<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to ______________
Commission file number: 0-27557
Dynamic Information System & eXchange, Inc.
------------------------------------------------
(Exact Name of registrant as specified in Charter)
Utah 87-0508350
---------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
385 East 800 South, Orem, Utah 84097-6387
--------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(801) 426-4600
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
------------------------------
(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 [ ] Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B 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 1 KSB [ X ].
<PAGE>
<PAGE> 2
State issuer's total consolidated revenues for the year ended December 31,
1999: $1,847,589.00
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days:
Based on the average of the bid and asked prices of the common stock at
March 31, 2000, of $0.62 per share, the market value of shares held by non-
affiliates (20,394,116 shares) would be approximately $12,644,352.
At March 31, 2000, the Registrant have 25,399,299 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the Form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933: NONE
<PAGE>
<PAGE> 3
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS 4
Business in General 4
Summary of Business Operations 6
Competition 9
Trademarks 9
Employees 9
ITEM 2. DESCRIPTION OF PROPERTY 9
Offices 9
Other Property 10
ITEM 3. LEGAL PROCEEDINGS 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 10
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 11
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION 11
Cautionary Statement Regarding Forward-looking Statements 11
Year 2000 Disclosure 12
Results of Operations 12
Year ended December 31, 1999 compared to year ended
December 31, 1998 12
Liquidity and Capital Resources 12
Impact of Inflation 12
Principal Customers 14
Seasonality 14
ITEM 7. FINANCIAL STATEMENTS 14
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 14
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSON; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 14
Biographical Information 15
Compliance with Section 16(a) of the Exchange Act 16
ITEM 10. EXECUTIVE COMPENSATION 17
Employment Agreements and Benefits 17
Compensation of Directors 18
Resignation of Officer and Director 18
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 19
Security Ownership of Certain Beneficial Owners 19
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 20
Transactions with Management and Others 20
Certain Business Relationships 20
Indebtedness of Management 20
Transactions with Promoters 20
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURES 21
<PAGE>
<PAGE> 4
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business in General
- -------------------
Dynamic Information Systems and Exchanges, Inc., ("Dynamic") a private
company, was incorporated in the State of Utah on April 9, 1993. Dynamic was
founded to provide information services to the labor and employment industry.
In October 1994, Dynamic was acquired by M&K Investments, Inc. ("M&K"). M&K,
an inactive public company, was incorporated in the State of Utah on March 20,
1987.
Effective October 20, 1994, Dynamic and M&K completed an Agreement and
Plan of Reorganization whereby M&K issued 14,483,326 shares (3,620,838 post-
split shares) of its common stock in exchange for 100% of the issued and
outstanding common stock of Dynamic. Thereafter, Dynamic became a wholly-
owned subsidiary of M&K.
In connection with the reorganization, M&K's name was changed to Dynamic
Information System & eXchange, Inc. (hereinafter "the Company" or "DiSX").
The exchange of M&K's common stock for the common stock of Dynamic resulted in
the former stockholders of Dynamic obtaining control of the Company. On
October 31, 1994, the Company effected a reverse stock split of the
outstanding common shares at a rate of 1 share for every 2 shares outstanding.
During 1995, the shareholders approved an additional reverse stock split at a
rate of 1 share for every 2 shares outstanding.
Effective February 11, 1999, DiSX entered into a joint venture with a
British company, topjobs.net plc. This resulting joint venture company,
topjobs.net inc (the "JV"), provides recruitment opportunities for
selected/premier corporate clients using broadcast media to drive active and
passive job seekers to the JV's Internet job listing web site.
Effective September 31, 1999, DiSX merged with Dynamic, with DiSX being
the surviving entity.
Effective December 15, 1999, DiSX and PLC mutually agreed to terminate
the JV effective January 31, 2000. PLC's decision was based on its assessment
of potential of the US market compared to its need to refocus its efforts in
Europe. DiSX agreed to the termination of the JV because it (1) allowed DiSX
to regain control of US operations, (2) allowed it to again promote its own
Internet recruitment product under the trade name of TopJobs USA, and (3)
allowed it to diversify its revenue base beyond that of an advertising agency.
On January 31, 2000, the JV ceased all Internet operations and following its
final audit ceased all operations on March 31, 2000.
The Company's corporate offices are located at 385 East 800 South, Orem,
Utah 84097-6387. See Item 3 DESCRIPTION OF PROPERTY.
Summary of Business Operations
- ------------------------------
The original business of the Company was to provide comprehensive job-
listing information on CD-ROM. After the popularization of the Internet, the
Company changed its delivery tool to the Internet. The Company's target
market was domestic employers in search of qualified professional, management
or technical specialist job candidates.
<PAGE>
<PAGE> 5
In June 1998, the Company entered into a nine month research and
cooperation test marketing agreement, limited to the State of Utah and the
city of Houston, Texas, with topjobs.net plc (formerly "The Corporate Net,"
hereinafter referred to as "PLC"), a corporation located in Manchester,
England, engaged in Internet recruitment. Under the terms of the agreement,
PLC was to receive 30% of the gross revenues derived from customers
advertising on the Top Jobs on the Net website, after the deduction of
payments to local television stations.
Partially as a result of securing contracts providing gross revenues to
the venture of $141,000 in December 1998, the Company and PLC decided to
terminate the test marketing arrangement and establish a permanent venture in
the United States. PLC formed a Delaware corporation, known as topjobs.net
inc, of which DiSX owns 49% and PLC owns 51% (for which both stockholders paid
a total of $1,000). On February 11, 1999, the Company entered into a series
of agreements with PLC, including a Stockholders Agreement and Licensing
Agreement. Under the terms of the agreements (which continue for so long as
the Company and PLC both own equity in the JV), PLC granted the JV an
exclusive license in the territory of the State of Utah, the city of Houston,
Texas, and such other United States cities as the parties may mutually agree
upon, to use PLC's software, name, and other trademarks to promote and market
the Top Jobs on the Net website in the territory in accordance with the Top
Jobs on the Net business plan. The Company agreed to furnish the venture with
the services of ten of its key personnel (who became employees of the JV under
employment agreements) and provide operating facilities in Orem, Utah. The
Company also granted an exclusive license in the territory to use the
Company's intellectual property and technical information. The parties also
agreed to assign to the JV all rights and obligations under all customer
agreements jointly developed under the test marketing agreement.
PLC advanced $300,000 as an interest free loan to the Company in
installments through March 4, 1999. The Company agreed to advance up to a
maximum of $500,000 to the JV on an interest free basis to fund day-to-day
working capital requirements. The Company's loan to the JV is repayable at
such time as shall be determined by the the JV board of directors based on the
venture's cash flow and capital resources. Upon completion of PLC's initial
public offering, PLC paid DiSX an additional $200,000 in cash and canceled the
$300,000 loan. PLC also issued to DiSX $500,000 of PLC's ordinary shares
(valued at the initial per share public offering price). Based on a $12.00
per ADS offering price, a total of 41,667 of PLC's ordinary shares were issued
to DiSX. The agreements also:
- provide that the Company shall not sell or transfer any of PLC's
ordinary shares for at least one year after the date of PLC's initial public
offering, April 28, 1999,
- provide that PLC's representatives will constitute a majority of the
board of directors of the JV,
- contain "buy/sell" procedures under which the Company and PLC each
have the first and last right to purchase the other's equity in the JV, and
- provide for adjustments in the equity between the parties in the event
one stockholder is unable to fund it pro-rata share of the ongoing capital
requirements of the JV.
In February 1999, the Company agreed with PLC to commence operations in
San Francisco and in March 1999 to expand into Los Angeles. The JV launched
its website in Los Angeles in July 1999. However, prior to launching its site
in San Francisco, the Company and PLC agreed to terminate the JV effective
January 31, 2000. PLC's decision was based on its assessment of potential of
<PAGE>
<PAGE> 6
the US market compared to its need to refocus its efforts in Europe. DiSX
willing agreed to the termination of the JV because (1) it allowed DiSX to
regain control of US operations, (2) allowed it to again promote its own
Internet recruitment product under the trade name of TopJobs USA, and (3)
allowed it to diversify its revenue base beyond that of an advertising agency.
On January 31, 2000, the JV ceased all Internet operations and, following its
final audit, ceased all operations on March 31, 2000.
Consequently, the JV began to wind down its operations in the United
States. In anticipation of a signed agreement between the Company, PLC and
the JV, the JV began laying employees off effective November 31, 1999. All
regions in which the JV operated were shutdown on January 31, 2000, with the
exception of the Salt Lake City area. This area was turned over to the
Company for continuation of business under the Company's product name TopJobs
USA. The final audit for the JV was completed during March 2000, and the
final two employees left the JV on March 31, 2000.
