SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended June 30, 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 June 30, 2002 was 3,608,238.
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 June 30, 2002 (unaudited)..........................................3
Condensed Statements of Operations
for the Nine Month Periods Ended and Six Month
Periods Ended June 30, 2002 and 2001 (unaudited).......................4
Condensed Statements of Cash Flows
for the Nine Month Periods Ended
June 30, 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 June 30, 2002 and statements of operations for six and nine months
ended and the comparable period for the preceding year and statements of cash
flows for the nine 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...
June 30, 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 3853 353
------------- -------------
Total assets $ 45,852 $ 43,643
============= =============
...LIABILITIES AND STOCKHOLDERS' DEFICIT...
Current Liabilities:
Accounts payable and accrued expenses $ 213,024 $ 125,469
Due to officers 34,097 -0-
Loans payable in common stock -0- 397,652
------------- -------------
Total current liabilities 247,121 523,121
------------- -------------
Stockholders' Deficit:
Common stock; $.001 par value; 100,000,000
shares authorized; 3,608,238 (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 (587,729) (479,478)
------------- -------------
Total stockholders' deficit (184,077) (479,478)
------------- -------------
Total liabilities and stockholders' deficit $ 45,852 $ 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 Nine Months For the Six October 20, 1999
Ended Months Ended (Development Stage
March 31 June 30 Inception)
-------- ------- Through
2002 2001 2002 2001 June 30, 2002
---- ---- ---- ---- -------------
System development costs $ 6,000 $ 35,055 $ 6,000 $ 19,919 $ 166,067
General and administrative cost 102,251 187,220 65,429 87,492 421,662
----------- ----------- ----------- ----------- -----------
Loss before income taxes 108,251 222,275 71,429 107,411 587,729
Income taxes -0- -0- -0- -0- -0-
----------- ----------- ----------- ----------- -----------
Net Loss $ 108,251 $ 222,275 $ 71,429 $ 107,411 $ 587,729
=========== =========== =========== =========== ===========
Basic and diluted loss per share $ (.03) $ (.34) $ (.02) $ (.14) $ (.16)
=========== =========== =========== =========== ===========
Weighted average basic and diluted
shares outstanding 3,608,238 660,439 3,608,238 781,319 3,608,238
=========== =========== =========== =========== ===========
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
Nine Months Nine Months (Development Stage
Ended Ended Inception) to
June 30, June 30, June 30,
2002 2001 2002
---- ---- ----
Cash flows from operating activities:
Net loss $ (108,251) $ (222,275) $ (587,729)
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 87,555 72,659 210,636
Increase in deposits 3,500 -0- 3,147
------------ ------------ ------------
Net cash used in operating activities (14,692) (149,969) (232,740)
------------ ------------ ------------
Cash flows from investing activities:
Payments of amounts due from officers 3,500 2,515 (22,791)
Proceeds from amounts due from officers -0- -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- 40,403 -0-
Proceeds from loans payable in
common stock -0- 142,005 397,652
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- 340 626
Payment of checks issued in excess of
cash in bank -0- -0- (626)
------------ ------------ ------------
Net cash provided by financing activities -0- 182,748 258,950
------------ ------------ ------------
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 six and
nine months ended June 30, 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 $ 587,729 and $-0- of cash at June 30, 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 nine-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 SIX AND NINE MONTHS ENDED JUNE 30, 2002 AND 2001.
The Company as of June 30, 2002, had not engaged in any operations
other than organizational and developmental matters. The Company had no sales or
sales revenues for the six and nine months ended June 30, 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 June 30, 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 $108,251 for the nine months ended
June 30, 2002, compared to a loss of $222,275 for the same period in 2001. For
the six months ended June 30, 2002, the company recorded a net loss of $ 71,429,
compared to a net loss of $ 107,411 for the same period in 2001. The loss for
nine months ended June 30, 2002, consisted of $102,251 in general and
administrative costs while conducting the business development.
CAPITAL RESOURCES AND LIQUIDITY
As of June 30, 2002, the Company had total assets of $ 45,852 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 June 30,
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.
ITEM 7.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ISEMPLOYMENT.COM, INC. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Frank
Ulakovich, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Frank Ulakovich
- -----------------------
Frank Ulakovich
Chief Executive Officer
August 23, 2002
12
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ISEMPLOYMENT.COM, INC. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Scott
Murray, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Scott Murray
- ----------------
Scott Murray
Chief Financial Officer
August 23, 2002
13
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
August 23, 2002
14