all registrant's officers and
examine all books and records,
including 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 in connection with
transfer of the securities, but a
listing broker's commission was in
cash by the recipient. The recipient
had access to information on the
company necessary to make an
informed investment decision
Item 3. Defaults Upon Senior Securities
There have been no defaults with respect to senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
Item 5. Other information
None.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
None.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
The Murdock Group Career Satisfaction Corporation
Dated this 19th day of October, 1999
/s/
- ----------------------------------------------
By KC Holmes, CEO
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated. Dated this 19th day of October, 1999
/s/
- ----------------------------------------------
By KC Holmes, CEO, Director
/s/
- ----------------------------------------------
By Heather Stone, President, Director
/s/
- ----------------------------------------------
By Lawrence Solomon, Controller
15
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 405
<SECURITIES> 0
<RECEIVABLES> 1390725
<ALLOWANCES> 205907
<INVENTORY> 0
<CURRENT-ASSETS> 1488273
<PP&E> 1001738
<DEPRECIATION> 298072
<TOTAL-ASSETS> 11888326
<CURRENT-LIABILITIES> 12574304
<BONDS> 0
0
0
<COMMON> 13177001
<OTHER-SE> (45)
<TOTAL-LIABILITY-AND-EQUITY> 11888326
<SALES> 0
<TOTAL-REVENUES> 1703466
<CGS> 591068
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4166958
<LOSS-PROVISION> 110128
<INTEREST-EXPENSE> 3374004
<INCOME-PRETAX> (7281990)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7281990)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7281990)
<EPS-BASIC> (0.66)
<EPS-DILUTED> 0
</TABLE>