The "Signed Agreement" provided that :
- the parties to the Stockholders Agreement were released from any
capital contribution obligations not theretofore fulfilled,
- Mr. Larry Heaps, Mr. Eric Marchant and Mr. Ross Wolfley resigned from
the board of directors of the JV,
- in consideration for the release from future capital contribution
obligations, DiSX agreed to transfer all its shares and interest in the JV to
topjobs.net plc at a future mutually agreed upon date. In the intervening
time, DiSX agree to vote its shares for dissolution of the JV and otherwise
cooperate in effecting the same as requested by topjobs.net plc, as determined
by it in its sole discretion at any time and from time to time.
- the JV's obligation to repay the loan from DiSX to the JV was waived by
DiSX.
The Company had loaned $400,763 to the JV. Repayment of this loan was
conditioned on the JV board of directors' determination of the JV's ability to
repay the loan. With the termination of the JV, the JV board of directors
determined that the JV would never be in a position to repay the loan from
DiSX and the parties to the agreement terminated the Loan Agreement and the
obligations of the JV to repay the loan. Both Stockholders in the JV were
released from any obligations not theretofore fulfilled of contributing
capital to the JV.
The termination of the Stockholders Agreement did not have any effect on
the original compensation received by DiSX from PLC, including the $500,000 of
PLC's common stock received by DiSX.
Competition
- -----------
The use of the Internet has significantly changed the job recruitment
marketplace. For DiSX's main product, TopJobs USA(TM), there are essentially
two main areas of competition in the recruitment market. The first is the
traditional method of job recruiting, which includes print media(help wanted),
recruiters, and placement agencies. Secondly, other Internet recruitment
sites are in competition among themselves.
Recent surveys have shown that the major source of recruitment
advertisement is still through the newspaper. The print media's strength
includes a broad readership and distribution. Also, newspapers are tangible,
i.e., the reader can see and feel it. It has been the most traditional
recruitment method used by most employers.
<PAGE>
<PAGE> 7
But the print vehicle is feeling the impact of Internet recruitment
sites. First, the cost of posting a job on an Internet site typically costs
less than with print media. In addition to the print media's high expense,
the space to advertise a job is limited. Also, an advertisement normally
takes days to be printed in a newspaper, whereas, posting a job on an Internet
recruitment site can be done almost immediately after deciding to advertise a
job opening on a site.
The second major competition comes from other Internet recruitment
companies both national and local. The national competitors are Monster.com,
HotJobs.com, Techies.com, and Dice.com. Monster.com is the strongest of all
the others because of their number of job postings. However, their downfall
is also because of the larger number of job postings. Because Monster.com
allows Recruiters to post on their site, many times job postings by
corporations are lost or placed several pages behind the recruiters. This is
discouraging for corporations who don't feel their jobs are getting adequate
views by job seekers and difficult for job seekers who would like to know the
company looking for a job candidate. HotJobs does not allow recruiters and
advertises nationally to promote their brand, not their clients. Techies.com
aims to provide a local approach but limits its job offerings to the technical
fields and costs substantially more than TopJobs USA's pricing. There are a
couple of locally based competitors which include UtahJobline.com and
citysearch.com. UtahJobline is a fairly new addition to the marketplace.
Citysearch.com is mainly a local advertising site that has recently entered
the recruitment industry.
TopJobs USA's pricing is competitive or in many cases lower than all of
it's competitors. The biggest stronghold TopJobs USA has on the competition
is the "Local" Internet recruitment site angle. From day one, TopJobs USA has
been recognized as the "Local" Internet recruitment site in Salt Lake City and
will hold that distinction in future markets. Job seekers will only find jobs
for that particular area advertised on the TopJobs USA site. This is unlike
most of the other sites that start out nationally and force job seekers to
choose the city/area they would like to search for a job. This "local" angle
has been a key selling point for customers.
Competitors for UltimateResume.com are mainly in the Internet recruitment
arena which include Monster.com, shotgunresume.com, HotJobs.com, Headhunter,
and Career Mosaic. All of the competitors, including UltimateResume.com,
allow job seekers to post their resume for free. There is a significant
difference when it comes to corporations. Most of the sites give corporations
access to their resume database for a costly monthly or yearly fee.
UltimateResume.com gives corporations the opportunity to browse its resume
database for free. Customers simply pay a nominal fee for each resume they
want. There are monthly, yearly, and unlimited access packages that are both
cost efficient to the customer looking to fill a large number of positions.
Also, these packages are still much lower than the competitors.
Customers
- ---------
TopJobs USA's target audience is corporations in each "local" market area
that have a need for recruiting qualified job candidates. Most of the desired
clients are seeking white-collared job candidates to fill positions that
require some work experience. The job categories range from IT to office
administration. In recent months, the sales market has expanded because of a
revised sales plan that allows for much more cost-efficient packages. Clients
are attracted to TopJobs USA because of its "local" emphasis, customer
service, and competitive pricing.
<PAGE>
<PAGE> 8
UltimateResume.com is essentially going after the same target audience as
TopJobs USA which are corporations that have recruitment needs. The Human
Resource professional's job is to find qualified job candidates.
UltimateResume.com's database provides them with an additional recruiting
tool. Job seekers are also a target of UltimateResume.com. The site provides
several career tools to job seekers such as resume and cover letter writing.
Job seekers can receive advice and help in these areas for a fee that is much
more cost efficient than through other Internet Recruitment sites.
Products and Services
- ---------------------
DiSX, Inc. has two main products which are TopJobs USA and
UltimateResume.com. Both of these products are Internet based.
TopJobs USA's services help a corporation enhance its recruitment ability
to attract qualified management, professional, technical, and other job
candidates. There are many features which separate TopJobs USA from the pack
by providing more than just a job listing Internet site. These services
include:
- Job Slots gives customers the control of posting and removing jobs as
needed. This unique system allows clients the flexibility of rotating in as
many jobs as needed and desired for the duration of the contract agreement.
- Corporate Pages provides customers the opportunity to describe in
detail their company's profile, culture, benefits and/or products.
- A Local Client Manager is assigned to each company assisting them with
creating, posting, and editing jobs, as well as answering questions and
providing expert advice which helps to establish a solid customer relationship
management.
- The JobTracker System is an exclusive tool of TopJobs USA that gives a
company hands-on control of their job listings including the ability to
create/edit/post jobs and view measurable results 24-hours per day, seven days
per week.
- Job Postings has helped to expand TopJobs USA's market by providing an
even more cost-effective recruitment tool. For a minimal cost, customers are
simply posting a job listing for a specified amount of time without the
flexibility of changing the job. However, they are provided with a job
description page where they can also include information about the company.
- Free access to the job listings for job seekers. Registered job
seekers are contacted via e-mail when their job criteria meets the company's
job listings.
What sets TopJobs USA apart from the rest is that it is a "local"
employer-based site. This unique service makes it attractive to potential
clients and easy for job seekers to navigate. When a job seeker comes to the
site, they will automatically be searching jobs in the "Local" region. Most
sites force job seekers to choose a specific city and region. This adds both
more steps, time, and frustration to their search. TopJobs USA makes it easy
for both the local company and local job seeker.
TopJobs USA promotes its product through both online and traditional
marketing tools. It advertises on local television and radio stations aimed
at driving traffic to the site, building a company brand identity, and
attracting new clients. Key marketing alliances with local corporations also
play a key role in attracting both business to business growth and consumer
growth.
UltimateResume.com takes on a different approach to Internet recruitment
than taken by TopJobs USA. While they are separate products, they have
learned to work together to help each other grow.
<PAGE>
<PAGE> 9
UltimateResume.com does not post job openings. Instead, the site allows
job seekers to post their resumes for free. This creates a large database of
job seekers. Companies are allowed to search through this database for free.
But if they would like to receive contact information, they can purchase a
resume individually for a minimal fee. This is attractive to companies
because they are only paying for want they want and not what they don't need.
There are also cost effective packages that allow monthly, yearly, or
unlimited access to the resume database and the pertinent contact information.
UltimateResume.com will also help corporations inundated with unsolicited
resumes by providing job seekers a database to post their resumes. This helps
drive companies to our site and job seekers posting resumes.
UltimateResume.com helps out the job seeker more than just allowing them to
post their resume. For a very nominal fee, they can receive resume, cover
letter, and career advice.
UltimateResume.com markets its products with online and traditional
marketing strategies including radio advertisements. UltimateResume.com is
also taking advantage of the success of TopJobs USA. With a link from the
TopJobs USA site, both corporations and job seekers have access to
UltimateResume.com and its services.
Trademarks
- ----------
The Company's trademark applications for "TOP JOBS USA" and "TOPJOBS"
were declined by the United States Department of Commerce, Patent and
Trademark Office.
Management Changes
- ------------------
In November 1999, Mr. Eric Marchant resigned as CEO of the Company. He
also resigned his position on the Board of Directors at the same time. Mr.
Curtis T. Johnson was appointed CEO of the Company on January 1, 2000.
