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 June 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 736104 87-0562244
(State or other jurisdiction of (Primary Standard (IRS Employer Classifi-
incorporation or organization) Industrial ID number) cation Code 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 August 1, 1999, the issuer had 12,477,671 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 Consolidates 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 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
<PAGE>
Part I. Item 1. Financial Statements
THE MURDOCK GROUP
CAREER SATISFACTION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------
ASSETS
June 30, December 31,
1999 1998
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 17,258 $ 4,289
Current portion of contracts receivable 865,106 543,344
Deferred offering costs 217,010 153,659
Other current assets 187,963 110,933
----------- -----------
Total current assets 1,287,337 812,225
----------- -----------
PROPERTY AND EQUIPMENT:
Computer equipment 270,439 247,573
Equipment, furniture and fixtures 221,266 162,014
Leasehold improvements 83,296 75,506
Capital leases for property and equipment 406,315 362,208
----------- -----------
981,316 847,301
Less: accumulated depreciation and amortization (245,734) (161,545)
----------- -----------
Net property, plant and equipment 735,582 685,756
----------- -----------
OTHER ASSETS:
Contracts receivable net of current portion 576,737 170,958
Deposits 330,774 311,378
Other assets 169,509 79,637
----------- -----------
Total other assets 1,077,020 561,973
----------- -----------
TOTAL ASSETS $ 3,099,939 $ 2,059,954
=========== ===========
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>
June 30, December 31,
1999 1998
----------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 868,753 $ 349,168
Accrued liabilities 717,678 1,218,451
Short-term Debt 5,619,573 3,466,700
Current portion of long-term debt 930,800 858,316
Debt with related parties 288,009 845,389
Other current liabilities 231,400 274,773
----------------- ----------------
Total current liabilities 8,656,213 7,012,797
----------------- ----------------
LONG-TERM DEBT 1,576,959 2,578,600
SHAREHOLDERS' EQUITY (DEFICIT):
Common Stock - Class A, no par value, 100,000,000 shares authorized,
12,477,671, and 8,488,240 shares issued and outstanding, respectively 6,545,402 913,460
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 (13,678,590) (8,444,858)
----------------- ----------------
Total Shareholders' equity (deficit) (7,133,233) (7,531,443)
----------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,099,939 $ 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 Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SERVICE REVENUE, inclusive of interest charged $ 824,427 $ 856,670 $ 1,486,095 $ 1,651,445
Less: Contract cancellations 45,442 120,728 73,051 291,461
Contract discounts 36,182 19,664 61,421 118,119
----------- ----------- ----------- -----------
Net Service Revenues 742,803 716,278 1,351,623 1,241,865
DIRECT COST OF SERVICES 265,561 371,822 506,004 738,571
----------- ----------- ----------- -----------
GROSS PROFIT 477,242 344,456 845,619 503,294
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling, general and administrative 2,191,615 433,539 3,510,776 1,144,944
New products research and development 109,415 186,252 181,416 400,326
Depreciation and amortization 37,248 24,924 86,122 46,677
----------- ----------- ----------- -----------
Total operating expenses 2,338,278 644,715 3,778,314 1,591,947
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (1,861,036) (300,259) (2,932,695) (1,088,653)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest expense (1,629,938) (243,295) (2,303,735) (372,458)
Write-off of non-trade receivables (44,582) -- (110,128) --
Other income 56,492 55,236 112,827 94,815
----------- ----------- ----------- -----------
Total other, net (1,618,028) (188,059) (2,301,036) (277,643)
NET LOSS (3,479,064) (488,318) (5,233,731) (1,366,296)
LOSS PER SHARE $ (0.38) $ (0.05) $ (0.61) $ (0.14)
=========== =========== =========== ===========
WEIGHTED AVERAGE CLASS A SHARES 9,169,315 9,981,505 8,513,329 9,974,293
=========== =========== =========== ===========
</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 six Months
Ended June 30,
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss (5,233,731) (1,366,297)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 86,122 46,677
Change in operating assets and liabilities:
Contracts receivable (725,059) (285,879)
Deferred offering costs (63,351) --
Deposits 19,396 29,825
Other assets (166,902) 104,200
Accounts payable 519,586 86,156
Accrued liabilities (500,773) 549,704
Other liabilities (33,370) (732,156)
----------- -----------
Net cash used in operating activities (6,098,082) (1,567,770)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (143,854) (196,241)
----------- -----------
Net cash used in investing activities (143,854) (196,241)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 12,023,643 3,729,927
Principle payments on debt (11,400,680) (1,968,322)
Proceeds from sale of stock 5,631,942 2,110
----------- -----------
Net cash provided by financing activities 6,254,905 1,763,715
NET INCREASE (DECREASE) IN CASH 12,969 (296)
=========== ===========
CASH - BEGINNING OF PERIOD 4,289 1,604
=========== ===========
CASH - END OF PERIOD 17,258 1,312
=========== ===========
</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 (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 six months ended June 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, and its Form 10-Q for the period ended March 31, 1999.
