SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended March 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ____________ to ____________
Commission file number: 000-28611
ISEMPLOYMENT.COM, INC.
----------------------
(Exact name of small business issuer as specified in its charter)
Wyoming 86-0970152
--------------- ------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
203-380 Pelissier Street, Windsor, Ontario N9A 6W8
--------------------------------------------------
(Address of principal executive office) (Zip Code)
(519) 258-8318
--------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes XX No___
---
The number of outstanding shares of the issuer's common stock, $0.001 par
value, as of March 31, 2002 was 2,578,238.
Transitional Small Business Disclosure Format
Yes No XX
----- --
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheets as of September 30, 2001
and March 31, 2002 (unaudited)........................................3
Condensed Statements of Operations
for the Six Month Periods Ended and Three Month
Periods Ended March 31, 2002 and 2001 (unaudited).....................4
Condensed Statements of Cash Flows
for the Six Month Periods Ended
March 31, 2002 and 2001 (unaudited)...................................5
Notes to Unaudited Condensed Financial Statements.....................6
ITEM 2. Managements Discussion and Analysis..................................11
PART II - Other Information
ITEM 1. Legal Proceedings....................................................11
ITEM 2. Changes in Securities................................................11
ITEM 3. Default on Senior Securities.........................................12
ITEM 4. Submissions of Matters to a Vote of Securities Holders...............12
ITEM 5. Other Information....................................................12
ITEM 6. Exhibits and Reports on Form 8-K.....................................12
1
ITEM 1. Financial Statements
As used herein, the term "Company" refers to ISEMPlOYMENT.COM, INC.
(formerly known as Magical Marketing, Inc.), a Wyoming corporation, and its
subsidiaries and predecessors unless otherwise indicated. Unaudited, condensed
interim financial statements including a balance sheet for the Company as of the
quarter ended March 31, 2002 and statements of operations for three and six
months ended and the comparable period for the preceding year and statements of
cash flows for the six months ended and the comparable period for the preceding
year.
2
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Condensed Balance Sheets
(Unaudited)
...ASSETS...
March 31, September 30,
2002 2001
---------- ------------
Current Assets:
Cash $ -0- $ -0-
Due from Officers -0- 1,291
Receivables from related party 39,611 39,611
---------- ------------
Total current assets 39,611 40,902
Fixed assets 2,388 2,388
Deposits 353 353
---------- ------------
Total assets $ 42,352 $ 43,643
========== ============
...LIABILITIES AND STOCKHOLDERS' DEFICIT...
Current Liabilities:
Accounts payable and accrued expenses $ 192,332 $ 125,469
Due to officers 34,097 -0-
Loans payable in common stock -0- 397,652
---------- ------------
Total current liabilities 226,429 523,121
---------- ------------
Stockholders' Deficit:
Common stock; $.001 par value; 100,000,000
shares authorized; 2,578,238 (2,100,000 at
September 30, 2001) shares issued
and outstanding 2,578 2,100
Paid in Capital (deficit) 395,274 (1,900)
Receivable for common stock (200) (200)
Deficit accumulated during
the development stage (581,729) (479,478)
---------- ------------
Total stockholders' deficit (184,077) (479,478)
---------- ------------
Total liabilities and stockholders' deficit $ 42,352 $ 43,643
========== ============
See accompanying notes to financial statements
3
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
For the Six Months For the Three Months October 20, 1999
Ended March 31 Ended March 31 (Development Stage
------------------ -------------------- Inception Through
2002 2001 2002 2001 March 31, 2002)
---- ---- ---- ---- --------------
System development costs $ -0- $ 35,055 $ -0- $ 19,919 $ 160,067
General and administrative cost 102,251 79,809 65,429 58,880 421,662
--------- --------- ---------- --------- ------------
