UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the fiscal year ended December 31, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from __________ to __________
Commission file number l-9224
CAREERENGINE NETWORK, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer 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) (Zip Code)
212-775-0400
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -----------------------
Common stock - par value $.10 American Stock Exchange
Pacific Exchange
Securities registered under Section 12(g) of the Exchange Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
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 [_]
(Cover page 1 of 2 pages)
<PAGE>
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Issuer's revenues for 1999, its most recent fiscal year, were
$3,086,352.
As of February 29, 2000, the aggregate market value of voting stock
held by non-affiliates of the Issuer was approximately $10,427,820.
The number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at February 29, 2000
----- --------------------------------
Common stock - par value $.10 5,435,673 shares
- ----------------------------- -----------------
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form l0-KSB incorporates by reference from the
issuer's definitive proxy statement for the annual meeting of stockholders to be
held on June 1, 2000.
(Cover page 2 of 2 pages)
<PAGE>
PART I
Item l. Description of Business.
Background and History
----------------------
CareerEngine Network, Inc. (name changed from Helmstar Group, Inc. on
March 28, 2000), through its subsidiaries (collectively referred to as
the "Company" unless the context requires otherwise), is engaged
primarily in the business of e-recruiting, merchant banking, and
providing consulting services.
E-Recruiting
------------
In 1998, the Company formed a wholly-owned subsidiary, CareerEngine,
Inc., an Internet-based job search services venture.
CareerEngine, Inc. (www.careerengine.com) owns and operates a network
of category specific, career oriented websites (currently 27) which
allow employers to post job openings for qualified candidates and
individuals to confidentially post resumes for potential employers to
review. These "vertical" career websites are free to use by those
seeking employment.
There is significant need for online recruitment offerings that
leverage the attributes of career specific sites. With regard to
employers, vertical sites enable them to (i) advertise job openings on
a variety of sites (by job function, by industry, by geographic area,
etc.) and (ii) provide them with the ability to (a) search targeted
resume databases and (b) focus their recruiting efforts on select
communities of potential employees. These attributes allow employers to
effectively manage their online recruiting efforts. With regard to
employees, vertical sites allow potential job seekers to confidentially
post their resumes and provide them with the ability to focus their
search efforts on desired job functions and/or industries. These
attributes allow employees easily to locate, compare, explore, evaluate
and apply for jobs.
The Company's objective is to develop a network of sophisticated
content and community driven, career destination sites to establish a
highly valuable and
<PAGE>
multi-faceted marketing platform that will withstand the directional
changes experienced on the Internet. The Company will seek to achieve
this objective by implementing a comprehensive communications program
to enable it to (i) generate significant traffic to each of the
targeted websites in its network and (ii) appropriately "brand" the
sites to facilitate the securing of strategic contracts/alliances with
generalist career websites, major recruitment advertising firms, human
resource departments of major corporations, and major
recruitment/placement agencies.
Revenue sources are expected to be fees from (i) job posting services,
(ii) resume subscriptions, (iii) corporate advertisement placements,
(iv) career site Application Service Providers, (v) joint venture
transactions with major content providers (i.e., co-branded sites) and
(vi) corporate sponsorships. In addition, the Company expects to derive
revenue from (a) fees from the sale of targeted databases, (b) fees
from the use of its various sites for market research purposes, and (c)
E-commerce from its highly targeted audience.
Merchant Banking:
-----------------
General
-------
Since 1988, the Company has engaged in merchant banking activities
primarily concentrating on real estate projects and real estate-related
services companies. The Company seeks projects that offer strong upside
potential because of high short-term risk, albeit manageable risk, and
financial leverage. Although real estate development, rehabilitation or
"value-added" transactions are of primary interest, the Company will
consider most industries with the exception of those requiring a highly
specialized scientific analysis.
Real Estate Project
-------------------
In 1997, Movieplex Realty Leasing, L.L.C. ("Movieplex"), a subsidiary
of the Company, entered into an agreement with a major film exhibitor,
Carmike Cinemas, Inc. ("Carmike") to develop and lease an unspecified
number of state of the art multiplex movie
2
<PAGE>
theaters at a cost not to exceed approximately $75,000,000, plus an
amount equal to any proceeds received by Movieplex from the investment
of related funding prior to the expending of development costs (the
"Project Funding"). Under the terms of the agreement, Carmike was
responsible for construction costs in excess of the Project Funding.
The primary components of the project's funding were (i) $72,750,000
from Movieplex's issuance of bonds and (ii) $2,272,500 from an equity
investment by Movieplex.
Pursuant to one of the related agreements, Carmike acted as the
development agent for Movieplex over the period November 20, 1997
through November 19, 1999, (the "Development Period"). During this
Development Period, eight theaters (each theater consisting of an
acquired parcel of land and the improvements constructed thereon) were
developed at a cost substantially in excess of Project Funding. These
excess costs were funded by Carmike. In order to restore the original
intent of developing multiple theaters at an amount not to exceed the
Project Funding, on April 11, 2000, Movieplex transferred title to two
theaters to Carmike. The costs relating to the remaining six
properties, after reallocating those costs incurred by Movieplex
pertaining to the two transferred theaters, does not exceed the costs
to develop such remaining theaters. The allocated costs for each of the
six theaters does not exceed their value as determined by an outside
appraiser. In connection with the transfer of the two theaters, the
related lease was amended to (i) increase the purchase option price to
Carmike at the expiration of the initial lease term from 100% to 110%
of a pre-determined future value, (ii) effectively increase the rent
payable during the initial renewal option term of the lease by 10%, and
(iii) increase the current return on Movieplex's Common Members equity
investment. These amendments, in the aggregate, increase the Company's
anticipated financial return on this transaction. The Company was also
compensated ($188,000 in 1999) for its consulting services provided
with regard to this matter.
Commencing November 20, 1999, Carmike leased each of the six theaters
under the terms of a triple net,
3
<PAGE>
credit type lease with Movieplex, as lessor. Monthly rental payments
received by the lessor primarily fluctuate with the debt service
payments on the related bonds and the cash return due to the Common and
Preferred Member of Movieplex. The lease requires that Carmike, in
addition to paying a stipulated monthly rental to the lessor (i) pay
all utilities, insurance, and local real estate, corporate and
franchise taxes; (ii) reimburse the lessor for substantially all of its
necessary and reasonable expenses incurred in fulfilling its role as
lessor; and (iii) assume full operating, maintenance and environmental
responsibilities for the preservation and, if necessary, restoration of
the land and related improvements thereon. At the end of the initial
lease term in 2015, Carmike has the option to extend the lease,
relating to not less than all the theaters, for an additional term of
ten years and, thereafter, for an additional term of five years at
rental rates provided in the lease. Alternatively, at the end of the
initial lease term, Carmike has the option to purchase, not less than
all the theaters, at an amount based on a pre-determined future value.
Monthly rental payments received by the Lessor primarily fluctuate with
the debt service payments on the related bonds payable and the cash
return due to the Common and Preferred Members. Rental income
recognized, although accounted for on a straight-line basis, fluctuates
principally due to changes in the variable base rate of the related
bonds payable.
The bonds related to the land and theaters thereon are secured by
irrevocable bank letters of credit which, in turn, are collateralized
solely by said land and theaters. The bonds bear interest, payable
monthly, at a variable base rate (6.46% at December 31, 1999) indexed
to the 30-day, high-grade commercial paper rate which is reset weekly.
Principal on the bonds is payable in annual installments, commencing
December 1, 2000, in amounts ranging from $970,000 to $7,775,000 with a
final payment due at maturity, November 1, 2015, of $12,975,000.