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 (the "Subsidiary") capitalized at 100,000,000
shares, of which 80,000,000 are common shares and 20,000,000 are preferred
shares, (ii) the transfer to the Subsidiary all the Company's developmental
materials for and interest in the web site myjobsearch.com in exchange for
20,000,000 common shares of the Subsidiary.
The Subsidiary elected Company officers KC Holmes, Heather Stone, and Lance
Heaton to serve on the Subsidiary's initial board of directors and serve as
initial officers of the Subsidiary.
7
<PAGE>
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
June 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.
The Company has completed development of the training system and believes that
it now has a product that can operate profitably. 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
write-offs, reducing interest expense, and possible dividends from the
Subsidiary.
Note 5 - Public Offering
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 bonds. During the period
8
<PAGE>
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.
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
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 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.
With the completion of the new proprietary job-search technology training system
the Company expects a reduction in client cancellations and discounts and
improved collection of client receivables.
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 bonds. During the period
between the declaration of effectiveness and May 9, 1999, the Company 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.
9
<PAGE>
Results of Operations: Three months ended June 30, 1999 compared to three months
ended June 30, 1998.
Net service revenues increased to $742,803 for the three month period ended June
30, 1999, compared to $716,278 for the corresponding period of the prior year.
The increase in revenues was primarily a result of reduced cancellations.
During the six months between October 1, 1997, and March 31, 1998, the Company
sold a service which guaranteed the client a job in an agreed amount of time.
While these guarantee contracts were helpful to gross sales they had a negative
impact on cancellations. More than fifty percent of these guarantee type
contracts were cancelled during 1998. The Company's new proprietary job-search
training system, introduced in 1998 has resulted in a significant reduction in
cancellations.
Direct cost of services decreased to $265,561 for the three month period ended
June 30, 1999, compared to $371,822 for the corresponding period of the prior
fiscal year. Gross profit as a percentage of service revenues improved to 64%
for the three month period ended June 30, 1999, compared to 48% 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 which is delivered in a group setting as compared to the original
one-on-one coaching.
General and administrative expenses, which include selling expense, increased to
$2,338,278 for the three months ended June 30, 1999, compared to $644,715 for
the corresponding period of the prior fiscal year. The increase in general and
administrative expense relates to Company growth and branch expansion. Revenues
in the new Seattle and Portland branches were not at full operating levels due
to lack of name recognition in the new market place, new sales employees, and
other start up type issues. Operating expenses for the new branches were near
the full operating levels because most branch expenses are fixed and not tied to
sales levels.
New products research and development expenses decreased to $109,415 for the
three months ended June 30, 1999, compared to $186,252 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 in 1998.
Interest expense increased to $1,629,938 for the three month period ended June
30, 1999, compared to $243,295 for the corresponding period of the prior year.
The increase in interest expense was a result of higher outstanding debt
balances and increased rates on moneys borrowed. See Liquidity and Capital
resources.
Results of Operations: Six months ended June 30, 1999 compared to six months
ended June 30, 1998.
Net service revenues increased to $1,351,623 for the six month period ended June
30, 1999, compared to $1,241,865 for the corresponding period of the prior year.