Loss before income taxes 102,251 114,864 65,429 78,799 581,729
Income taxes -0- -0- -0- -0- -0-
--------- --------- ---------- --------- ------------
Net Loss $ 102,251 $ 114,864 $ 65,429 $ 78,799 $ 581,729
========== ========= ========== ========= ============
Basic and diluted loss per share $ (.04) $ (.19) $ (.03) $ (.13) $ (.47)
========== ========= ========== ========= ============
Weighted average basic and diluted
shares outstanding 2,418,825 600,000 2,578,238 600,000 1,241,825
========== ========= ========== ========= ============
See accompanying notes to financial statements
4
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
October 20, 1999
Six Months Six Months (Development Stage
Ended Ended Inception) to
March 31, March 31, March 31,
2002 2001 2002
---- ---- ----
Cash flows from operating activities:
Net loss $ (102,251) $ (114,864) $ (581,729)
Adjustments to reconcile net loss to net
cash used in operating activities
System development expenses incurred
by assumption of a related party loan -0- -0- 96,555
System development expenses incurred
by assumption of advances payable -0- (353) 42,147
Company expenses paid by officer 35,388 -0- 35,388
Increase in accounts payable and
accrued expenses 66,863 26,758 189,944
Increase in deposits -0- -0- (353)
----------- ----------- ------------
Net cash used in operating activities -0- (88,459) (218,048)
----------- ----------- ------------
Cash flows from investing activities:
Payments of amounts due from officers -0- 2,515 (26,291)
Proceeds from amounts due from officers -0- 25,000
Advances to related party -0- (38,238) (39,611)
----------- ----------- ------------
Net cash used in investing activities -0- (35,723) (40,902)
----------- ----------- ------------
Cash flows from financing activities:
Due to officers -0- 15,403 -0-
Proceeds from loans payable in
common stock -0- 105,679 397,652
Repayment of a related party loan -0- -0- (96,555)
Repayment of advances payable -0- -0- (42,147)
Checks issued in excess of cash in bank -0- 156 626
Payment of checks issued in excess of
cash in bank -0- -0- (626)
----------- ----------- ------------
Net cash provided by financing activities -0- 121,238 258,950
----------- ----------- ------------
Net increase (decrease) in cash -0- (2,944) -0-
Cash at beginning of period -0- 2,944 -0-
----------- ----------- ------------
Cash at end of period $ -0- $ -0- $ -0-
=========== =========== ============
See accompanying notes to financial statements
5
ISEMPLOYMENT.COM, INC.
(Formerly Known as Marketing, Inc.)
(A Development Stage Company)
Notes to Financial Statements
NOTE 1. THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for ISEmployment.com, Inc.
(the Company) (a development stage company) is presented to
assist in understanding the Company's financial statements.
The accounting policies conform to U.S. generally accepted
accounting principles and have been consistently applied in
the preparation of the financial statements.
Interim Reporting
-----------------
The accompanying unaudited condensed financial statements have
been prepared in accordance with the instructions to Form
10-QSB. Therefore, they do not include all information and
footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders'
equity in conformity with U.S. generally accepted accounting
principles. The condensed balance sheet at September 30, 2001,
was derived from the audited balance sheet at that date which
is not presented herein. Except as disclosed herein, there has
been no material change in the information disclosed in the
notes to the financial statements included in the Company's
annual report on Form 10-KSB for the year ended September 30,
2001. The unaudited statements reflect, in the opinion of
management, all adjustments (which include only normal
recurring adjustments) necessary to fairly state the financial
position and results of operations for the three and six
months ended March 31, 2002, and 2001. Operating results for
interim periods are not necessarily indicative of the results
for the year ending September 30, 2002.
The Company was incorporated under the laws of the State of
Wyoming on February 27, 1997. The Company ceased all operating
activities during the period from February 27, 1997, to
October 20, 1999, and was considered dormant.