In February 2000, Mr. Troy L. Corriveau was appointed Chief Operating
Officer of the Company and effective April 3, 2000, was appointed to the Board
of Directors.
Employees
- ---------
As of December 31, 1999, the Company had 11 full-time employees,
including 1 administrative employee, and 6 part-time employees. None of the
Company's employees are represented by a labor union. The Company believes
that it will be able to hire a sufficient quantity of qualified laborers in
the local area to meet the Company's employment needs.
ITEM 2. DESCRIPTION OF PROPERTY
Offices
- -------
The Company leases its principal executive offices in Orem, Utah. The
current lease is for a space of approximately 6,745 square feet at a rate of
$6,200 per month. The lease agreement is for three years from October 1, 1998
to September 30, 2001. The lease includes provision for a 3% increase in
lease payment on October 1, 2000.
The Company's current facilities are generally adequate for anticipated
needs over the next 12 to 24 months.
<PAGE>
<PAGE> 10
Other Property
- --------------
The Company owns Lot 32 of a development known as Cottages on the Green,
as identified in the Plat recorded in the office of the Wasatch County
Recorder, as Entry No. 200360, in Book 371, at Page 458, contained with Plat C
of Cottages on the Green, P.U.D., Midway City, Wasatch County, State of Utah.
Value of the property is $95,000.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation with Laservend, Inc., a Utah
corporation ("Laservend"), who is currently undergoing Chapter 7 bankruptcy
proceedings in the Bankruptcy Court for the District of Utah, Central
Division. Laservend's Bankruptcy Trustee filed a complaint against the
Company on June 18, 1998, alleging that Laservend had advanced the Company
$225,000.00 with the agreement or understanding that the Company would repay
Laservend $225,000.00 plus interest. Subsequently, the complaint has been
amended alleging that the amounts advanced with interest are $273,000.00. The
Company contends that the parties were in merger negotiations and that the
amounts advanced were part of these negotiations. Further, that in the event
that a merger did not occur, any and all amounts advanced by Laservend to the
Company would be repaid through the Company's Common Stock at a rate of $0.50
per share. The merger failed to take place due to events occurring in
Laservend. On July 31, 1998, the Trustee in bankruptcy filed a Complaint that
the advance is a loan to be repaid by DiSX, that it was a preferential
transfer and that Laservend did not receive reasonably equivalent value for
the advances. An Answer was filed by the Company. The Bankruptcy Court has
granted the Trustee's Motion for Summary Judgment. The Order grants judgment
in the amount of $273,347.00 principle, together with prejudgment interest of
$66,884.25, plus prejudgment interest in accordance with 29 U.S.C. Section
1961. The
Trustee garnished amounts claimed due from topjobs.net inc, the JV, and the
bank account of DiSX. The Trustee has also executed on the computer
equipment, office equipment, stock in topjobs.net inc and topjobs.net plc, and
other assets of DiSX. The Company has entered into a Settlement Agreement
with the Trustee. Under the terms of the Settlement Agreement, the Company is
obligated to make certain payments to the Trustee and during such time the
Trustee agrees to forbear from obtaining writs of garnishment or executions or
otherwise collecting on the judgment except for the collection of the two
garnishments described above. During such period of forbearance, the writs of
execution remain in effect. Management intends to make payment of the
judgment.
In March 2000, the Company was sued in the matter of Martineau & Company
vs. Dynamic Information System & eXchange, Inc. No Answer has been filed by
this time. The amount claimed in the Complaint is in excess of $21,666.00.
The amount claimed for accounting services is apparently $8,648.00 with the
balance being accrued interest at 2% per month since March 1995. Company
management does not believe that accounting services were provided by
plaintiff and intends to contest the matter rigorously. Due to the recent
involvement with the matter no evaluation can be made of the likelihood of an
unfavorable outcome nor the range of potential loss.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company during
the fourth quarter of the fiscal year ended December 31, 1999.
<PAGE>
<PAGE> 11
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The table below sets forth, for the respective periods indicated, the
prices for the Company's common stock in the over-the-counter market as
reported by the NASD's OTC Bulletin Board. The bid prices represent inter-
dealer quotations, without adjustments for retail mark-ups, mark-downs or
commissions and may not necessarily represent actual transactions. From
December 4, 1999 to February 22, 2000, as a result of the Company's Form 10-SB
not having yet been accepted without comments by the Securities and Exchange
Commission, the Company's stock was traded on the pink sheets.
Fiscal Year Ended December 31, 1999 High Bid Low Bid
- ----------------------------------- -------- -------
First Quarter $ 0.94 $ 0.16
Second Quarter $ 0.75 $ 0.38
Third Quarter $ 0.47 $ 0.25
Fourth Quarter $ 0.50 $ 0.05
Fiscal Year Ended December 31, 1998 High Bid Low Bid
- ----------------------------------- -------- -------
First Quarter $ 1.25 $ 0.06
Second Quarter $ 1.63 $ 0.22
Third Quarter $ 0.66 $ 0.13
Fourth Quarter $ 0.44 $ 0.10
Fiscal Year Ended December 31, 1997 High Bid Low Bid
- ----------------------------------- -------- -------
First Quarter $ 1.25 $ 0.25
Second Quarter $ 1.00 $ 0.13
Third Quarter $ 0.75 $ 0.19
Fourth Quarter $ 0.69 $ 0.06
At March 31, 2000, the Company's Common Stock High Bid and Low Bid,
quoted on the OTC Bulletin Board, for the first quarter of Fiscal Year 2000
was $0.875 and $0.100, respectively.
Since its inception, the Company has not paid any dividends on its Common
Stock, and the Company does not anticipate that it will pay dividends in the
foreseeable future. At March 31, 2000, the Company has approximately 222
shareholders of record based on information provided by the Company's transfer
agent.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Cautionary Statement Regarding Forward-looking Statements
- ---------------------------------------------------------
This report may contain "forward-looking" statements. Examples of
forward-looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of the Company and its management or Board of Directors; (c) statements of
future economic performance; (d) statements of assumptions underlying other
statements and statements about the Company and its business relating to the
future; and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend" or similar expressions.
<PAGE>
<PAGE> 12
Year 2000 Disclosure
- --------------------
The Company experienced no material adverse impact of any nature as a
result of year 2000.
Results of Operations
- ---------------------
During 1998, the Company continued in its developmental stage. In 1999,
the Company commenced operations and was no longer designated a developmental
stage company. Financial statements covering that two-year period reflect
those changes and year to year comparisons may have limited significance.
Year ended December 31, 1999 compared to year ended December 31, 1998
- ---------------------------------------------------------------------
Total revenues for the year ended December 31, 1999, was $1,847,589
compared to $53,389 for the same period of 1998. This large increase was due
to agency revenues from topjobs.net inc, totaling $1,783,846. Direct costs for
the year ended December 31, 1999, were $1,553,471 as compared to $12,920 for
the year ended December 31, 1998. The increase in direct costs were primarily
due to advertising related costs in support of topjobs.net inc's Internet
recruitment activities.
For fiscal year 1999, operating expenses were $1,146,320, consisting of
salaries and wages of $359,016, depreciation and amortization expenses of
$13,432, and general and administrative expenses of $773,872, resulting in a
loss from operations of $852,202. Total operating expenses for 1998 were
$1,247,410, consisting of salaries and wages of $374,616, depreciation and
amortization expenses of $16,833, and general and administrative expenses of
$855,961, resulting in a loss from operations of $1,206,941. The decrease in
salaries and wages resulted from the continued reduction in data entry
staffing which was partially offset by the hiring of professional advertising
personnel. The data entry staffing reduction was made possible by continued
automation and a shift in corporate emphasis to employer based products. The
reduction in general and administrative expenses was due to lower expenses for
professional services.
Total other income (expense) for fiscal 1999 netted an income of $497,578
compared to an expense of $(166,201) for fiscal 1998. During 1999, interest
income was $800, other income was $599,237, and interest expense was
$(102,459). Other income in 1999 included $1,000,000 received from
topjobs.net plc as an incentive for the Company to take a minority position in
the JV, topjobs.net inc; this was offset by a loss of $(400,763) that the
Company contributed to the JV. Other income (expense) in 1998 included
interest income of $700, and interest expense of $(166,901). The year to year
change was due to the increase in other income and reduced interest expense.
The net loss for the Company was $354,624 in 1999 compared to a net loss
of $1,373,142 the prior year. The Company experienced a comprehensive loss
$539,496 for the year ended December 31, 1999, compared to a comprehensive
loss of $1,373,142 for the same period of 1998, a decrease of 60.7%. The
basic loss per share for fiscal 1999 was $0.02 as compared to $0.09 for fiscal
1998, based on the weighted average number of shares outstanding for the
respective periods.
Liquidity and Capital Resources
- -------------------------------
During 1999, cash flows from operations, notes payable (some convertible
to shares of the Company's common stock) were utilized for working capital,
conversion of debt, payment of professional services and for other activities
of the Company.