The equity investment by the Lessor amounted to $2,272,500 of which
$2,250,000 and $22,500 was contributed by the Lessor's Preferred and
Common
4
<PAGE>
Memberships (or shareholdings), respectively. 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 Common and Preferred
Membership interests are entitled to a cash return based on a formula
specified within the Lease commencing January 1, 2000.
Consulting Services
-------------------
Beginning in 1990, drawing on its experience in real estate project
finance, the Company began to offer financial consulting services to
clients on a fee basis. This permits the Company to increase its
revenue by utilizing its merchant banking expertise without deploying a
significant amount of capital. The Company's primary focus in this area
has been assisting clients in realizing lower cost of capital through
creative financial structuring. This business is transaction oriented,
and potential revenue therefrom is subject to wide variation. During
1999, 1998, 1997, and 1996 approximately 19%, 34%, 5%, and 9% of the
Company's total revenues in each year were realized in connection with
providing financial consulting services.
General
-------
The Company was incorporated under the laws of the State of Delaware in
1968. It maintains offices at 2 World Trade Center, Suite 2112, New
York, New York 10048 and its telephone number is (2l2) 775-0400. Unless
the context requires otherwise, the term "Company" refers to
CareerEngine Network, Inc. and its wholly-owned subsidiaries:
CareerEngine, Inc.; Snider, Williams & Co., Inc.; Randolph, Hudson &
Co., Inc.; Shaw Realty Company, Inc.; Helmstar Funding, Inc.; Burrows,
Hayes Company, Inc.; Dover, Sussex Company, Inc.; Housing Capital
Corporation; Randel, Palmer & Co., Inc.; Parker, Reld & Co., Inc.,
McAdam, Taylor & Co., Inc.; Ryan, Jones & Co., Inc.; Advanced Digital
Networks, Inc.; Alexander Edwards International, Inc.; and Matthews &
Wright, Inc. The term Company also includes Movieplex Realty Leasing,
L.L.C. ("Movieplex"), a limited liability company, all of whose common
membership interests are indirectly owned by the Company.
As of March l, 2000, the Company had 39 employees.
5
<PAGE>
Competition
-----------
The Company's subsidiary, CareerEngine, Inc., and its web site compete
with numerous large and small organizations and their related web sites
in the Internet-based personnel recruiting market. These web sites can
be described as either "generalist" (a web site that covers employment
opportunities in all industries) or "vertical/category specific" (a web
site that covers employment opportunities in a specific industry). The
Company expects to have significant Internet-based competition for the
foreseeable future. Additionally, the traditional print media,
specifically major city newspapers, are major competitors of the
Company. Almost all of the Company's competitors in this area are
vastly larger, have attained significant name recognition, possess
large advertising budgets, and have established significant strategic
alliances within the recruitment industry.
Competition in the Company's business of merchant banking and financial
consulting, focusing on middle market oriented, real estate and other
businesses, is widespread and highly fragmented. Competition will be
encountered from small syndicators; individual investors, typically
from the local market; smaller insurance companies; and participating
mortgage lenders. Many of the Company's likely competitors have greater
access to capital than the Company. The Company encounters stiff
competition from a broad range of financial services firms when seeking
financial consulting assignments. Other major parties in the
marketplace for off-balance sheet structures are large developers,
commercial banks with synthetic lease structures, and real estate
investment trusts.
6
<PAGE>
Regulation
----------
In the course of conducting its business of merchant banking, the
Company may acquire interests in regulated activities. Such regulation
may be either directly or indirectly related to the Company's interest.
Forward Looking Statements
--------------------------
Certain statements in this Annual Report Form 10-KSB constitute
"forward-looking statements" relating to the Company within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements
regarding future events, our financial performance and operating
results, our business strategy and our financing plans are
forward-looking statements. In some cases you can identify
forward-looking statements by terminology, such as "may," "will,"
"would," "should," "could," "expect," "intend," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue," the
negative of such terms or other comparable terminology. These
statements are only predictions. Known and unknown risks, uncertainties
and other factors could cause actual results to differ materially from
those contemplated by the statements. In evaluating these statements,
you should specifically consider various factors that may cause our
actual results to differ materially from any forward-looking
statements.
7
<PAGE>
Item 2. Description of Property.
The Company leases approximately 7,000 square feet of office space at 2
World Trade Center, New York, New York 10048 under the terms of a lease
that expires February 28, 2006. This office is utilized as the
Company's executive office in addition to housing its e-recruiting,
consulting and merchant banking activities. The future minimum annual
base rental commitments under this lease, at December 31, 1999, are as
follows:
2000 $ 139,100
2001 139,100
2002 139,100
2003 139,100
2004 139,100
Thereafter 162,200
-----------
$ 857,700
===========
The Company owns six parcels of land and the multiplex movie theaters
thereon, which have a related aggregate cost of $70,494,949 at December
31, 1999. These theaters are located in Mobile, AL, El Paso, TX,
Franklin, TN, Delmont, PA, Kennewick, WA and Edinburgh, TX.
8
<PAGE>
Item 3. Legal Proceedings.
None. In February 2000, the Company, in exchange for a nominal amount,
obtained a release from all claims arising from a 1996 litigation.
9
<PAGE>
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
10
<PAGE>
PART II
Item 5. Market For Common Equity and Related Stockholder
Matters.
Exchange Listing:
The common stock of CareerEngine Network, Inc. is listed on the
American Stock Exchange and the Pacific Exchange (trading symbol CNE).
The approximate number of recordholders of Common Stock as of February
29, 2000 was 249.
Equity Sale Prices:
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
High Low High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 2 5/8 1 9 1/2 2 3/16 5 2 1/2 6 3 1/2
1998 1 3/4 15/16 11/16 7/8 5/8 1 1/4 3/4
</TABLE>
Dividends:
The Company has not previously paid cash dividends on its common stock.
The Board of Directors does not presently intend to pay cash dividends
on the outstanding shares of common stock in the foreseeable future.
The payments of future dividends and the amount thereof will depend
upon the Company's earnings, financial condition, capital requirements
and such other factors as the Board of Directors may consider relevant.
11
<PAGE>
Item 6. Management's Discussion and Analysis.
A. Results of Operations
-------------------------
1. 1999 Compared to 1998
-------------------------
Total revenues increased to $3,086,352 in 1999 from $3,006,509 for
1998.
E-recruiting related services increased to $30,980 in 1999 from nil in
1998 as the operations of the Company's subsidiary, CareerEngine, Inc.,
commenced.
Rental income from real estate leased increased to $996,405 for 1999
from nil in 1998 as the construction of the Company's movie theaters
was completed on November 20, 1999 and rent thereon commenced.
Revenue from financial consulting fees decreased to $615,314 in 1999
from $1,040,000 in 1998. As the Company provides its services on a fee
basis and due to the transactional nature of the consulting business,
significant variations in revenue from year to year are common.
Income on securities transactions decreased to $836,549 for 1999 from
$1,526,873 for 1998. This revenue category includes the net profit from
the Company's cash management and its investing in futures, puts,
calls, municipals and other securities.
Other income increased to $229,370 for 1999 from $22,101 in 1998 due to
the Company's collection of a reserved receivable relating to the sale
of a former subsidiary.
Total expenses increased to $7,127,968 for 1999 from $3,738,715 in
1998.
Compensation and related costs increased to $2,642,606 for 1999 from
$1,601,163 for 1998. 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, net increased to $1,568,029 in 1999 from $1,093,435
in 1998 due primarily to the completion
12
<PAGE>
of the construction of the movie theaters and the commencement of rent
in late 1999. At that time, depreciation commenced and net interest
expense on the related bonds payable ceased to be partially
capitalized. Accordingly, depreciation of $158,927 (nil in 1998) and
net interest expense of $1,405,435 ($1,092,852 in 1998) was charged in
1999. The decrease in interest income ($1,393,946 in 1999 and
$3,502,350 in 1998) included in net interest expense was due to the
significant decrease in the amount available for investing, as the
funds were utilized for improvements.
