U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
--------------
Transition report under Section 13 or 15(d) of the Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-9224
CAREERENGINE NETWORK, INC.
--------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 13-2689850
-------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2 World Trade Center, Suite 2112, New York, N.Y. 10048
------------------------------------------------------
(Address of Principal Executive Offices)
212-775-0400
------------
(Issuer's Telephone Number, Including Area Code)
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 the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at April 30, 2000
----- -----------------------------
Common stock - par value $.10 5,438,873 shares
<PAGE>
PART I
FINANCIAL INFORMATION
Item l. Financial Statements.
The following consolidated financial statements of
CareerEngine Network, Inc. and subsidiaries (collectively
referred to as the "Company," unless the context requires
otherwise) are prepared in accordance with the rules and
regulations of the Securities and Exchange Commission for Form
10-QSB and reflect all adjustments (consisting of normal
recurring accruals) and disclosures which, in the opinion of
management, are necessary for a fair statement of results for
the interim periods presented. It is suggested that these
financial statements are read in conjunction with the
financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1999,
which was filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31,
2000 are not necessarily indicative of the results to be
expected for the entire fiscal year.
1
<PAGE>
<TABLE>
<CAPTION>
CareerEngine Network, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents .................................. $ 1,092,172 $ 1,006,276
Marketable securities ...................................... 3,429,610 4,888,610
Real estate leased, net .................................... 69,983,293 70,336,022
Fixed assets, net .......................................... 563,505 600,541
Deferred financing costs, net .............................. 1,680,054 1,707,279
Deferred rental income ..................................... 1,044,638 577,485
Other assets ............................................... 834,855 565,018
------------ ------------
$ 78,628,127 $ 79,681,231
============ ============
LIABILITIES
Bonds payable .............................................. $ 72,750,000 $ 72,750,000
Accrued interest ........................................... 874,811 836,130
Accrued expenses and other liabilities ..................... 1,520,228 1,891,201
------------ ------------
Total liabilities .................................... 75,145,039 75,477,331
------------ ------------
Due to preferred member .................................... 2,250,000 2,250,000
------------ ------------
Commitments
STOCKHOLDERS' EQUITY
Common stock - authorized 10,000,000 shares, par value $.10;
issued 6,749,600 shares ................................. 674,960 674,960
Paid-in surplus ............................................ 14,985,814 14,984,510
Deficit .................................................... (11,383,673) (10,657,861)
------------ ------------
4,277,101 5,001,609
Less treasury stock, at cost -
1,312,327 shares in 2000 and 1,313,927 in 1999.............. (3,044,013) (3,047,709)
------------ ------------
1,233,088 1,953,900
------------ ------------
$ 78,628,127 $ 79,681,231
============ ============
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CareerEngine Network, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
-----------------------------
March 31,
2000 1999
----------- -----------
<S> <C> <C>
Revenues
E-recruiting related services ............. $ 178,610
Rental income from real estate leased ..... 2,257,630
Consulting fees ........................... 11,600 $ 108,090
Income on securities transactions, net .... 674,805 191,841
Interest income ........................... 42,352 108,631
----------- -----------
3,164,997 408,562
----------- -----------
Expenses
Compensation and related costs ............ 763,242 449,632
Real estate leased expenses, net .......... 1,988,413 321,372
Advertising ............................... 610,791 26,900
General and administrative ................ 512,343 245,943
----------- -----------
3,874,789 1,043,847
Loss before income taxes ..................... (709,792) (635,285)
Income tax provision ......................... 16,020 12,843
----------- -----------
Net loss ..................................... $ (725,812) $ (648,128)
=========== ===========
Net loss per common share - basic and diluted $ (.13) $ (.12)
=========== ===========
Weighted average number of common shares
outstanding - basic and diluted .............. 5,436,206 5,436,539
=========== ===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CareerEngine Network, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
----------------------------
March 31,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss ....................................................... $ (725,812) $ (648,128)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization ............................. 444,635 48,315
Unrealized loss from joint ventures and other investments . 191,635
Sale of marketable securities, net ........................ 1,459,000 374,563
Issuance of Treasury Stock for services ................... 5,000
Changes in:
Deferred rental income ................................. (467,153)
Other assets ........................................... (265,709) (5,226)
Accrued expenses, other liabilities and accrued interest (332,292) 60,191
----------- -----------
Net cash provided by operating activities ........... 117,669 21,350
----------- -----------
Cash flows from investing activities
Sale of investment securities - net ............................ 8,220,791
Purchase of land ............................................... (3,361,448)
Construction of improvements ................................... (4,924,448)
Purchase of furniture and equipment ............................ (31,773) (50,513)
----------- -----------
Net cash used in investing activities ............... (31,773) (115,618)
----------- -----------
Cash flows from financing activities
Purchase of treasury stock ..................................... -- (23,180)
----------- -----------
Net cash used in financing activities ............... -- (23,180)
----------- -----------
Increase (decrease) in cash and cash equivalents .................. 85,896 (117,448)
Cash and cash equivalents at beginning of period .................. 1,006,276 1,040,955
----------- -----------
Cash and cash equivalents at end of period ........................ $ 1,092,172 $ 923,507
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized) ....................... $ 1,591,252 $ 1,163,952
Income taxes ................................................ $ 7,375
</TABLE>
4
<PAGE>
Careerengine Network, Inc. and Subsidiaries
Notes To Condensed Consolidated Financial Statements
(Unaudited)
1. Significant Accounting Policies
-------------------------------
The accounting policies followed by the Company are set forth in the
notes to the Company's financial statements included in its Form
10-KSB, for the year ended December 3l, 1999, which was filed with the
Securities and Exchange Commission.