On June 30, 2000, ISEmployment.com, Inc. (ISEmployment), a
Delaware corporation, and Magical Marketing, Inc. (Magical
Marketing), merged. Magical Marketing became the surviving
corporation and adopted the name ISEmployment.com, Inc. The
Company issued 400,000 shares of common stock to the
shareholders of the former ISEmployment.com, Inc. corporation
and the Company's majority stockholder cancelled his 800,000
shares of common stock upon the merger. The merger transaction
is treated as a recapitalization and is accounted for as a
reverse acquisition and recorded at
6
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Notes to Financial Statements
(Continued)
NOTE 1. THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
(continued)
historical cost with no goodwill or other intangibles
recorded. The 400,000 common share decrease as a result of the
merger transaction reflects the exchange of ISEmployment's
2,000,000 shares for 400,000 shares of Company common stock
and the retirement of 800,000 shares of Company common stock.
The Company is primarily engaged in raising capital and
developing an on-line human resources and recruiting service
for the information systems industry.
Revenue Recognition
-------------------
Revenue from providing services to customers will be
recognized when the services are rendered.
Capitalization of Internal-Use Software Costs
---------------------------------------------
The Company follows the guidance in Statement of Position
98-1, Accounting for Costs of Computer Software Developed or
Obtained for Internal Use, and EITF 00-2, Accounting for Web
Site Development Costs. During the preliminary project stage,
the Company expenses internal and external costs it incurs, or
assumes from related parties, to develop internal-use software
and systems. During the application development product stage,
the Company capitalizes such costs and will amortize them on
the straight-line method over their expected useful lives.
Substantially all costs incurred by the Company to date relate
to the preliminary project and planning stage including
conceptual formulation, evaluation of alternatives,
determination of functionalities, and identification of
graphics and content. Accordingly, such costs have been
expensed as system development costs.
Fixed Assets
The cost of fixed assets is being depreciated on a
straight-line basis over its estimated useful life of five
years.
7
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Notes to Financial Statements
(Continued)
NOTE 1. THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
(continued)
Start-Up Costs
--------------
The Company expenses organization and start-up costs as
incurred.
Income Taxes
------------
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amount of assets and
liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Foreign Currency
----------------
The Company generates and expends cash in both U.S. dollars and
Canadian dollars. Management believes that the Company's primary
economic environment is U.S. dollars.
The Company's financial statements have been prepared on the
basis of U.S. dollars; however, certain transactions during
the year were executed in Canadian dollars. Gains or losses
from changes in Canadian dollar to U.S. dollar exchange rates
for transactions denominated in Canadian dollars are included
in the determination of operating results in the period in
which the exchange rate changes.
8
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Notes to Financial Statements
(Continued)
New Accounting Pronouncements
-----------------------------
The Company does not expect the adoption of any issued, but
not yet effective, accounting pronouncements to have a
material effect, if any, on its financial position or results
of operations.
NOTE 2. CAPITAL RESOURCES
As shown in the financial statements, the Company has
cumulative losses of $ 581,729 and $-0- of cash at March 31,
2002. The Company currently has no sales. These factors, among
others, raise substantial doubt about the Company's ability to
continue as a going concern. In order to develop and
commercialize its technology and continue as a going concern,
the Company will need, among other things, additional capital
resources and financing. Management's plans to obtain such
resources for the Company include (1) raising additional
capital through sales of common stock, the proceeds of which
would be used to perfect the Company's technology and services
and satisfy immediate operating needs, and (2) using common
stock to pay for consulting and professional services.
The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the
plans described in the preceding paragraph and eventually
secure other sources of financing and attain profitable
operations. The accompanying financial statements do not
include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
Note 3. DUE TO OFFICERS
The Company has received advances from its President and Chief
Executive Officer from time to time. The advances are
non-interest bearing and due on demand.
Note 4. STOCK SPLIT AND OTHER TRANSACTIONS
On October 20, 1999, the board of Directors authorized a 1,000
for 1 stock split, and changed the authorized number of shares
to 100,000,000 shares and the par value to $.001. As a result
of the split, an additional 999,000 shares were issued. All
references in the accompanying financial statements to the
number of common shares and per-share amounts have been
restated to reflect this stock split.