<PAGE>
<PAGE> 13
The Company had a working capital deficit of $1,077,762, at December 31,
1999. The Company had a cash overdraft of $16,149 and receivables of $13,050.
Cash used in operations for the year ended December 31, 1999 was $406,437
compared with $977,680 for the year ended December 31, 1998. The reduction in
the outflow of funds used for operations was due primarily to the increased
revenues that led to a significantly reduced net loss. Cash flows used in
investing activities increased to $407,763 in 1999 compared with $17,363 the
prior year. The loss from the investment in topjobs.net inc led to that
increase. Proceeds from notes payable and convertible debentures (including
the $500,000 cash received by the Company from PLC) offset the funding used in
operations and investing activities and cash payments on prior notes payable
and convertible debentures. In addition, portions of the notes payable and
convertible debentures were repaid through conversion to common stock in 1999.
Because the Company has an accumulated deficit of $6,281,787, has a
working capital deficit and limited internal financial resources, the report
of the Company's auditor contains a going concern modification as to the
ability of the Company to continue. During fiscal 1999, the Company continued
measures to reduce cash outflow and increase working capital through proceeds
from operations and the conversion of accrued liabilities and notes payable to
common stock. The Company is expected to stay on the same course during 2000.
The Company will rely on additional outside debt and equity funding as it
transitions from advertising agency activities to internet employment
operations.
At December 31, 1999, the Company had recorded $345,210 in accrued
expenses consisting of accrued salaries and wages, accrued interest and unpaid
payroll taxes, and unemployment taxes, including reasonable interest and
penalties for late payment. Subsequent to December 31, 1999, and prior to
this filing, the Company has reduced outstanding accrued salaries and wages
and accrued interest through issuance of restricted common stock. The Company
has also paid a portion of the accrued payroll taxes due to the Internal
Revenue Service and the Utah State Tax Commission and continues to pay the
Utah Department of Job Force Services $2,000 monthly towards the Company's
unemployment tax obligation.
At December 31, 1999, the Company had recorded notes payable, convertible
debentures, and current portion of long-term liabilities totaling $614,021
compared to $931,347 at December 31, 1998.
The Company has recorded contingent liabilities with related accrued
interest totaling $368,982 to Laservend, Inc. In January 1998, the Company
entered into a "Letter Offer to Acquire" with Laservend, Inc. whereby
Laservend would acquire all the issued and outstanding common stock of the
Company. In anticipation of the proposed merger, Laservend advanced the
Company $286,572 during the year ended December 31, 1998. The merger failed
to take place due to events occurring in Laservend. Laservend subsequently
filed for bankruptcy. On July 31, 1998, the Trustee in bankruptcy filed a
complaint that the advance was a loan to be repaid by DiSX, that it was a
preferential transfer and that Laservend did not receive reasonably equivalent
value for the advances. The Company filed an answer to the complaint. The
Bankruptcy Court granted the Trustee's motion for summary judgment. The order
granted judgment in the amount of $273,347 principle, together with
prejudgment interest of $66,884. As of December 31, 1999, the Company paid
the Bankruptcy Court $7,125. The Company has entered into a settlement
agreement with the Trustee. Under the terms of the settlement agreement, the
Company is obligated to make certain payments to the Trustee and during such
time the Trustee agrees to forbear from obtaining writes of garnishment or
executions or otherwise collect on the judgment. The Company also accrued an
<PAGE>
<PAGE> 14
additional $35,876 in interest and other contingent expenses through the end
of 1999 bringing the total contingent liability to $368,982. During the first
quarter of 2000, $17,468 has been sent to reduce the outstanding balance. As
of the end of April 2000, the Company may sell their holding in PLC stock to
repay the judgment.
Impact of Inflation
- -------------------
The Company does not anticipate that inflation will have a material
impact on its current or proposed operations.
Principal Customers
- -------------------
During the most recent fiscal year ended December 31, 1999, the Company
had one individual customer, topjobs.net inc, that accounted for 96.5% of the
Company's revenues. This high percentage is largely due to the Company having
transferred all of it revenue generating Internet recruiting business to the
JV. With the dissolution of the JV, the revenue will again be generated
through the Company.
Seasonality
- -----------
Management of the Company knows of no seasonal aspects relating to the
nature of the Company's business operations that had a material effect on the
financial condition or results of operation of the Company.
ITEM 7. FINANCIAL STATEMENTS
The following statements of the Company are set forth immediately
following the signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public
accountants with respect to accounting practices or procedures or financial
disclosure. See ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSON;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth the name, age, and position of each
executive officer and director that has served during the fiscal year ended
December 31, 1999, and the term of office of each director of the Company.
Name Age Position Director or Officer Since
- ---- ---- -------- -------------------------
Larry D. Heaps 51 President, Director October 1993
Curtis T. Johnson 50 Director, CEO October 1993 (1)
Eric E. Marchant 47 Director, CEO October 1993 (2)
J. Robert Walz 42 Vice President April 1999
Kurt Johansson 43 Vice President February 1999(3)
- -------------------------
(1) Mr. Johnson was named CEO in January 2000.
(2) Mr. Marchant resigned as Director and CEO in November 1999.
(3) Mr. Johansson's employment with the Company ended in November 1999.
<PAGE>
<PAGE> 15
The term of office of each director is one year and until his or her
successor is elected and qualified at the Company's annual meeting, subject to
removal by the Shareholders. All Officers serve at the pleasure of the board
of directors and until his or her successor is elected at a meeting of the
board of directors and is qualified except as noted below in Employment
Agreements and Benefits.
Biographical Information
- ------------------------
Set forth below is certain biographical information for each of the
Company's Officers and Directors and other key personnel.
Larry D. Heaps has extensive experience in operations and manufacturing
management. Mr. Heaps has served as President of the Company since 1993.
From 1989 to 1993, as an independent operations consultant, Mr. Heaps
successfully worked with a number of clients in establishing improved
manufacturing and operational procedures. From 1972 to 1983, as Executive VP
and General Manager of a successful children's clothing manufacturing
operation, Larry managed operations that included hundreds of employees,
thousands of customer accounts, overseas exports and innovative receivables
financing. Educated at Brigham Young University, in 1972, Mr. Heaps received a
Bachelor of Science in Business Management with an emphasis in Marketing.
Eric E. Marchant, resigned as CEO and director of the Company in November
1999, after having served since 1993. From 1989 to 1993, Mr. Marchant served
as President of Management Perspectives Group, a management consulting firm
that assists clients in improving their strategic focus, cultural unity and
management/leadership environment. He oversaw and participated in the firm's
product development and consulting services. Prior to that period, as a
private consultant, his list of clients included Exxon, Dow Chemical,
Department of Energy, and a number of other organizations large and small. A
lawyer and member of the Utah Bar Association since 1978, Mr. Marchant
received his Juris Doctorate from Brigham Young University's J. Reuben Clark
Law School in 1978. He received his B.A. in Political Science/Spanish from
Southern Utah State College where he graduated with high honors (4.0 GPA) in
three years in 1976.
Curtis T. Johnson became CEO of the Company on January 1, 2000. He most
recently worked as a Senior Marketing Manager from 1998 to 1999 for Intel.
From 1993 to 1998, Mr. Johnson worked for the Company. From 1989 to 1993, he
spent four years with Novell, Inc. as Product Line Manager and Senior
Marketing Manager in Sales/Marketing. He managed a major product line from
early specification through availability in the marketplace. His
responsibilities included establishing and maintaining OEM relationships with
major high technology vendors as well as creating and managing programs
relating to Novell's major customers. From 1974 to 1980, Mr. Johnson's
background also includes corporate responsibilities with Digital Equipment
Corporation and from 1980 to 1989 with Wang Laboratories. He filled a variety
of roles including technology development, sales, marketing and management.
Troy L. Corriveau was appointed Chief Operating Officer of the Company in
February 2000 and a Director of the Company in April 2000. Prior to this
appointment, he was the Vice President of Marketing/Corporate Planning for
topjobs.net inc from January 1999 - 2000. From July 1997 to December 1998,
Mr. Corriveau was involved with entrepreneurial activities, mainly real estate
investments. During the period of July 1994 to July 1997, he served as the
President of the Thailand Bangkok Mission for the Church of Jesus Christ of
Latter-day Saints. Besides working with the missionary endeavors of 300
<PAGE>
<PAGE> 16
missionaries in Thailand and Cambodia, he also helped to initiate, organize
and manage the humanitarian projects of the Church in Thailand, Cambodia,
Burma and Laos. He has been involved in the creation and management of
several service related businesses over the past 2 1/2 decades. Mr. Corriveau
received his Doctor of Chiropractic degree from Palmer College of Chiropractic
in 1974 and his BA degree from the University of the State of New York in
1991.