Advertising expense increased to $1,235,778 for 1999 from $77,515 for
1998 as CareerEngine, Inc. commenced its comprehensive communications
program in 1999.
General and administrative expenses increased to $1,554,314 for 1999
from $568,025 for 1998 due primarily to the increased operations of
CareerEngine, Inc.
Interest expense decreased to $127,241 for 1999 from $398,577 for 1998
primarily due to the Company's computation of interest due on its
outstanding tax assessment was based on one year in 1999 and several
years in 1998.
On a pretax basis, the Company had a loss of $4,041,616 for 1999
compared with a loss of $732,206 for 1998 primarily due to the start-up
expenses associated with CareerEngine, Inc. In 1999, the Company had a
tax expense of $10,778 compared to a tax benefit of $107,797 for 1998.
For Federal income tax purposes, as of December 31, 1999, the Company
has 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 1999 was $4,052,394 compared with net loss
of $624,409 for 1998. For 1999, loss per share (basic and diluted) is
$.75 per share. For 1998, net loss per share (basic and diluted) was
$.11 per share.
13
<PAGE>
Inflation
---------
Inflation may affect the Company in certain areas of its cash
management, real estate development program, and merchant banking
activities. Changes in interest rates typically follow actual or
expected changes in the inflation rate. Accordingly, interest rates
usually increase during periods of high inflation and decrease during
periods of low inflation.
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. See
"Description of Business - Merchant Banking - Real Estate Project." 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.
14
<PAGE>
While the Company believes that currently available funds will provide
it with sufficient resources to meet all present and reasonably
foreseeable future capital needs, as well as future operational costs
of its e-recruiting Internet focused venture, the Company may seek
various forms of external financing in order to fund its operations in
the future. The Company does not have any material commitments for
capital expenditures as of December 31, 1999.
15
<PAGE>
Item 7. Financial Statements.
The Company's financial statements to be filed hereunder follow,
beginning with page F.
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
CareerEngine Network, Inc.
New York, New York
We have audited the consolidated balance sheet of CareerEngine Network, Inc. and
subsidiaries (formerly Helmstar Group, Inc. and subsidiaries) as of December 31,
1999, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the two-year period
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CareerEngine
Network, Inc. and subsidiaries as of December 31, 1999, and the consolidated
results of their operations and their consolidated cash flows for each of the
years in the two-year period then ended in conformity with generally accepted
accounting principles.
/s/Richard A. Eisner & Company, LLP
- -----------------------------------
Richard A. Eisner & Company, LLP
New York, New York
March 10, 2000
With respect to Note A
March 28, 2000
With respect to Note B
April 11, 2000
<PAGE>
<TABLE>
<CAPTION>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1999
<S> <C>
ASSETS
Cash and cash equivalents .................................... $ 1,006,276
Marketable securities ........................................ 4,888,610
Real estate leased, net ...................................... 70,336,022
Fixed assets, net ............................................ 600,541
Deferred financing costs, net ................................ 1,707,279
Deferred rental income ....................................... 577,485
Other assets ................................................. 565,018
------------
$ 79,681,231
============
LIABILITIES
Bonds payable ................................................ $ 72,750,000
Accrued interest ............................................. 836,130
Accrued expenses and other liabilities ....................... 1,891,201
------------
Total liabilities ...................................... 75,477,331
------------
Due to preferred member ...................................... 2,250,000
------------
Commitments
STOCKHOLDERS' EQUITY
Common stock - authorized 10,000,000 shares, par value $.10;
issued 6,749,600 shares ................................... 674,960
Paid-in surplus .............................................. 14,984,510
Deficit ...................................................... (10,657,861)
------------
5,001,609
Less treasury stock, at cost - 1,313,927 shares .............. (3,047,709)
------------
1,953,900
$ 79,681,231
============
</TABLE>
See notes to financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Year Ended December 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
E-recruiting related services ....................................... $ 30,980
Rental income from real estate leased ............................... 996,405
Consulting fees ..................................................... 615,314 $ 1,040,000
Income on securities transactions, net .............................. 836,549 1,526,873
Interest income ..................................................... 377,734 417,535
Other income ........................................................ 229,370 22,101
----------- -----------
3,086,352 3,006,509
----------- -----------
Expenses:
Compensation and related costs ...................................... 2,642,606 1,601,163
Real estate leased expenses, net .................................... 1,568,029 1,093,435
Advertising ......................................................... 1,235,778 77,515
General and administrative .......................................... 1,554,314 568,025
Interest ............................................................ 127,241 398,577
----------- -----------
7,127,968 3,738,715
----------- -----------
Loss before income taxes ............................................... (4,041,616) (732,206)
Income tax provision (benefit) ......................................... 10,778 (107,797)
----------- -----------
Net loss ............................................................... $(4,052,394) $ (624,409)
=========== ===========
Net loss per common share - basic and diluted .......................... $ (.75) $ (.11)
=========== ===========
Weighted average number of common shares outstanding - basic and diluted 5,435,673 5,489,376
=========== ===========
</TABLE>
See notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
Common Stock
------------------------------- Paid-in
Shares Amount Surplus Deficit
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance - January 1, 1998 ..... 6,749,600 $ 674,960 $ 14,984,510 $ (5,981,058)
Treasury stock acquired at cost
Net loss ...................... (624,409)
------------ ------------ ------------ ------------
Balance - December 31, 1998 ... 6,749,600 674,960 14,984,510 (6,605,467)
Treasury stock acquired at cost
Net loss ...................... (4,052,394)
------------ ------------ ------------ ------------
Balance - December 31, 1999 ... 6,749,600 $ 674,960 $ 14,984,510 $(10,657,861)
============ ============ ============ ============
<PAGE>
Treasury Stock
------------------------------
Shares Amount Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance - January 1, 1998 ..... 1,233,227 $ (2,928,598) $ 6,749,814
Treasury stock acquired at cost 63,000 (95,931) (95,931)
Net loss ...................... (624,409)
------------ ------------ ------------
Balance - December 31, 1998 ... 1,296,227 (3,024,529) 6,029,474
Treasury stock acquired at cost 17,700 (23,180) (23,180)
Net loss ...................... (4,052,394)
------------ ------------ ------------
Balance - December 31, 1999 ... 1,313,927 $ (3,047,709) $ 1,953,900
============ ============ ============
</TABLE>
See notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Year Ended December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ....................................................... $ (4,052,394) $ (624,409)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation and amortization ............................. 478,246 79,409
Share of income from joint venture ........................ (22,101)
Gain on sale of furniture and equipment ................... (166)
Purchase of marketable securities ......................... (14,772,852) (26,361,024)
Sale of marketable securities ............................. 17,740,652 25,739,476
Changes in:
Deferred rental income ................................. (577,485)
Other assets ........................................... 49,192 38,767
Accrued expenses, other liabilities and accrued interest (533,330) 1,691,723
------------ ------------
Net cash (used in) provided by operating activities . (1,667,971) 541,675
------------ ------------
Cash flows from investing activities:
Sales of other short-term investments - restricted ............. 52,020,895 19,154,039
Purchase of land ............................................... (940,082) (13,697,418)
Construction of improvements ................................... (49,575,013) (6,271,436)
Purchase of furniture and equipment ............................ (599,328) (202,242)
Distributions from joint ventures .............................. 195,391
Other .......................................................... 17,493
------------ ------------
Net cash provided by (used in) investing activities . 906,472 (804,173)
------------ ------------
Cash flows from financing activities:
Deferred financing costs ....................................... (152,968)
Purchase of treasury stock ..................................... (23,180) (95,931)
Contribution received from preferred member .................... 750,000 750,000
------------ ------------
Net cash provided by financing activities ........... 726,820 501,101
------------ ------------
(Decrease) increase in cash and cash equivalents .................. (34,679) 238,603
Cash and cash equivalents at beginning of year .................... 1,040,955 802,352
------------ ------------
Cash and cash equivalents at end of year .......................... $ 1,006,276 $ 1,040,955
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) ....................... $ 2,756,900 $ 4,643,493
Income taxes ................................................ $ 31,175 $ 71,763
</TABLE>
See notes to financial statements
F-5
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
Notes to Financial Statements
December 31, 1999
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Effective March 28, 2000 Helmstar Group, Inc. changed its name to CareerEngine
Network, Inc. CareerEngine Network, Inc. and its subsidiaries (the "Company")
are engaged in the e-recruiting business through its subsidiary CareerEngine,
Inc. which was formed in 1998. The Company is also engaged in merchant banking
activities concentrating on real estate projects and also provides financial
consulting services.