The increase in revenues was primarily a result of reduced cancellations and
discounts. During the six months between October 1, 1997, and March 31, 1998,
the Company sold services which guaranteed the client a job in an agreed amount
of time. While these guarantee contracts were helpful to gross sales they had a
negative impact on cancellations. More than fifty percent of these guarantee
type contracts were cancelled during 1998. The Company's new proprietary
job-search training system, introduced in 1998 has resulted in a significant
reduction in cancellations and discounts.
Direct cost of services decreased to $506,004 for the six month period ended
June 30, 1999, compared to $738,571 for the corresponding period of the prior
fiscal year. Gross profit as a percentage of service revenues improved to 63%
for the six month period ended June 30, 1999, compared to 41% for the
corresponding period of the prior year. The improvement in gross profit as a
10
<PAGE>
percentage of sales was primarily a result of the delivery of the Company's new
product which is delivered in a group setting as compared to the original
one-on-one coaching.
General and administrative expenses, which include selling expense, increased to
$3,778,314 for the six months ended June 30, 1999, compared to $1,591,947 for
the corresponding period of the prior fiscal year. The increase in general and
administrative expense relates to Company growth and branch expansion. Revenues
in the new Seattle and Portland branches were not at full operating levels due
to lack of name recognition in the new market place, new sales employees and
other start up type issues. Operating expenses for the new branch are near the
full operating levels because most branch expenses are fixed and not tied to
sales levels.
New products research and development expenses decreased to $181,416 for the six
months ended June 30, 1999, compared to $400,326 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 in 1998.
Interest expense increased to $2,303,735 for the six month period ended June 30,
1999, compared to $372,458 for the corresponding period of the prior year. The
increase in interest expense was a result of higher outstanding debt balances
and increased rates on moneys borrowed. 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 June 30, 1999, had an accumulated deficit of $13,678,590. 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.
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
carries with high interest rates.
At June 30, 1999, the Company had a working capital deficit of approximately
$7,133,233. 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 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.
11
<PAGE>
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.
"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.
12
<PAGE>
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:
Issued To Date No. Shares Securities Act Exemption Relied Upon
Jaci Cummings 5/24/99 10,000 These shares were issued to a trust
as inducement to make a $345,000 loan
Grant in to the registrant. The lender was a
connection sophisticated business person and
with loan sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
Icelander Family 6/1/99 64,000 These shares were issued to a trust
Trust Grant in as inducement to make a $110,000 loan
connection to the registrant. The lender was a
with loan sophisticated business person and
sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
13
<PAGE>
Chris Kenney 6/21/99 50,000 The granted shares were issued to the
Employee named Company officer as a grant for
grant outstanding performance. No
consideration was paid.
Christopher 6/21/99 20,000 The granted shares were issued to the
Leonard Employee named Company officer as a grant for
grant outstanding performance. No
consideration was paid.
ISI, LLC 6/21/99 226,000 These shares were issued as an
Grant in inducement to the named lender to
connection make a $250,000 loan to the
with loan registrant. The lender was a
sophisticated business person and
sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
Buckeneer 6/21/99 1,000,000 These shares were issued in exchange
Family Trust Issued in for cancellation of a Company note in
exchange for the amount of $1,000,000. The lender
cancellation was a sophisticated business person
of Company and sophisticated investor who was
note 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. The lender had
access to information on the company
necessary to make an informed
investment decision.
Bill Hansen 6/21/99 35,000 These shares were issued in exchange
Issued in for general public relations
exchange for services. The consultant is a
consulting sophisticated business person and
services sophisticated investor 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. The
consultant had access to information
on the company necessary to make an
informed investment decision.
Reta Fawson 6/21/99 131,319 These shares were issued in exchange
Issued in for cancellation of a Company note in
exchange for the amount of $150,000 plus accrued
cancellation interest. The lender was a
of Company sophisticated business person and
note sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
Lance Heaton 6/21/99 500,000 The granted shares were issued to the
Employee named Company officer as a grant for
grant outstanding performance. No
consideration was paid.