J. Robert Walz has nearly twenty years of experience as an on air talent
in the television industry. From 1984 to 1999, Mr. Walz worked for KSL-
Television in Salt Lake City, Utah, as a reporter/correspondent. His reports
were aired by CBS, ABC and NBC affiliate stations throughout the United States
and throughout the world on CNN. From 1992 to 1997, Mr. Walz taught
journalism at Brigham Young University and Utah Valley Community College. He
has written and produced numerous video productions. Mr. Walz received a
Bachelor of Arts in Communications from Brigham Young University with an
emphasis in Broadcast Journalism in 1982. He was the student president for
the Society of Professional Journalists in 1981.
Kurt Johansson joined the Company as vice president in February 1999.
From 1991 to 1999, Mr. Johansson owned and operated his own advertising agency
with major accounts such as Dannon Yogurt, Grand Targhee Ski Area and Fuji
Film. In 1996, Mr. Johansson was the Director of Marketing at Mansell and
Associates. From 1992 to 1996, he was a director of Advertising at
HealthRider and was responsible for a multi-million dollar television, radio
and print budget. From 1986 to 1990, he worked in radio station sales and
management and was the number one sales person at a top Salt Lake City radio
station in 1990. From 1978 to 1985, Mr. Johansson owned a financial planning
firm, supervising 300 agents with offices in Utah, Arizona and Idaho.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
The Company's Common Stock was recently registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in connection therewith, directors, officers, and beneficial owners of
more than 10% of the Company's Common Stock are required to file on a timely
basis certain reports under Section 16 of the Exchange Act as to their
beneficial ownership of the Company's Common Stock. Based on information
provided to the Company as of March 1, 2000, all required reports have been
filed on a timely basis.
<PAGE>
<PAGE> 17
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's chief executive officer and each of its other
executive officers that received compensation in excess of $100,000 during
such period (as determined at December 31, 1999, the end of the Company's last
completed fiscal year):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Other
Annual Restricted All Other
Name & Principal Compen- Stock Options/ LTIP Compensa-
Position Year Salary($) Bonus($) sation($) Award($) SARS(#) Payout($) tion($)
- ---------------- ---- --------- -------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eric E. Marchant 1999 $ 8,750 - - $55,000 - - -
CEO & Chairman 1998 $ 96,000 - - - - - -
1997 $ 75,000 - $ 112,500(1) - - - -
Larry D. Heaps 1999 $ 60,167 - - $82,500 - - -
President & Director 1998 $ 96,000 - - - - - -
1997 $ 75,000 - $112,500(1) - - - -
Curtis T. Johnson 1999 $ - - $ 1,000 - - - -
Director 1998 $ 5,750 - - - - - -
(President 1994-96) 1997 $ 75,000 - $ 112,500(1) - - - -
(1) These officers received restricted stock for accrued salaries.
</TABLE>
Employment Agreements and Benefits
- ----------------------------------
On April 6, 1999, the Company entered into an Employment Agreement with
J. Robert Walz for the salary of $84,000.00 per year, subject to discretionary
increase pursuant to an annual review by the board of directors. The
agreement includes a signing bonus of fifty thousand (50,000) shares of the
Company's common stock. The agreement also includes provisions for a bonus
payment upon the anniversary date of signing based upon a determination of the
board of directors.
On January 10, 2000, the Company entered into a three-year Employment
Agreement with Larry D. Heaps for the salary of $120,000.00 per year, subject
to discretionary increase pursuant to a semi-annual review by the board of
directors.
On January 10, 2000, the Company entered into a three-year Employment
Agreement with Curtis T. Johnson for the salary of $120,000.00 per year,
subject to discretionary increase pursuant to a semi-annual review by the
board of directors.
On February 1, 2000, the Company entered into an annually renewable
Employment Agreement with Troy Corriveau for the salary of $90,000.00 per
year, subject to discretionary increase pursuant to a semi-annual review by
the board of directors.
<PAGE>
<PAGE> 18
All other employee agreements with the Company are at will. As a
condition to employment, all the Company's managers and key personnel are
required to sign a non-disclosure and non-competition agreement.
Compensation of Directors
- -------------------------
The Company's directors receive no payments for attendance at meetings.
Board members may be reimbursed for all reasonable out-of-pocket expenses
incurred by them in conjunction with their attendance at board meetings.
Resignation of Officer and Director
- -----------------------------------
Effective 24 November 1999, Eric E. Marchant tendered his resignation as
CEO and Chairman of the board of directors of the Company.
<PAGE>
<PAGE> 19
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 2000, the name and the
number of shares of the Company's Common Stock, par value $0.001 per share,
held of record or beneficially, more than 5% of the 25,399,299 issued and
outstanding shares of the Company's Common Stock, and the name and
shareholdings of each director and of all officers and directors as a group.
Security Ownership of Certain Beneficial Shareholders
- ----------------------
Title
of Name and Address Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class
- ----- ---------------- -------------------- ----------
Common Larry D. Heaps 1,625,000 Direct 6.40
743 South 670 East 510,000 Indirect (1) 2.01
Orem, Utah 84097
Common Eric E. Marchant 1,075,000 Direct 4.23
3926 Riverwood Drive 24,608 Indirect (2) 0.10
Provo, Utah 84604
Common Curtis T. Johnson 1,579,000 Direct 6.22
1133 East 2570 North
Provo, Utah 84604
Common Craig Morrison 1,829,964 Direct 7.20
3771 Riverwood Drive
Provo, Utah 84604
Common Arnell Heaps 1,280,000 Direct 5.04
1357 East Pheasant Ridge
Bountiful, Utah 84010
Officers and Directors
- ----------------------
Title
of Name and Address Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class
- ----- ---------------- -------------------- ----------
Common Larry D. Heaps -see above-
Common Eric E. Marchant -see above-
Common Curtis T. Johnson -see above
Common J. Robert Walz 201,575 direct 0.80
3145 North Comanche
Provo, Utah 84604
All Officers/Directors 4,480,575 Direct 17.64
as a Group (4 Persons) 524,608 Indirect 2.07
--------- -----
Total Beneficial Ownership 8,115,147 31.95
========= =====
(1) Represents shares held of record by the Heaps Family Trust, an entity
controlled by DeLynn Heaps, of which Larry Heaps is a beneficiary.
(2) Represents shares held of record by Marchant & Sons, a family trust of
which Mr. Marchant is a beneficiary.
<PAGE>
<PAGE> 20
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
- ---------------------------------------
Except as indicated below, and for the periods indicated, there were no
material transactions, or series or similar transactions, or series of similar
transactions, since the beginning of the Company's last fiscal year, or any
currently proposed transactions, or series of similar transactions, to which
the Company was or is to be a party, in which the amount involved exceeds
$60,000, or in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than 5% or
any class of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.
During 1999, the Company issued restricted common stock to the following
affiliates: Larry D. Heaps was issued 350,000 shares of restricted common
stock for prior year accrued salary, wages, and services rendered; Eric E.
Marchant was issued 350,000 shares of restricted common stock for prior year
accrued salary, wages, and services rendered, and Robert Walz was issued
92,000 shares of restricted stock for services rendered.
Certain Business Relationships
- ------------------------------
Except as indicated below, and for the periods indicated, there were no
material relationships regarding directors that exist, or have existed during
the Company's last fiscal year.
Indebtedness of Management
- --------------------------
Except as indicated below, and for the periods indicated, there were no
material transaction, or series of similar transactions, or series of similar
transactions, since the beginning of the Company's last fiscal year, or any
currently proposed transactions, or series of similar transactions, to which
the Company was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than 5% of
any class of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.
Transactions with Promoters
- ---------------------------
None.