[1] Principles of consolidation:
The accompanying consolidated financial statements include the accounts of
CareerEngine Network, Inc. and its subsidiaries. All significant
intercompany balances and transactions have been eliminated.
[2] Depreciation and amortization:
Depreciation of real estate improvements, which consist of movie theaters
under lease (see Note B), began upon commencement of rental income in
November 1999, using the straight-line method over an estimated useful
life of thirty-nine years.
Furniture, fixtures and equipment are being depreciated using both
straight-line and accelerated methods over estimated lives of five to
seven years. Leasehold improvements are amortized on a straight-line basis
over the shorter of the term of the lease or their estimated useful lives.
Deferred financing costs are being amortized over the eighteen year term
of the related bonds. As of December 31, 1999, accumulated amortization on
deferred financing costs amounted to $218,896.
[3] Revenue recognition:
Leases of movie theaters are being accounted for as operating leases and
rental income over the initial lease term is being recognized on a
straight-line basis subject to the fluctuations of the variable interest
rate on the related bonds which financed the construction of the movie
theaters (see Note B). The excess of rental income recognized over rental
income received is recorded as deferred rental income in the accompanying
balance sheet.
E-recruiting related services are earned on the placement of banner and
job placement advertisements on the Company's web site. Such fees are
recognized over the period during which the advertisements are exhibited.
Consulting fees are recognized as services are provided and all
contractual obligations have been performed.
[4] Cash and cash equivalents:
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. As of
December 31, 1999, cash equivalents consist principally of an investment
of approximately $853,000 in a money market account.
<PAGE>
[5] Net loss per share:
Basic and diluted net loss per share is computed based upon the weighted
average number of common shares outstanding during each year. Outstanding
employee stock options did not have an effect on the computation as they
were anti-dilutive.
F-6
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[6] Income taxes:
Deferred income taxes are measured by applying enacted statutory rates in
effect at the balance sheet date to net operating loss carryforwards and
to the differences between the tax bases of assets and liabilities and
their reported amounts in the financial statements. The resulting deferred
tax asset as of December 31, 1999 was fully reserved since the likelihood
of realization of future tax benefits cannot be established.
[7] Marketable securities:
The Company's marketable securities which have a cost of $4,848,780
consist of United States Treasury Bills and Municipal Bonds which are
classified as trading securities and are recorded at market value. Gains
and losses on the trading securities are included in operations.
[8] Derivative financial instruments:
As part of its investment strategies to profit from anticipated market
movements, the Company maintains trading positions in a variety of
derivative financial instruments consisting principally of futures
contracts in treasuries, stocks and municipal securities. All positions
are reported at fair value, and changes in fair value are reflected in
operations as they occur. The Company realized net gains from derivatives
sold in 1999 and 1998 of approximately $837,000 and $1,527,000,
respectively. Such amounts are included in income on securities
transactions in the accompanying statements of operations. At December 31,
1999, no derivative financial instruments were held by the Company and the
average fair value of such instruments held during the years was not
material.
[9] Stock-based compensation:
The Company has elected to continue to account for its stock-based
compensation plans using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB25"). Under APB25, compensation cost for stock options
is measured as the excess, if any, of the quoted market price of the
Company's common stock at the date of the grant or other measurement date
over the amount an employee must pay to acquire the stock.
[10] Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
[11] Advertising costs:
Advertising costs, which relate primarily to the e-recruiting business are
expensed as incurred.
<PAGE>
[12] Software development costs:
External direct costs of materials and services incurred to develop the
Company's website during the application development stage were
capitalized. Such costs, which amounted to approximately $38,000 in the
year ended December 31, 1999, are being amortized using the straight-line
method over an estimated useful life of three years.
F-7
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[13] Reclassifications:
Certain amounts have been reclassified in the 1998 financial statements to
conform with the 1999 presentation.
NOTE B - REAL ESTATE LEASED, BONDS PAYABLE AND DUE TO PREFERRED MEMBER
In 1997, Movieplex Realty Leasing, L.L.C. ("Movieplex"), a subsidiary of the
Company, entered into an agreement with a major film exhibitor, Carmike Cinemas,
Inc. ("Carmike"), to develop and lease an unspecified number of state of the art
multiplex movie theaters at a cost not to exceed approximately $75,000,000, plus
an amount equal to any proceeds received by Movieplex from the investment of
related funding prior to the expending of development costs (the "Project
Funding"). Under the terms of the agreement, Carmike was responsible for
construction costs in excess of the Project Funding. The primary components of
the Project Funding were (i) $72,750,000 from Movieplex's issuance of bonds and
(ii) $2,272,500 from an equity investment by Movieplex.
Pursuant to one of the related agreements, Carmike acted as the development
agent for Movieplex over the period November 20, 1997 through November 19, 1999
(the "Development Period"). During the Development Period, eight theaters (each
theater consisting of an acquired parcel of land and the improvements
constructed thereon) were developed at a cost substantially in excess of the
Project Funding. These excess costs were funded by Carmike. In order to restore
the original intent of developing multiple theaters at an amount not to exceed
the Project Funding, on April 11, 2000, Movieplex transferred title to two
theaters to Carmike. The costs relating to the remaining six properties, after
reallocating those costs incurred by Movieplex pertaining to the two transferred
theaters, does not exceed the cost incurred to develop such remaining theaters.
The allocated costs for each of the six theaters does not exceed their value as
determined by an outside appraiser. In connection with the transfer of the two
theaters, the related lease was amended to (i) increase the purchase option
price to Carmike at the expiration of the initial lease term from 100% to 110%
of a pre-determined future value, (ii) effectively increase the rent payable
during the initial renewal option term of the lease by 10%, and (iii) increase
the current return on Movieplex's Common Members' equity investment. These
amendments, in the aggregate, increase the Company's anticipated financial
return on this transaction. The Company was also compensated ($188,000) for its
consulting services provided with regard to this matter.
Commencing November 20, 1999, Carmike leased each of the six theaters under the
terms of a triple net, credit type lease with Movieplex, as lessor. Monthly
rental payments received by the lessor primarily fluctuate with the debt service
payments on the related bonds and the cash return due to the Common and
Preferred Members of Movieplex. The lease requires that Carmike, in addition to
paying a stipulated monthly rental to the lessor (i) pay all utilities,
insurance, and local real estate, corporate and franchise taxes; (ii) reimburse
the lessor for substantially all of its necessary and reasonable expenses
incurred in fulfilling its role as lessor; and (iii) assume full operating,
<PAGE>
maintenance and environmental responsibilities for the preservation and, if
necessary, restoration of the land and related improvements thereon. At the end
of the initial lease term in 2015, Carmike has the option to extend the lease,
relating to not less than all the theaters, for an additional term of ten years
and, thereafter, for an additional term of five years at rental rates provided
in the lease. Alternatively, at the end of the initial lease term, Carmike has
the option to purchase, not less than all the theaters, at an amount based on a
predetermined future value.