Steve Heaton 6/21/99 50,000 These shares were issued to a trust
Grant in as inducement to make a $150,000 loan
connection to the registrant. The lender was a
with loan sophisticated business person and
sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
14
<PAGE>
Ohare Clebar 6/21/99 130,512 These shares were issued in exchange
Jenson Issued in for cancellation of a Company note in
exchange for the amount of $150,000 plus accrued
cancellation interest. The lender was a
of Company sophisticated business person and
note sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
Canary Trust 6/21/99 48,000 These shares were issued in exchange
Issued in for cancellation of a Company note in
exchange for the amount of $60,000. The lender was
cancellation a sophisticated business person and
of Company sophisticated investor who was given
note 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
SK 6/21/99 40,000 These shares were issued in exchange
Management Issued in for cancellation of a Company note in
exchange for the amount of $50,000. The lender was
cancellation a sophisticated business person and
of Company sophisticated investor who was given
note 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
Paul Family 6/21/99 217,600 These shares were issued in exchange
Trust Issued in for cancellation of a Company note in
exchange for the amount of $272,000. The lender
cancellation was a sophisticated business person
of Company and sophisticated investor who was
note 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. The lender had
access to information on the company
necessary to make an informed
investment decision.
International 6/21/99 80,000 These shares were issued in exchange
Asset Issued in for cancellation of a Company note in
Management exchange for the amount of $100,000. The lender
cancellation was a sophisticated business person
of Company and sophisticated investor who was
note 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. The lender had
access to information on the company
necessary to make an informed
investment decision.
David Myers and 6/21/99 320,000 These shares were issued in exchange
Perry Frandsen Issued in for cancellation of a Company note in
exchange for the amount of $400,000. The lenders
cancellation were sophisticated business people
of Company and sophisticated investors who were
note 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. The lenders
had access to information on the
company necessary to make an informed
investment decision.
15
<PAGE>
Pete Chandler 6/21/99 2,000 These shares were issued general
Issued in public relations in services. The
exchange for consultant is a sophisticated
consulting business person and exchange for
services sophisticated investor 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. The
consultant had access to information
on the company necessary to make an
informed investment decision.
S & L Family 6/21/99 100,000 These shares were issued as an
Trust Grant in inducement to the named lender to
connection make a $1,416,324 loan to the
with loan registrant. The lender was a
sophisticated business person and
sophisticated investor 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. The
lender had access to information on
the company necessary to make an
informed investment decision.
British 6/21/99 50,000 These shares were issued in exchange
Telecommunica- Issued in for cancellation of a Company note in
tions Ltd. exchange for the amount of $50,000. The lender was
cancellation a sophisticated business person and
of Company sophisticated investor who was given
note 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. The
lender 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.
Item 6. Exhibits and Reports on Form 8-K
The registrant filed a report on Form 8-K on June 22, 1999, to report that the
registrant closed its branch offices in Seattle, Washington and Portland, Oregon
on June 16, 1999. This action was taken 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.
16
<PAGE>
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 20th day of August, 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 20th day of August, 1999
/s/
-----------------------------------------------
By KC Holmes, CEO
/s/
-----------------------------------------------
By Heather Stone, President
/s/
-----------------------------------------------
By Lawrence Solomon, Controller
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 17258
<SECURITIES> 0
<RECEIVABLES> 1441843
<ALLOWANCES> 265496
<INVENTORY> 0
<CURRENT-ASSETS> 1287337
<PP&E> 981316
<DEPRECIATION> 245734
<TOTAL-ASSETS> 3099939
<CURRENT-LIABILITIES> 8656213
<BONDS> 12000
0
0
<COMMON> 6545402
<OTHER-SE> (45)
<TOTAL-LIABILITY-AND-EQUITY> 3099939
<SALES> 0
<TOTAL-REVENUES> 1351623
<CGS> 506004
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3778314
<LOSS-PROVISION> 110128
<INTEREST-EXPENSE> 2303735
<INCOME-PRETAX> (5233731)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5233731)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3479064)
<EPS-BASIC> (0)
<EPS-DILUTED> (0)
</TABLE>