Certain amounts have been reclassified in the financial statements for
the three-month period ended March 31, 1999 to conform to the
presentation of the three-month period ended March 31, 2000.
2. Income (Loss) Per Share
-----------------------
Basic income (loss) per share is based on the weighted average number
of common shares outstanding. Employee stock options did not have an
effect on the computation of diluted earnings per share since they were
anti-dilutive.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Certain statements in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
elsewhere in this Form 10-QSB constitute "forward-looking
statements" within the meaning of the Reform Act. See Part II,
Other Information - Item 5.
A. Three Months Ended March 31, 2000 Compared
------------------------------------------
with Three Months Ended March 31, 1999
--------------------------------------
Total revenues increased to $3,164,997 for the three
months ended March 31, 2000 from $408,562 for the
three months ended March 31, 1999.
E-recruiting related services increased to $178,610
for the three months ended March 31, 2000 from nil
for the three months ended March 31, 1999 as the
E-recruiting operations of the Company's subsidiary,
CareerEngine, Inc., commenced in the quarter ended
December 31, 1999.
Rental income from real estate leased increased to
$2,257,630 for the three months ended March 31, 2000
from nil in the three months ended March 31, 1999, as
the construction of the Company's movie theaters was
completed on November 20, 1999 and rent thereon
commenced.
Financial consulting fees were $11,600 for the three
months ended March 31, 2000 compared to $108,090 for
the three months ended March 31, 1999. Significant
variations in this category of revenue are likely to
occur due to the transactional nature of the
Company's financial consulting business.
Investment income increased to $674,805 for the three
months ended March 31, 2000 compared to $191,841 for
the three months ended March 31, 1999 principally
from the results of the Company's cash management and
investing activities. These activities include
transactions involving futures, puts, calls,
equities, municipal securities, and other securities.
Interest income decreased to $42,352 for the three
months ended March 31, 2000 from $108,631 for the
three months ended March 31, 1999 due to the reduced
amount of funds available for investment.
6
<PAGE>
Total expenses increased to $3,874,789 for the three
months ended March 31, 1999 from $1,043,847 for the
three months ended March 31, 1999.
Compensation and related costs increased to $763,242
for the three months ended March 31, 2000 from
$449,632 for the three months ended March 31, 1999.
The increase is due principally to the additional
employees hired by CareerEngine, Inc. in connection
with its internet-based job search services venture.
Real estate leased expenses, net increased to
$1,988,413 for the three months ended March 31, 2000
from $321,372 for the three months ended March 31,
1999 due primarily to the completion of the
construction of the movie theaters and the
commencement of rent in late 1999.
Advertising expense increased to $610,791 for the
three months ended March 31, 2000 from $26,900 for
the three months ended March 31, 1999 as
CareerEngine, Inc. commenced its comprehensive
communications program in 1999.
General and administrative expenses increased to
$512,343 for the three months ended March 31, 2000
from $245,943 for the three months ended March 31,
1999 due primarily to the increased operations of
CareerEngine, Inc.
On a pre-tax basis, the Company had a loss of
$709,792 for the three months ended March 31, 2000
compared with a loss of $635,285 for the three months
ended March 31, 1999 primarily due to the start-up
expenses associated with CareerEngine, Inc. In the
three months ended March 31, 2000, the Company had a
tax expense of $16,020 compared to a tax expense of
$12,843 for the three months ended March 31, 1999.