F-8
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE B - REAL ESTATE LEASED, BONDS PAYABLE AND DUE TO PREFERRED MEMBER
(CONTINUED)
Minimum future rentals to be received on the leases, based on the variable base
interest rate in effect at the inception of the lease, for the five years
subsequent to December 31, 1999 and thereafter, are as follows:
Year Ending
December 31, Amount
------------- ---------------
2000 $ 7,546,000
2001 7,508,000
2002 7,495,000
2003 7,482,000
2004 7,467,000
Thereafter 104,672,000
---------------
$ 142,170,000
===============
Bonds payable are secured by irrevocable bank letters of credit which, in turn,
are collateralized solely by the related land and theaters thereon. The bonds
bear interest, payable monthly, at a variable base rate (6.46% at December 31,
1999) indexed to the 30-day, high-grade commercial paper rate which is reset
weekly. Principal on the bonds is payable in annual installments, commencing
December 1, 2000, in amounts ranging from $970,000 to $7,775,000 with a final
payment due at maturity, November 1, 2015, of $12,975,000. The fair value of the
bonds approximates the amount set forth in the financial statements.
Scheduled maturities of bonds payable for the five years subsequent to December
31, 1999 and thereafter are as follows:
Year Ending
December 31, Amount
------------- ---------------
2000 $ 970,000
2001 1,035,000
2002 1,105,000
2003 1,180,000
2004 1,260,000
Thereafter 67,200,000
---------------
$ 72,750,000
===============
During the Development Period, interest, related letter of credit fees and
amortization of deferred financing costs related to the bonds were capitalized,
except those amounts attributable to funds not yet expended to either purchase
land or construct the improvements thereon. During the years ended December 31,
1999 and 1998, respectively, approximately $3,051,629 and $516,000 of interest,
letter of credit fees and amortization of deferred financing costs, were
capitalized and included in real estate leased - improvements.
<PAGE>
The equity investment by the lessor amounted to $2,272,500 of which $2,250,000
and $22,500 was contributed by the lessor's Preferred and Common Memberships (or
shareholdings), respectively. 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 Common and Preferred Membership interests are entitled to a
cash return based on a formula specified within the lease.
F-9
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE B - REAL ESTATE LEASED, BONDS PAYABLE AND DUE TO PREFERRED MEMBER
(CONTINUED)
As of December 31, 1999 real estate leased consists of the following:
Land $ 14,637,500
Improvements 55,857,449
---------------
70,494,949
Less accumulated depreciation 158,927
---------------
$ 70,336,022
===============
Expenses related to real estate leased, net included in the accompanying
statements of operations consist of the following:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
Interest expense on bonds $ 2,799,381 $ 4,595,202
Interest income on restricted investments (1) (1,393,946) (3,502,350)
--------------- ---------------
Interest expense, net 1,405,435 1,092,852
Depreciation expense 158,927
Other 3,667 583
--------------- ---------------
$ 1,568,029 $ 1,093,435
=============== ===============
</TABLE>
(1) The Trust Indenture pursuant to which the bonds were issued,
restricted the term and the investment instruments in which the
bond proceeds would be invested until spent for the purposes
defined in the indenture. Interest income earned on the
investments is being shown as an offset to the interest expense
on the bonds.
<PAGE>
NOTE C - INCOME TAXES
The income tax provision (benefit), all of which is current, consists of the
following:
Year Ended
December 31,
----------------------------
1999 1998
------------ -------------
Federal $ 0 $ (22,143)
State and local 10,778 (85,654)
------------ -------------
$ 10,778 $ (107,797)
============ =============
At December 31, 1999, the Company has a net operating loss carryforward for
federal income tax purposes of approximately $17,311,000, which expires in the
years 2005 through 2019.
F-10
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE C - INCOME TAXES (CONTINUED)
The Company's deferred tax assets and liability consist of the following as of
December 31, 1999:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforward $ 7,963,000
Liability for interest and state taxes related to federal
tax settlement 266,000
Other 39,000
--------------
Total deferred tax assets, before valuation allowance 8,268,000
Less:
Valuation allowance (8,002,000)
--------------
Total deferred tax assets 266,000
Deferred tax liability:
Deferred rental income (266,000)
--------------
Net deferred tax assets $ 0
==============
</TABLE>
The valuation allowance increased by approximately $2,027,000 during 1999 and
$650,000 during 1998.
The effective tax rate varied from the statutory federal income tax rate as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
------------------
1999 1998
---- ----
<S> <C> <C>
Statutory rate (34.0)% (34.0)%
State and local taxes, net of federal income tax effect (12.0) 4.3
Nondeductible expenses 1.8 3.9
Tax exempt interest (5.5)
Reversal of prior year tax overaccrual (7.2)
Valuation allowance 50.0 18.2
----- -----
Effective rate .3% (14.8)%
===== =====
</TABLE>
<PAGE>
The Internal Revenue Service has examined the Company's federal income tax
returns for the years 1985 through 1989 and in December 1999 assessed a tax
deficiency of $348,000 together with accrued interest of $576,000. As of
December 31, 1997, the Company had recorded a liability for income tax and
interest related to the years under examination and during 1998 and 1999, the
Company accrued additional interest expense of $312,000 and $125,000,
respectively, related to the tax deficiency, thereby increasing the liability to
$984,000 at December 31, 1999, including related additional state and local tax
deficiencies.
F-11
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE D - FIXED ASSETS
Fixed assets consist of the following:
Furniture and fixtures $ 163,701
Computer and other equipment 855,795
Leasehold improvements 86,807
-------------
1,106,303
Less accumulated depreciation 505,762
-------------
$ 600,541
=============
NOTE E - STOCK OPTION PLANS
In 1990, the Company adopted a stock option plan (the "1990 Plan") for granting
of options to purchase up to 750,000 shares of its common stock, pursuant to
which officers and other key employees are eligible to receive incentive and/or
nonqualified stock options, stock appreciation rights, and restricted stock
awards. Incentive stock options granted under the 1990 Plan are exerciseable for
a period of up to 10 years (five years in the case of a 10% stockholder) from
date of grant at an exercise price which is not less than the fair value on date
of grant, except that the exercise price of options granted to a stockholder
owning more than 10% of the outstanding capital stock may not be less than 110%
of the fair value of the common stock at date of grant.
On April 23, 1999, the Company adopted a stock option plan (the "1999 Plan") for
granting options to purchase up to 350,000 shares of common stock, pursuant to
which officers and other key employees are eligible to receive incentive and/or
nonqualified stock options. Options granted under the 1999 Plan are exercisable
for a period of up to 5 years from date of grant at an exercise price which is
not less than the fair value on date of grant, except that the exercise price of
options granted to a stockholder owing more than 10% of the outstanding capital
stock may not be less than 110% of the fair value of the common stock at date of
grant.