<PAGE>
<PAGE> 21
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS. The following financial statements are
included in this report:
Title of Document Page
- ----------------- ----
Independent Auditor's Report of Jones, Jensen & Company 22
Balance Sheet as of December 31, 1999 23
Statements of Operations for the years ended December 31, 1999 and 1998
and from inception on April 9, 1993 through December 31, 1999 25
Statements of Stockholders' Equity 26
Statements of Cash Flows for the years ended December 31, 1999 and 1998
and from inception on April 9, 1993 through December 31, 1999 27
Notes to Financial Statements 29
(a) (2) FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None
(a) (3) EXHIBITS. The following exhibits are included as part of this
report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- --------
10 10.1 Agreement among topjobs.net plc, This filing
DiSX, and topjobs.net inc
27 27 Financial Data Schedule This filing
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed with the Commission during
the quarter ended December 31, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following person on behalf
of the Registrant and in the capacity and on the date indicated:
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
Date: April 14, 2000 By: /S/ Larry D. Heaps, President and Director
By: /S/ Curtis T. Johnson, CEO and Director
By: /S/ Troy L. Corriveau, COO and Director
<PAGE>
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Dynamic Information System and eXchange, Inc. (DISX) and Subsidiary
Orem, Utah
We have audited the accompanying consolidated balance sheet of Dynamic
Information System & eXchange, Inc., and Subsidiary as of December 31, 1999
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the years ended December 31, 1999 and 1998.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated 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 consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dynamic
Information System & eXchange, Inc. and Subsidiary as of December 31, 1999 and
the results of their operations and their cash flows for the years ended
December 31, 1999 and 1998 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company has current liabilities in excess of
current assets of $1,077,762 and has experienced significant losses for the
years ended December 31, 1999 and 1998, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/S/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
April 11, 2000
<PAGE>
<PAGE> 23
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Balance Sheet
ASSETS
------
December 31,
1999
------------
CURRENT ASSETS
Notes receivable - related parties (Note 6) $ 13,050
------------
Total Current Assets 13,050
------------
FIXED ASSETS - net (Notes 1 and 3) $ 16,287
------------
OTHER ASSETS
Deposits 10,126
Investment in marketable securities (Note 1) 315,128
Investment in property 95,000
------------
Total Other Assets 420,254
------------
TOTAL ASSETS $ 449,591
============
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 24
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
December 31,
1999
------------
CURRENT LIABILITIES
Cash overdraft $ 16,149
Accounts payable 115,432
Accrued expenses (Note 4) 345,210
Current portion - long-term liabilities (Note 5) 351,319
Convertible debentures (Note 5) 174,967
Notes payable - related parties (Note 5) 87,735
------------
Total Current Liabilities 1,090,812
------------
LONG-TERM LIABILITIES (Note 5) -
------------
Total Liabilities 1,090,812
------------
COMMITMENTS AND CONTINGENCIES (Note 7) 368,982
------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 5,000,000 shares authorized at $0.001
par value; no shares issued or outstanding -
Common stock, 50,000,000 shares authorized at $0.001
par value; 22,569,135 shares issued 22,569
Additional paid-in capital 5,433,887
Other comprehensive loss (184,872)
Accumulated deficit (6,281,787)
------------
Total Stockholders' Equity (Deficit) (1,010,203)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 449,591
============
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 25
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Statements of Operations
For the Years
Ended December 31,
------------ ------------
1999 1998
------------ ------------
SALES $ 1,847,589 $ 53,389
COST OF SALES 1,553,471 12,920
------------ ------------
GROSS MARGIN 294,118 40,469
------------ ------------
OPERATING EXPENSES
Salaries and wages 359,016 374,616
Depreciation and amortization 13,433 16,014
General and administrative 773,871 856,780
------------ ------------
Total Operating Expenses 1,146,320 1,247,410
------------ ------------
Loss from Operations (852,202) (1,206,941)
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 800 700
Other income (Note 8) 599,237 -
Interest expense (102,459) (166,901)
------------ ------------
Total Other Income (Expense) 497,578 (166,201)
------------ ------------
NET LOSS (354,624) (1,373,142)
------------ ------------
OTHER COMPREHENSIVE LOSS
Loss on valuation of marketable securities (184,872) -
------------ ------------
Net Comprehensive Loss $ (539,496) $ (1,373,142)
============ ============
BASIC LOSS PER SHARE $ (0.02) $ (0.09)
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 26
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Total
Common Stock Additional Other Stockholders'
------------ Paid-in Comprehensive Accumulated Equity
Shares Amount Capital Loss Deficit (Deficit)
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 12,922,848 $ 12,921 $ 3,286,813 $ - $ (4,554,021) $(1,254,287)
Common stock issued for services
rendered at $0.30 per share 385,500 386 116,438 - - 116,824
Conversion of debentures and
interest payable to common
stock at $0.24 per share 2,562,813 2,563 618,350 - - 620,913
Conversion of notes and interest
payable at $0.21 per share 875,608 877 179,411 - - 180,288
Net loss for the year ended
December 31, 1998 - - - - (1,373,142) (1,373,142)
----------- ----------- ------------ ------------ ------------ ------------
Balance, December 31, 1998 16,746,769 16,747 4,201,012 - (5,927,163) (1,709,404)
Common stock issued for services
$0.23 per share 2,737,378 2,737 751,819 - - 754,556
Conversion of debentures and
payable to common stock at $0.25
per share 2,006,503 2,007 501,270 - - 503,277
Conversion of notes and interest
payable to common stock at $0.27
per share 1,033,985 1,034 278,830 - - 279,864
Cancellation of common stock (295,500) (296) (393,704) - - (394,000)
Common stock issued for property
at $0.28 per share 340,000 340 94,660 - - 95,000
Loss on valuation of marketable
securities - - - (184,872) - (184,872)
Net loss for the year ended
December 31, 1999 - - - - (354,624) (354,624)
----------- ----------- ------------ ------------ ------------ ------------
Balance, December 31, 1999 22,569,135 $ 22,569 $ 5,433,887 $ (184,872) $ (6,281,787) $(1,010,203)
=========== =========== ============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 27
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years
Ended December 31,
------------ ------------
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (354,624) $ (1,373,142)
Adjustments to reconcile net loss to net
cash flows used by operating activities:
Depreciation and amortization 13,433 16,014
Common stock issued for services 754,556 116,824
Other income (599,237) -
Common stock canceled (394,000) -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 114,405 (106,970)
(Increase) decrease in accounts receivable -
related party 3,074 (14,335)
(Increase) decrease in deposits (3,600) -
Increase (decrease) in cash overdraft 10,135 (2,030)
Increase (decrease) in commitments and
contingencies 28,751 53,659
Increase (decrease) in accounts payable 53,253 29,433
Increase (decrease) in accrued expenses 94,417 155,867
Increase (decrease) in deferred revenue (127,000) 127,000
------------ ------------
Net Cash Flows (Used) by
Operating Activities (406,437) (997,680)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to equity investee (400,763) -
Purchase of fixed assets (6,549) (17,363)
------------ ------------
Net Cash Flows (Used) by Investing
Activities (407,312) (17,363)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable and
convertible debentures (832,381) (180,781)
Proceeds from notes payable and
convertible debentures 1,646,130 1,195,824
------------ ------------
Net Cash Flows Provided by
Financing Activities $ 813,749 $ 1,015,043
------------ ------------
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 28
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
For the Years
Ended December 31,
------------ ------------
1999 1998
------------ ------------
NET INCREASE (DECREASE) IN CASH $ - $ -
CASH AT BEGINNING OF YEAR - -
------------ ------------
CASH AT END OF YEAR $ - $ -
============ ============
CASH PAID DURING THE YEAR FOR:
Interest $ 43,620 $ 71,276
Income taxes $ - $ -
NON-CASH TRANSACTIONS
Debentures converted to common stock $ 490,000 $ 620,913
Interest converted to common stock $ 152,065 $ -
Common stock issued for notes payable $ 141,076 $ 180,288
Common stock issued for services $ 754,556 $ 116,824
Common stock issued for property $ 95,000 $ -
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE> 29
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of Dynamic
Information System & eXchange, Inc. (DiSX) (the Company). The Company was
incorporated in the State of Utah on March 20, 1987.
Effective October 20, 1994, the Company and DiSX completed an Agreement and
Plan of Reorganization whereby the Company issued 14,483,326 (3,620,838 post-
split shares) shares of its common stock in exchange for 100% of the issued
and outstanding common stock of DiSX. The Company also changed its name on
this date from M&K Investments, Inc. to Dynamic Information System & eXchange,
Inc. On October 31, 1994, the Company effected a reverse stock split of the
outstanding common shares at a rate of 1 share for every 2 shares outstanding.
During 1995 the shareholders approved an additional reverse stock split at a
rate of 1 share for every 2 shares outstanding. All references to shares
outstanding and earnings per share have been retroactively restated to reflect
the reverse stock splits.
DiSX was incorporated in the State of Utah on April 9, 1993. DiSX was founded
to provide information services to the labor and employment industry and has
developed a data base that includes over 60,000 professional job listings
throughout the United States. 85% of the listings are currently contained in
the Western United States. DiSX products include TopJobs USA and
UltimateResume.com.
At the time of the acquisition, the Company was essentially inactive, with no
operations and minimal assets. Additionally, the exchange of the Company's
common stock for the common stock of DiSX resulted in the former stockholders
of DiSX obtaining control of the Company. Accordingly, DiSX became the
continuing entity for accounting purposes, and the transaction was accounted
for as a recapitalization of DiSX with no adjustment to the basis or assets
acquired or liabilities assumed by the Company. For legal purposes, the
Company was the surviving entity. The Company was taken out of the
development stage on January 1, 1999.