For Federal income tax purposes, as of December 31,
1999, the Company had net operating loss
carryforwards of approximately $17,311,000 available
to reduce future taxable income. These carryforwards
expire in the years 2005 through 2019.
The Company's net loss for the three months ended
March 31, 2000 was $725,812 compared with a net loss
of $648,128 for the three months ended March 31,
1999. For the three months ended March 31, 2000, loss
per share (basic and diluted) is $.13 per share. For
the three months ended March 31, 1999, net loss per
share (basic and diluted) was $.12 per share.
7
<PAGE>
B. Liquidity and Capital Resources
-------------------------------
Management of the Company believes that funds
generated from operations, supplemented by its
available assets, will provide it with sufficient
resources to meet present and reasonably foreseeable
future capital needs. These available assets consist
primarily of cash, and investments which are readily
convertible into cash.
The Company invests excess funds in liquid,
short-term financial instruments in order to maximize
its current cash return with minimum interest rate
risk, while preserving the ability to move quickly in
funding attractive merchant banking ventures. Such
investments include U.S. Government and municipal
obligations, futures contracts and money market
funds.
In 1997, the Company issued $72,750,000 of adjustable
rate tender securities due November 1, 2015 (the
"Bonds"). The Bonds were issued to finance 97% of the
cost of the Company's real estate program. The 3%
balance, $2,272,500, was provided as a capital
contribution by the Preferred Member ($2,250,000) and
the Common Members ($22,500) of the Company's lessor
subsidiary, Movieplex Realty Leasing, L.L.C. A third
party owns 100% of the Preferred Membership and two
subsidiaries of the Company own 100% of the Common
Membership of the Lessor.
The monthly rent received by the Company, which
commenced November 20, 1999, is always sufficient to
pay the interest and amortization related to the
Bonds, as well as the preferred return on the capital
contributed by the Preferred Member and Common
Members throughout the term of the related 16-year
lease. In addition, rent will cover all other costs
of owning and operating the real estate other than
Federal, state or local income taxes due on a net
income basis.
While the Company believes that currently available
funds will provide it with sufficient resources to
meet all present and reasonably foreseeable future
operational and capital needs, the Company is seeking
external financing in order to fund the projected
expanded operations of its e-recruiting Internet
focused venture. The Company does not have any
material commitments for capital expenditures as of
March 31, 2000.
8
<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information.
Certain statements under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and elsewhere in this Form 10-QSB constitute "forward looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements
are based on current expectations and information available to
management at this time. They may involve known risks,
uncertainties, and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements. Factors which could cause actual results to differ
from the forward looking statements include, among others, the
following: general economic and business conditions;
competition; the success of operating initiatives relating to
the Company's technology related subsidiary and the Company's
financial consulting services; development and operating
costs; fluctuations in interest rates; the existence or
absence of adverse publicity; changes in business strategy or
development plans; quality of management; availability, terms
and deployment of capital; business abilities and judgment of
personnel; availability of qualified personnel; labor and
employee benefit costs; and changes in or the failure to
comply with government regulations.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:-- A statement regarding the computation of
per share earnings is omitted because the computation
is described in Note 2 of the Notes to Consolidated
Financial Statements (Unaudited) in this Form 10-QSB.
Exhibit 27 -- Financial Data Schedule - see below
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K
during the three months ended March 31, 2000.
9
<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.
CAREERENGINE NETWORK, INC.
/s/ George W. Benoit
--------------------
Date: May 15, 2000 George W. Benoit, Chairman of the Board
of Directors, President, and Chief Executive
Officer
/s/ Anthony S. Conigliaro
-------------------------
Date: May 15, 2000 Anthony S. Conigliaro, Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAREERENGINE
NETWORK, INC. AND SUBSIDIARIES' CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE INTERIM
PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,092,172
<SECURITIES> 3,429,610
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 71,623,487
<DEPRECIATION> 1,076,689
<TOTAL-ASSETS> 78,628,127
<CURRENT-LIABILITIES> 0
<BONDS> 72,750,000
0
0
<COMMON> 674,960
<OTHER-SE> 558,128
<TOTAL-LIABILITY-AND-EQUITY> 78,628,127
<SALES> 0
<TOTAL-REVENUES> 3,164,997
<CGS> 0
<TOTAL-COSTS> 2,246,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,628,664
<INCOME-PRETAX> (709,792)
<INCOME-TAX> 16,020
<INCOME-CONTINUING> (725,812)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (725,812)
<EPS-BASIC> (.13)
<EPS-DILUTED> (.13)
</TABLE>