<PAGE>
Stock option activity under the 1990 Plan and 1999 Plan is summarized as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1999 1998
-------------------------- ------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
----------- ------- ----------- ------
<S> <C> <C> <C> <C>
Options outstanding at beginning of year 100,000 $ .56 100,000 $.56
Granted 460,000 2.33
----------- -----------
Options outstanding at end of year 560,000 2.02 100,000 .56
=========== ===========
Options exercisable at end of year 100,000 .56 100,000 .56
=========== ===========
</TABLE>
F-12
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE E - STOCK OPTION PLANS (CONTINUED)
The following table presents information relating to stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- ---------------------
Weighted
Weighted Average Weighted
Average Remaining Average
Exercise Life in Exercise
Range of Exercise Price Shares Price Years Shares Price
----------------------- ------ ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
$.56 100,000 $ .56 2.92 100,000 $.56
$2.25 - $2.50 460,000 2.33 9.27
------- -------
560,000 2.02 8.14 100,000 .56
======= =======
</TABLE>
On May 1, 1999, CareerEngine, Inc., a subsidiary of the Company, adopted a stock
option plan (the "1999 Plan") for granting options to purchase up to 2,000,000
shares of common stock, pursuant to which officers and other key employees are
eligible to receive incentive and/or nonqualified stock options. Options granted
under the 1999 Plan are exercisable for a period of up to 10 years from date of
grant at an exercise price which is not less than the fair value on date of
grant, except that the exercise price of options granted to a stockholder owning
more than 10% of the outstanding capital stock may not be less than 110% of the
fair value of the common stock at date of grant. During 1999, CareerEngine, Inc.
granted 1,580,000 options with a weighted average exercise price of $.55 of
which 15,000 options are exercisable at December 31, 1999 at $2.50.
The following table presents information relating to stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------- ---------------------
Weighted
Weighted Average Weighted
Average Remaining Average
Exercise Life in Exercise
Shares Price Years Shares Price
------ ----- ----- ------ -----
<S> <C> <C> <C>
1,075,000 $ .01 9.34
505,000 2.50 9.87 15,000 $2.50
--------- ------
1,580,000 .55 9.51 15,000 2.50
========= ======
</TABLE>
<PAGE>
The fair value of options at date of grant was estimated using the Black-Scholes
option pricing model utilizing the following assumptions:
CareerEngine CareerEngine,
Network, Inc Inc.
1999 1999
-------------- --------------
Risk-free interest rates 5.12% to 6.59% 5.15% to 6.30%
Expected option life in years 5 to 7 5
Expected stock price volatility 134% 46%
Expected dividend yield 0% 0%
F-13
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE E - STOCK OPTION PLANS (CONTINUED)
Had the Company elected to recognize compensation cost based on the fair value
of the options at the date of grant as prescribed by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", net
loss in 1999 would have been approximately $(4,274,049) or $(.79), per basic and
diluted loss per share.
NOTE F - COMMITMENTS
[1] The Company occupies office space under a lease expiring on February 28,
2006. Rental expense relating to the lease amounted to $167,966 and
$164,819 for the years ended December 31, 1999 and 1998, respectively.
Minimum future annual rental payments at December 31, 1999 are as follows:
2000 $ 139,100
2001 139,100
2002 139,100
2003 139,100
2004 139,100
Thereafter 162,200
-----------
$ 857,700
===========
[2] The Company has a Retirement Savings Plan for its employees, pursuant to
Section 401(k) of the Internal Revenue Code. Employee contributions to the
plan and the Company's matching contributions vest immediately. The
Company's contribution to the plan, in accordance with the plan's top
heavy provisions, amounted to approximately $10,100 and $9,800, in the
twelve months ended December 31, 1999 and 1998, respectively.
NOTE G - FINANCIAL INFORMATION RELATING TO OPERATING SEGMENTS
The Company's reportable segments are strategic business units that offer
different services as described in Note A. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. The Company evaluates performance of a segment based on
income or loss from operations before income taxes.
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1999
---------------------------------------------------------------------
E-recruiting
Merchant Consulting related
Banking Services Services Total
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 2,440,058 $ 615,314 $ 30,098 $ 3,086,352
Interest income (1) 1,771,680 1,771,680
Interest expense (2) 2,926,622 2,926,622
Depreciation and amortization 310,035 168,211 478,246
Income (loss) from operations 28,118 (787,964) (3,281,770) (4,041,616)
Segment assets 79,007,970 89,600 583,661 79,681,231
Capital expenditures 50,545,579 24,662 544,182 51,114,423
</TABLE>
F-14
<PAGE>
CAREERENGINE NETWORK, INC. AND SUBSIDIARIES
NOTE G - FINANCIAL INFORMATION RELATING TO OPERATING SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
---------------------------------------------------------------------
E-recruiting
Merchant Consulting related
Banking Services Services Total
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 1,966,509 $ 1,040,000 $ 3,006,509
Interest income (1) 3,919,885 3,919,885
Interest expense (2) 4,993,779 4,993,779
Depreciation and amortization 36,779 $ 42,630 79,409
Income (loss) from operations (551,938) 171,077 (351,345) (732,206)
Segment assets 83,377,206 21,100 141,829 83,540,135
Capital expenditures 20,077,022 94,074 20,171,096
Investment in equity method investee 12,574 12,574
Equity in net income of investees 22,101 22,101
</TABLE>
(1) Includes interest on restricted investments of 1,393,948, (1999) and
$3,502,350 (1998) which was included in real estate leased expenses in the
Consolidated Statements of Operations.
(2) Includes interest expense on bonds of $2,799,381 (1999) and $4,595,202
(1998) which was included in real estate leased expenses in the
Consolidated Statement of Operations.
All of the Company's revenues are attributable to, and all of its long-lived
assets are located, in the United States.
NOTE H - LITIGATION
In February 2000, the Company, in exchange for a nominal amount, obtained a
release from all claims arising from a 1996 litigation.
F-15
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
17
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The information required to be furnished pursuant to this item is set
forth under the caption "Management" in the registrant's definitive
proxy statement to be filed with the Securities and Exchange Commission
within 120 days of the end of the fiscal year ended December 31, 1999,
the period covered by this Form 10-KSB, and is incorporated herein by
reference.
18
<PAGE>
Item 10. Executive Compensation.
The information required to be furnished pursuant to this item is set
forth under the caption "Executive Compensation" in the registrant's
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days of the end of the fiscal year ended December
31, 1999, the period covered by this Form 10-KSB, and is incorporated
herein by reference.
19
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The information required to be furnished pursuant to this item is set
forth under the caption "Security Ownership of Certain Beneficial
Owners and Management" in the registrant's definitive proxy statement
to be filed with the Securities and Exchange Commission within 120 days
of the end of the fiscal year ended December 31, 1999, the period
covered by this Form 10-KSB, and is incorporated herein by reference.
20
<PAGE>
Item 12. Certain Relationships and Related Transactions
The information required to be furnished pursuant to this item is set
forth under the caption "Certain Relationships and Related
Transactions" in the registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission within 120 days of
the end of the fiscal year ended December 31, 1999, the period covered
by this Form 10-KSB, and is incorporated herein by reference.
21
<PAGE>
Item 13. Exhibits, List and Reports on Form 8-K.
(a) Exhibits
--------
Certain of the following exhibits, as indicated
parenthetically, were previously filed as exhibits to other
reports or registration statements filed by the Registrant
under the Securities Act of 1933 or under the Securities
Exchange Act of 1934 and are hereby incorporated by reference.
3.1 Restated Certificate of Incorporation of the
Registrant filed on July 31, 1987 and amendments
thereto filed on June 8, 1989, September 14, 1990
and December 2, 1991. Certificate of change of
location of registered office and of registered
agent filed on May 7, 1992. (Incorporated by
reference to the Registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1997.)
3.2 Amended and Restated By-Laws of the Registrant.
(Incorporated by reference to the Registrant's
Annual Report on Form 10-KSB for the year ended
December 31, 1995.)