9
ISEMPLOYMENT.COM, INC.
(Formerly Known as Magical Marketing, Inc.)
(A Development Stage Company)
Notes to Financial Statements
(Continued)
Note 4. STOCK SPLIT AND OTHER TRANSACTIONS (continued)
In December 2001, the Company obtained an unpriced quotation
on the NASD OTC Bulletin Board from NASD Regulation, Inc. As a
result, the Company issued 478,238 shares to the third party
investors holding $397,652 in loans to the Company payable in
common shares at September 30, 2001. The loans payable were
due and payable once the Company became publicly traded on
the NASDAQ OTC market. Payment of the balance was made by
issuing shares of Company common stock at prices ranging from
$0.50 to $0.85 per share for a total of 478,238 shares.
In November 2001, the Company entered into a six-month
financing agreement with an investment banking company (the
investment bankers). Under the terms of the agreement, the
investment bankers will endeavor to obtain up to $2,000,000 of
financing for the Company through the sale of up to 1,000,000
shares of the Company's common stock at a price of $2.00 per
share in exchange for a sales commission equal to 9% of the
total amount of proceeds generated by the sale. Additionally,
the agreement requires the Company to issue to the investment
bankers a number of warrants to purchase shares of the
Company's common stock equal to 10% of the total shares issued
under the financing. The warrants entitle the investment
bankers to purchase shares of common stock at a price equal to
150% of the offering price under the financing for four years
from the end of the financing agreement. No funds were raised
under the agreement which expired in May 2002.
Note 5. RELATED PARTY TRANSACTIONS
The Company leases its office facilities from a stockholder on
a month-to-month basis. The Company is also obligated to pay
for certain common area fees and property taxes under the
terms of the lease.
The Company has advances to an entity related through common
ownership in the amount of $39,611. This receivable from a
related party is non-interest bearing and is due on demand.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2002 AND 2001.
The Company as of March 31, 2002, had not engaged in any operations other
than organizational and developmental matters. The Company had no sales or sales
revenues for the three and six months ended March 31, 2002 or 2001 due to its
development stage operations. ISEmployment.com is an Internet based development
stage company, which will provide human resources and recruiting services
on-line. The Company's site will differentiate itself from other
employment-related sites by creating a virtual human resources center and a
virtual recruitment and selection system. ISEmployment.com's targeted market
will be providing its services to United States corporations, which were
recruiting Information Systems employees.
The Company is a development stage company. In order to fund operations
through March 31, 2002, the Company has relied on funding raised from the
issuance of notes payable to various unrelated parties. These notes payable were
converted into common stock of the company.
The Company recorded a net loss of $102,251 for the six months ended March
31, 2002, compared to a loss of $114,864 for the same period in 2001. For the
three months ended March 31, 2002, the company recorded a net loss of $ 65,429,
compared to a net loss of $ 78,799 for the same period in 2001. The loss for six
months ended March 31, 2002, consisted of $102,251 in general and administrative
costs while conducting the business development.
CAPITAL RESOURCES AND LIQUIDITY
As of March 31, 2002, the Company had total assets of $ 42,352 as compared
to $43,643 of total assets at September 30, 2001. The Company is actively
pursuing various financing sources to provide the necessary capital for its
expansion plans.
Total stockholders' deficit in the Company was $184,077 as of March 31,
2002.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
The Company's had loans payable that were due and payable once the Company
becomes publicly traded on the NASDAQ OTC market. Payment of the balance was to
be made by issuing shares of Company common stock at prices ranging from $0.50
to $0.85 per share. The loans were from third party investors. The Company
issued 478,238 shares of common stock in satisfaction of the notes.
11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) None.
(b) None.
12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ISEmployment.com, Inc.
/s/ Scott Murray
- ----------------
Scott Murray
President/CFO and Director
May 20, 2002
13