Effective September 30, 1999, the Company and its subsidiary merged with DISX
being the surviving entity.
b. Accounting Method
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has selected a calendar year end.
c. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements as follows:
<PAGE>
<PAGE> 30
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Basic Loss Per Share (Continued)
For the Year Ended For the Year Ended
December 31, 1999 December 31, 1998
--------------------------------- --------------------------------
Loss Shares Per-Share Loss Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------ -------- ------------ ----------- -------
Net Loss $(354,624) 19,657,952 $ (0.02) $(1,373,142) 14,845,019 $(0.09)
Fully diluted loss per share is not presented as any common stock equivalents
are antidilutive in nature.
d. Provision for Taxes
No provision for taxes has been made, due to cumulative operating losses at
December 31, 1999. The Company has net operating loss carryforwards of
approximately $6,000,000 which will expire in 2008 through 2019. The net
operating losses are the only significant component of the deferred tax asset
and liability. No tax benefit has been reported in the financial statements
and the potential tax benefits of the loss carryforwards are offset by a
valuation allowance of the same amount.
e. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
f. Fixed Assets
Fixed assets are stated at cost. Depreciation of fixed assets is computed
using the straight-line method over the estimated useful lives of the related
assets, primarily five years.
g. Principles of Consolidation
The consolidated financial statements include those of Dynamic Information
Systems & eXchange, Inc. (the Company) and its wholly-owned subsidiary,
Dynamic Information System & eXchanges, Inc. (DiSX). All significant
intercompany accounts and transactions have been eliminated.
h. Concentrations of Credit Risk
The Company sells its services in Utah and various other states. The Company
extends credit to its customers.
Credit losses, if any, have been provided for in the financial statements and
are based on management's expectations. The Company's accounts receivable are
subject to potential concentrations of credit risk. The Company does not
believe that it is subject to any unusual risks, nor significant risks in the
normal course of its business.
<PAGE>
<PAGE> 31
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. 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.
j. Revenue Recognition
The Company recognized media revenues upon completion of services.
k. Advertising
The Company follows the policy of charging the costs of advertising to expense
as incurred. Advertising expense was $42,171 and $12,681 for the years ended
December 31, 1999 and 1998, respectively.
l. Changes in Accounting Principles
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving offsetting changes
in fair value or cash flows. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. The adoption of this
statement had no material impact on the Company's financial statements.
m. Marketable Securities
The Company has adopted the provisions of SFAS No. 115, "Accounting for
Investments in Debt and Equity Securities." In 1999, the Company received
41,667 shares of topjobs, p.l.c. which were valued at their trading price of
$12 per share for a total valuation of $500,000. The Company classifies the
shares as available for sale. Accordingly, the decrease in value of $184,872
from the date the shares were received to December 31, 1999 is reflected as a
separate component of stockholders' equity.
<PAGE>
<PAGE> 32
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to generate cash flow through increased sales
and marketing of its internet services and to continue to convert debt to
equity.
NOTE 3 - FIXED ASSETS
Fixed assets consisted of the following:
1999
------------
Computer equipment $ 26,142
Office equipment 41,286
Capital lease equipment 8,795
------------
76,223
Accumulated depreciation (59,936)
$ 16,287
============
Total depreciation expense for the years ended December 31, 1999 and 1998 was
$13,433 and $15,386, respectively.
NOTE 4 - ACCRUED EXPENSES
Accrued expenses consisted of the following:
1999
------------
Accrued salaries and wages $ 46,214
Payroll taxes payable 140,795
Accrued interest payable 86,001
Consulting fees payable 72,200
------------
$ 345,210
============
<PAGE>
<PAGE> 33
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - LONG-TERM LIABILITIES
Long-term liabilities consisted of the following:
1999
------------
Notes Payable - Related Parties
- -------------------------------
Note payable to a family organization related to
an officer, secured by Company stock, at 12% per
annum, payable on demand. $ 87,735
Total Notes Payable - Related Parties 87,735
------------
Convertible Debentures
- ----------------------
1996 convertible debentures payable to three
individuals bearing interest at 10% per annum,
convertible into Company stock at $0.50 per share.
Interest and principle due on demand. 30,422
1997 convertible debentures payable to three
individuals bearing interest at 10% per annum,
convertible into Company stock at an average price
of $0.375 per share. Interest and principal
due on demand. 17,500
1998 convertible debentures payable to three
individuals bearing interest at 12% per annum,
convertible into Company stock at $0.25 per share.
Interest and principal due on demand. 82,000
1999 convertible debentures payable to four
individuals bearing interest at 12% per annum,
convertible into Company stock at an average price
of $0.00 per share. Interest and principal due
on demand. 45,045
------------
Total Convertible Debentures 174,967
------------
Current Portion Long-Term Liabilities
- -------------------------------------
Notes payable to five individuals, secured by
Company stock,at 12% per annum payable on demand. 151,824
Note payable to Company, secured by Company stock,
at 12% per annum, payable by demand. 100,000
Note payable to individual at 10% per annum, secured
by Company, due upon demand. 50,000
Note payable to an individual at 30% per annum,
secured by Company stock, due upon demand. 9,000
------------
Balance Forward $ 310,824
============
<PAGE>
<PAGE> 34
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - LONG-TERM LIABILITIES (Continued)
Current Portion Long-Term Liabilities (Continued)
- -------------------------------------
Balance forward $ 310,824
Note payable to Utah State University at 6% per annum,
unsecured, with an initial payment of $9,000 due
June 30, 1996 and thereafter monthly principal and
interest payments of $2,852. 39,198
Overdraft payable to bank at 21%, unsecured, with an
overdraft limit of $7,500, payable on demand. 1,297
------------
Total Current Portion Long-Term Liabilities 351,319
------------
Total long-term liabilities 614,021
------------
Less current portion long-term liabilities (351,319)
Less convertible debentures (174,967)
Less notes payable - related parties (87,735)
------------
Long-term liabilities $ -
============
Principal maturities are as follows:
2000 $ 614,021
2001 -
2002 -
2003 -
2004 -
2005 and thereafter -
------------
$ 614,021
============
NOTE 6 - NOTES RECEIVABLE - RELATED PARTIES
During the year ended December 31, 1999, the Company advanced $18,750 to four
employees. The notes receivable bear interest at 8%, are unsecured and due on
demand. As of December 31, 1999, the balance due is $13,050 including
principal and interest.
<PAGE>
<PAGE> 35
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Pending Litigation
- ------------------
The Company is involved in litigation with Laservend, Inc., a Utah corporation
("Laservend"), who is currently undergoing Chapter 7 bankruptcy proceedings in
the Bankruptcy Court for the District of Utah, Central Division. Laservend's
Bankruptcy Trustee filed a complaint against the Company on June 18, 1998,
alleging that Laservend had advanced the Company $225,000 with the agreement
or understanding that the company would repay Laservend $225,000 plus
interest. Subsequently, the complaint has been amended alleging that the
amounts advanced with interest are $273,000. The Company contends that the
parties were in merger negotiations and that the amounts advanced were part of
these negotiations. Further, that in the event that a merger did not occur,
any and all amounts advanced by Laservend to the Company would be repaid
through the Company's common stock at the rate of $0.50 per share. The merger
failed to take place due to events occurring in Laservend. On July 31, 1998,
the Trustee in bankruptcy filed a complaint that the advance is a loan to be
repaid by the Company, that it was a preferential transfer and that Laservend
did not receive reasonably equivalent value for the advances. An answer was
filed by the Company. The Bankruptcy Court has granted the Trustee's Motion
for Summary Judgment. The Order grants judgment in the amount of $273,347
principle, together with prejudgment interest of $66,884, plus prejudgment
interest estimated at $28,751 in accordance with 29 U.S.C. Section 1961.
The Company
has accrued $368,982. The trustee garnished amounts claimed due from
topjobs.net inc, the JV, and the bank account of the Company. The Trustee has
also executed liens on the computer equipment, stock in topjobs.net inc and
topjobs.net plc, and other assets of the Company. The Company has entered
into a Settlement Agreement with the Trustee. Under the terms of the
Settlement Agreement, the Company is obligated to make certain payments to the
Trustee and during such time the Trustee agrees to forbear from obtaining
writs of garnishment or executions or otherwise collecting on the judgment
except for the collection of the two garnishments described above. During
such period of forbearance, the writs of execution remain in effect.
Management intends to make payment of the judgment. The Company has also
deposited the topjobs.net plc stock with the court against the liability.
Operating Lease Obligation
- --------------------------
The Company is leasing its office space on a month-to-month basis. Rent
expense for the year ended December 31, 1999 was $72,717.
Consulting Agreement
- --------------------
On October 21, 1999, the Company entered into a consulting agreement for the
purpose of advising corporate management and assisting on business and growth
strategies. The agreement calls for the Company to issue 500,000 shares of
restricted common stock upon signing and to issue 190,000 shares of restricted
common stock per month for the next ten months. The Company issued the
500,000 shares which were valued at $62,500 which represented the trading
price on the date of issue. The Company has not issued the 380,000 shares for
November and December 1999, but has accrued a liability of $72,200 which
represents the trading price of the stock at November 30, 1999 and December
31, 1999 times the 190,000 shares to be issued each month.