10.1 Lease of the Company's executive offices, dated
February 29, 1996. (Incorporated by reference to
the Registrant's Annual Report on Form 10-KSB for
the year ended December 31, 1996.)
10.2 CareerEngine Network, Inc. 1999 Stock Option Plan.
10.3 Indenture of Trust between Movieplex Realty
Leasing, L.L.C. and First Union National Bank, as
Trustee, dated November 1, 1997. (Incorporated by
reference to the Registrant's Annual Report on
Form 10-KSB/A for the year ended December 31,
1997.)
10.4 Form of Bond. (Incorporated by reference to the
Registrant's Annual Report on Form 10-KSB/A for
the year ended December 31, 1997.)
22
<PAGE>
10.5 Master Lease between Movieplex Realty Leasing,
L.L.C., as Landlord, and Carmike Cinemas, Inc., as
Tenant, dated November 20, 1997. (Incorporated by
reference to the Registrant's Annual Report on
Form 10-KSB/A for the year ended December 31,
1997.)1
10.6 Reimbursement Agreement, dated as of November 20,
1997, among Movieplex Realty Leasing, L.L.C, the
Lenders, and Wachovia Bank, N.A., as Agent.
(Incorporated by reference to the Registrant's
Annual Report on Form 10-KSB/A for the year ended
December 31, 1997.)1
10.7 Form of Letter of Credit. (Incorporated by
reference to the Registrant's Annual Report on
Form 10-KSB/A for the year ended December 31,
1997.)
10.8 Form of Bond Purchase Agreement between Movieplex
Realty Leasing, L.L.C. and {the Purchaser], dated
November 20, 1997. (Incorporated by reference to
the Registrant's Annual Report on Form 10-KSB/A
for the year ended December 31, 1997.)
- --------
1 Portions of this exhibit have been deleted per the Registrant's request for
confidential treatment and filed separately with the Commission pursuant to Rule
24b-2
23
<PAGE>
10.9 Agency and Development Agreement between Movieplex
Realty Leasing, L.L.C. and Carmike Cinemas, Inc.,
dated November 20, 1997. (Incorporated by
reference to the Registrant's Annual Report on
Form 10-KSB/A for the year ended December 31,
1997.)
21.0 Subsidiaries of the Registrant.
(b) No reports on Form 8-K have been filed during the
last quarter covered by this report.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 14th day of April,
2000.
CareerEngine Network, Inc.
/s/George W. Benoit
----------------------
George W. Benoit, Chairman of the Board
and Chief Executive Officer
/s/Anthony S. Conigliaro
------------------------
Anthony S. Conigliaro, Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant in
the capacities indicated on the 14th day of April, 2000.
Signature Title
--------- -----
/s/George W. Benoit Chairman of the Board, President,
- ------------------- Chief Executive Officer
(George W. Benoit)
/s/Joseph G. Anastasi Director
- ---------------------
(Joseph G. Anastasi)
/s/Charles W. Currie Director
- --------------------
(Charles W. Currie)
/s/James J. Murtha Director
- ------------------
(James J. Murtha)
/s/David W. Dube Director
- ----------------
(David W. Dube)
25
<PAGE>
/s/Kevin J. Benoit Director
- ------------------
(Kevin J. Benoit)
26
HELMSTAR GROUP, INC.
1999 STOCK OPTION PLAN
1. PURPOSES. The purposes of the 1999 Stock Option Plan (the "Plan") are to
attract and retain qualified personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of the Company
or its Subsidiaries (as defined below), as well as other individuals who perform
services for the Company or its Subsidiaries, and to promote the success of the
Company's business. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Exchange Act (as defined below) and Section
162(m) of the Code (as defined below).
Options granted hereunder may be either "incentive stock options", as
defined in Section 422 of the Code, or "non-qualified stock options", at the
discretion of the Board and as reflected in the terms of the written instrument
evidencing an Option.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company (par value
$.10 per share).
(d) "Company" shall mean Helmstar Group, Inc., a Delaware corporation.
(e) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan,
if one is appointed.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence
approved by the Board.
(g) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Incentive Stock Option" shall mean a stock option intended to
qualify as an incentive stock option within the meaning of Section
422 of the Code.
(j) "Non-qualified Stock Option" shall mean a stock option not intended
to qualify as an Incentive Stock Option.
<PAGE>
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
(m) "Optionee" shall mean an Employee or other person who receives an
Option.
(n) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 425(e) of the Code.
(o) "Securities Act" shall mean the Securities Act of 1933, as amended.
(p) "SEC" shall mean the Securities and Exchange Commission.
(q) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 425(f) of the Code.
-A-1-
<PAGE>
3. STOCK. Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of shares which may be optioned and sold under the Plan is
350,000 shares of Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for further grant under the Plan.
4. ADMINISTRATION.
(a) Procedure. The Board may appoint a Committee to administer the Plan.
The Committee shall consist of not less than three members of the Board who
shall administer the Plan on behalf of the Board, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan.
If a majority of the Board is eligible to be granted Options or has
been eligible at any time within the preceding year, a Committee must be
appointed to administer the Plan. The Committee must consist of not less than
three members of the Board, all of whom are "non-employee directors" as defined
in Rule 16b-3 of the General Rules and Regulations promulgated under the
Exchange Act and "outside directors" under Section 162(m) of the Code.
(b) Powers of the Board. Subject to the provisions of the Plan, the Board,
or the Committee shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, in accordance with Section 422A of the Code, as
amended, or to grant Non-qualified Stock Options; (ii) to determine, upon review
of relevant information and in accordance with Section 8(b) of the Plan, the
fair market value of the Common Stock; (iii) to determine the exercise price per
share of Options to be granted which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the persons to whom,
and the time or times at which, Options shall be granted and the number of
shares to be represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) Effect of the Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
<PAGE>
5. ELIGIBILITY
(a) General. Incentive Stock Options may be granted only to Employees.
Non-qualified Stock Options may be granted to employees as well as directors
(subject to the limitations set forth in Section 4), independent contractors and
agents, as determined by the Board. Any person who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment at any time.
(b) Limitation on Incentive Stock Options. No Incentive Stock Option may be
granted to an Employee if, as the result of such grant, the aggregate fair
market value (determined at the time each option was granted) of the Shares with
respect to which such Incentive Stock Options are exercisable for the first time
by such Employee during any calendar year (under all such plans of the Company
and any Parent and Subsidiary) shall exceed One Hundred Thousand Dollars
($100,000).
-A-2-
<PAGE>
6. TERM OF THE PLAN. The Plan shall become effective upon the earlier to occur
of (i) its adoption by the Board, or (ii) its approval by vote of the holders of
a majority of the outstanding shares of the Company entitled to vote on the
adoption of the Plan. The Plan shall continue in effect until March 31, 2009
unless sooner terminated under Section 13 of the Plan.
7. TERM OF OPTION. The term of each Option shall be ten (10) years from the date
of grant hereof or such shorter term as may be provided in the instrument
evidencing the Option. However, in the case of an Incentive Stock Option granted
to an Employee who, immediately before the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the day of grant thereof or
such shorter time as may be provided in the instrument evidencing the Option.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, immediately before the grant of
such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per
Share on the date of grant, as the case may be;
(B) granted to an Employee not subject to the provisions of
Section 8(a)(i)(A), the per Share exercise price shall be no
less than one hundred percent (100%) of the fair market value
per Share on the date of grant.
(ii) In the case of a Non-qualified Stock Option, the per Share
exercise price shall be no less than one hundred percent (100%) of
the fair market value per Share on the date of grant.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices or, if applicable, the closing price of the Common Stock on the
date of grant, as reported by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System or, in the event the Common Stock is listed
on a stock exchange, the fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option, as reported in the Wall
Street Journal.
<PAGE>
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option or in payment of any withholding taxes thereon, including the
method of payment, shall be determined by the Board and may consist entirely of
(i) cash, check or promissory note; (ii) other Shares of Common Stock owned by
the Employee having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (iii) other Options owned by the Employee having an aggregate
in-the-money value equal to the aggregate exercise price of the Options being
exercised (Options are in-the-money if the fair market value of the underlying
Shares exceeds the exercise price of the Options); (iv) an assignment by the
Employee of the net proceeds to be received from a registered broker upon the
sale of the Shares or the proceeds of a loan from such broker in such amount; or
(v) any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Shares to the extent permitted under
Delaware Law and meeting rules and regulations of the SEC to plans meeting the
requirements of Section 16(b)(3) of the Exchange Act.
-A-3-
<PAGE>
9. PROCEDURES AND LIMITATIONS ON EXERCISE OF OPTIONS.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and subject to such conditions as
may be determined by the Board, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
instrument evidencing the Option by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the Board,
consist of any consideration and method of payment allowable under Section 8(c)
of the Plan; it being understood that the Company shall take such action as may
be reasonably required to permit use of an approved payment method. Until the
issuance, which in no event will be delayed more than thirty (30) days from the
date of the exercise of the Option, (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee. If any Employee ceases to serve
as an Employee, he may, but only within thirty (30) days (or such other period
of time not exceeding ninety (90) days as is determined by the Board) after the
date he ceases to be an Employee of the Company, exercise his Option to the
extent that he was entitled to exercise it as of the date of such termination.
To the extent that he was not entitled to exercise the Option at the date of
such termination, or if he does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) Disability of an Employee. Notwithstanding the provisions of Section
9(b) above, in the event an Employee is unable to continue his employment with
the Company as a result of his total and permanent disability (as defined in
Section 105(d)(4) of the Internal Revenue Code of 1986, as amended), he may, but
only within three (3) months (or such other period of time not exceeding twelve
(12) months as is determined by the Board) from the date of disability, exercise
his Option to the extent he was entitled to exercise it at the date of such
disability. To the extent that he was not entitled to exercise the Option at the
date of disability, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
<PAGE>
(i) during the term of the Option who is at the time of his death an
Employee of the Company and who shall have been in Continuous Status
as an Employee since the date of grant of the Option, the Option may
be exercised, at any time within twelve (12) months following the
date of death, by the Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that would have accrued had
the Optionee continued living one (1) month after the date of death;
or
(ii)within thirty (30) days (or such other period of time not exceeding
three (3) months as is determined by the Board) after the
termination of Continuous Status as an Employee, the Option may be
exercised, at any time within three (3) months following the date of
death, by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of
termination.
-A-4-
<PAGE>
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, or
in the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Board of Directors of the Company shall, as to outstanding Options, either (i)
make appropriate provision for the protection of any such outstanding Options by
the substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to one share of Common Stock of the Company; provided, only
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof, or (ii) upon written notice to an Optionee, provide that all
unexercised Options must be exercised within a specified number of days of the
date of such notice or they will be terminated. In any such case, the Board of
Directors may, in its discretion, advance the lapse of any waiting or
installment periods and exercise dates.
<PAGE>
12. TIME FOR GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each person to whom an
Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) General. The Board may amend or terminate the Plan from time to time in
such respects as the Board may deem advisable; provided, however, that the
following revisions or amendments shall require approval of the holders of a
majority of the outstanding shares of the Company entitled to vote:
(i) any increase in the number of Shares subject to the Plan, other than
in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons eligible to be
granted options; or
(iii) any material increase in the benefits accruing to participants under
the Plan.
(b) Stockholder Approval. If any amendment requiring stockholder approval
under Section 13(a) of the Plan is made, such stockholder approval shall be
solicited as described in Section 17(a) of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
-A-5-
<PAGE>
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by, or appropriate
under, any of the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option agreements in
such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. Continuation of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months after the date the
Plan is adopted by the Board. If such stockholder approval is obtained at a duly
held Stockholders' Meeting, it may be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company present or
represented and entitled to vote thereon. The approval of such stockholders of
the Company shall be (1) solicited substantially in accordance with Section
14(a) of the Exchange Act and the rules and regulations promulgated thereunder,
or (2) solicited after the Company has furnished in writing to the holders
entitled to vote substantially the same information concerning the Plan as that
which would be required by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished.
If such stockholder approval is obtained by written consent in the absence
of a Stockholders' Meeting, it must be obtained by the written consent of
stockholders of the Company who would have been entitled to cast the minimum
number of votes which would be necessary to authorize such action at a meeting
at which all stockholders entitled to vote thereon were present and voting.
18. OTHER PROVISIONS. The Stock Option Agreement authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the Option, as the Board shall deem advisable. Any Incentive
Stock Option Agreement shall contain such limitations and restrictions upon the
exercise of the Incentive Stock Option as shall be necessary in order that such
option will be an Incentive Stock Option as defined in Section 422 of the Code.
-A-6-
<PAGE>
19. INDEMNIFICATION OF BOARD. In addition to such other rights of
indemnification as they may have as directors or as members of the Board, the
members of the Board shall be indemnified by the Company against the reasonable
expenses, including attorneys' fees actually and necessarily incurred in
connection with the defense of any action suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such Board
member is liable for negligence or misconduct in the performance of his duties,
provided that within sixty (60) days after institution of any such action, suit
or proceeding a Board member shall, in writing, offer the Company the
opportunity, as its own expense, to handle and defend the same.
20. OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect any
other stock option or incentive or other compensation plans in effect for the
Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
21. COMPLIANCE WITH EXCHANGE ACT RULE 16b-3 AND SECTION 162(m) OF THE CODE.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act and Section 162(m) under the
Code. To the extent any provision of the Plan or action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board.
22. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.
23. HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and Sections hereof
are inserted for convenience and reference; they constitute no part of the Plan.
-A-7-
EXHIBIT 21.0
List of Subsidiaries
Matthews & Wright, Inc. (Delaware)
Snider, Williams & Co., Inc. (Delaware)
Randolph, Hudson & Co., Inc. (Delaware)
Shaw Realty Company, Inc. (New York)
Burrows, Hayes Company, Inc. (New York)
Dover, Sussex Company, Inc. (New York)
Housing Capital Corporation (New York)
Randel, Palmer & Co., Inc. (New York)
Parker, Reld & Co., Inc. (New York)
McAdam, Taylor & Co., Inc. (New York)
Helmstar Funding, Inc. (Pennsylvania)
Ryan, Jones & Co., Inc. (New York)
Movieplex Realty Leasing, L.L.C. (New Jersey)
CareerEngine, Inc. (New York)
Advanced Digital Networks, Inc. (New York)
Alexander Edwards International, Inc. (New York)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAREERENGINE
NETWORK, INC. AND SUBSIDIARIES' CONSOLIDATED BALANCE SHEET AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,006,276
<SECURITIES> 4,888,610
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 71,601,252
<DEPRECIATION> 664,689
<TOTAL-ASSETS> 79,681,231
<CURRENT-LIABILITIES> 0
<BONDS> 72,750,000
0
0
<COMMON> 674,960
<OTHER-SE> 1,278,940
<TOTAL-LIABILITY-AND-EQUITY> 79,681,231
<SALES> 0
<TOTAL-REVENUES> 3,086,352
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,000,727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 127,241
<INCOME-TAX> (4,401,616)
<INCOME-CONTINUING> 10,778
<DISCONTINUED> (4,052,394)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,052,394)
<EPS-BASIC> (.75)
<EPS-DILUTED> (.75)
</TABLE>