<PAGE>
<PAGE> 36
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 8 - OTHER INCOME
In June 1998, the Company entered into a nine month research and cooperation
test marketing agreement, limited to the State of Utah and the city of
Houston, Texas with topjobs.net plc (PLC), a corporation located in
Manchester, England. partially as a result of securing contracts which
provided net revenues to the venture of $141,000 in December 1998, the Company
and PLC decided to terminate the test marketing arrangement and establish a
permanent joint venture in the United States. PLC formed a Delaware
corporation, known as topjobs.net inc. (joint venture). On February 11, 1999,
the Company entered into a series of agreements with PLC, including a
Stockholders' Agreement and Licensing Agreement. As an incentive for the
Company to take a minority interest (49%) in the joint venture, PLC advanced
$300,000 to the Company in interest free loans through March 4, 1999. Upon
PLC's initial public offering, PLC paid the Company an additional $200,000,
forgave the $300,000 of loans and issued to the Company 41,667 shares of PLC's
ordinary shares valued at the then market price of $12 per share for total
consideration of $1,000,000.
The Company elected to defer the revenue of $1,000,000 until such time as the
joint venture was profitable where upon the advances would have been amortized
over the estimated life of the joint venture. The Company was accounting for
the 49% investment in the joint venture as an equity investment per APB No.
18. As of December 31, 1999, the Company had advanced $400,763 to the joint
venture as working capital. The advances were non-interest bearing and due on
demand. Through December 31, 1999, the joint venture had sustained losses of
$3,901,973 of which $1,911,967 is attributable to the Company.
On December 15, 1999, the Company and PLC terminated the joint venture. Terms
of the termination are that both parties had no further obligations to each
other. Accordingly, the Company has recognized other income of $599,237 which
is the net amount of $1,000,000 received and payments made of $400,763.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 315,128
<RECEIVABLES> 13,050
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,050
<PP&E> 171,223
<DEPRECIATION> 69,936
<TOTAL-ASSETS> 449,591
<CURRENT-LIABILITIES> 1,090,812
<BONDS> 0
0
0
<COMMON> 5,271,584
<OTHER-SE> (6,281,787)
<TOTAL-LIABILITY-AND-EQUITY> 449,591
<SALES> 1,847,589
<TOTAL-REVENUES> 1,847,589
<CGS> 1,553,471
<TOTAL-COSTS> 2,699,791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,459
<INCOME-PRETAX> (354,624)
<INCOME-TAX> 0
<INCOME-CONTINUING> (354,624)
<DISCONTINUED> 0
<EXTRAORDINARY> (184,872)
<CHANGES> 0
<NET-INCOME> (539,496)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
<PAGE> 1
Exhibit 10.1
AGREEMENT
among
TOPJOBS.NET PLC
(FORMERLY, THE CORPORATE NET LIMITED),
DYNAMIC INFORMATION SYSTEM AND EXCHANGE, INC.
and
TOPJOBS.NET INC.
This Agreement (the "Agreement") is made as of December [15], 1999, by
and among topjobs.net plc (formerly, The Corporate Net Limited)
("topjobs (uk)"), Dynamic Information System and eXchange, Inc. ("DiSX")
and topjobs.net inc. ("topjobs (usa)").
W I T N E S S E T H:
WHEREAS, On February 11, 1999, DiSX, topjobs (uk) and topjobs (usa)
entered into a Stockholders Agreement, as amended by the Amendment to
the Stockholders Agreement, dated March 29, 1999 (the "Stockholders
Agreement"), and the Intellectual Property and Brand Licensing Agreement
(the "Licensing Agreement") and on February 11, 1999, DiSX and topjobs
(usa) entered into a Loan Agreement (the "Loan Agreement").
WHEREAS, DiSX, topjobs (uk) and topjobs (usa) have agreed to terminate
the Stockholders Agreement, the Licensing Agreement and the Loan
Agreement as provided herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged (including, without
limitation, the agreements set forth below to release DiSX from the
obligations to make certain payments), and intending to be legally bound
hereby,the parties hereto agree as follows:
SECTION 1. Definitions.
A. Unless otherwise defined herein, capitalized terms used herein which
are defined in the Stockholders Agreement, the Licensing Agreement and
the Loan Agreement shall have the respective meanings assigned to such
terms in the Stockholders Agreement, the Licensing Agreement and the
Loan Agreement.
SECTION 2. The Stockholders Agreement.
A. The parties to the Stockholders Agreement hereby release any
obligations not heretofore fulfilled to contribute capital to topjobs
(usa).
B. The parties hereby acknowledge and agree that Larry Heaps is no
longer on the Operational Executive of topjobs (uk), Secretary of
topjobs (usa) or otherwise an officer, representative or agent of either
topjobs (uk) or topjobs (usa), having previously resigned from all
positions with topjobs (uk) and topjobs (usa).
C. Effective immediately, Mr. Larry Heaps, Mr. Eric Marchant and Mr.
Ross Wolfley are no longer directors of the topjobs (usa). DiSX hereby
agrees to their removal and does vote to remove them, and hereby agrees
that it has no further rights under the Stockholders Agreement to
appoint directors of topjobs (usa).
D. It is acknowledged and agreed that, except as topjobs (uk), in its
sole discretion, may otherwise determine, all Former DiSX Employees
shall cease to be employees of topjobs (usa) on January 31, 2000.
<PAGE>
<PAGE> 2
E. All books and records relating to topjobs (usa) shall be delivered
immediately to such person or entity as may be directed by Brian Mosley
of topjobs (uk).
F. In consideration of the release of DiSX from certain obligations
topjobs (usa) and topjobs (uk) as described herein, on the date hereof
DiSX hereby agrees to transfer to tobjobs (uk) or its designee all of
DiSX's right and interest in and to all shares and interests of DiSX in
topjobs (usa) provided, that no such transfer may be effective until
such time as DiSX is legally authorized to effect the same, and topjobs
(uk) is legally authorized to accept the same, under applicable law and
court orders. DiSX shall deliver to topjobs (uk) or its designees such
stock powers and other rights as topjobs (uk) may reasonably request to
evidence the foregoing from time to time. DiSX hereby agrees, in
consideration of the benefits being derived by DiSX pursuant to this
agreement, that DiSX shall not dispose of any of such shares of topbjobs
(usa) or any interest therein, directly or indirectly, for a period of 5
years or until the same are acquired by topjobs (uk) or its designee, as
herein provided, and that any attempted disposition of such shares or
any rights therein (including, without limitation, voting rights) shall
be null and void ab initio. DiSX hereby further agrees that it shall
vote its shares for dissolution of topjobs (usa) and otherwise cooperate
in effecting the same in the event that it is requested by topjobs (uk)
to do so, which topjobs (uk) may do in its sole discretion at any time
and from time to time.
G. The Stockholders Agreement is hereby terminated as of this date by
mutual agreement, provided, however, that Sections 11.3.5 and Articles
12 (with regard to arbitration), and 14 shall survive the termination of
the Stockholders Agreement.
SECTION 3. The Licensing Agreement.
The Licensing Agreement is hereby terminated as of this date by mutual
agreement, provided, however, that Articles 9 and 13 and Section 12.3
shall survive the termination of the Licensing Agreement.
SECTION 4. The Loan Agreement.
A. The topjobs (usa) board of directors having determined that it will
never be appropriate for topjobs (usa) to repay the Loan to DiSX, which
is not repayable unless such determination is made by said board of
directors, in its sole discretion, topjobs (usa)'s obligation to repay
the Loan made by DiSX to topjobs (usa) is hereby waived by DiSX.
B. The Loan Agreement and the obligations under the Loan are hereby
terminated immediately.
SECTION 5. Good Faith.
A. The parties hereto undertake with each other to do all things
necessary within their power which are necessary or desirable to give
effect to the spirit and intent of this Agreement.
B. The parties hereto shall and shall use their respective reasonable
endeavors to procure that any necessary third parties shall do, execute
and perform all such further deeds, documents, assurances, acts and
things as any of the parties hereto may reasonably require by notice in
writing to the others to carry the provisions of this Agreement into
full force and effect.
<PAGE>
<PAGE> 3
SECTION 6. Effectiveness.
This Agreement shall become effective as of December __, 1999 when and
if each of DiSX, topjobs(uk) and topjobs (usa) shall have executed this
Agreement.
SECTION 7. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute but one and
the same instrument.
SECTION 8. Governing Law.
All issues and questions concerning the construction, validity,
interpretation and enforceability of this Agreement shall be governed by
and construed in accordance with, the laws of the State of Utah, without
giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Utah.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
TOPJOBS.NET PLC
By: /S/Brian Mosley
Title: COO & Director
DYNAMIC INFORMATION SYSTEM
AND EXCHANGE, INC.
By: /S/Larry D. Heaps
Title: President
TOPJOBS.NET INC.
By: /S/Ross S. Wolfley
Title: President
