U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K/A No. 1
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 12, 2000
Commission file number 0-26013
-------
MULTI-LINK TELECOMMUNICATIONS, INC.
----------------------------------
(Exact name of small business issuer
as specified in its charter)
Colorado 84-1334687
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4704 Harlan Street, Suite 420, Denver, CO 80212
-----------------------------------------------
(Address of principal executive offices)
(303) 831-1977
-------------------------
(Issuer's telephone number)
Not Applicable
----------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
<PAGE>
This Form 8-K/A amends and supplements a filing by Multi-Link
Telecommunications, Inc. ("Multi-Link" or "Registrant") on Form 8K, dated April
14, 2000 pursuant to which Registrant reported the acquisition of all the
outstanding common stock of VoiceLink, Inc. ("VoiceLink"). Such Form 8-K is
hereby amended by changing Item 7 thereof to read as follows, and filing
herewith the attached financial statements and information.
The pro-forma financial information filed herewith combines those of
Multi-Link, Hellyer Communications, Inc. ("Hellyer"), One Touch Communications,
Inc. ("One Touch") and VoiceLink.
The acquisition of the business and substantially all of the assets of
Hellyer and One Touch were accounted for under the purchase method of accounting
and, as such, the statement of operations of Hellyer and One Touch for periods
prior their dates of acquisition (November 17, 1999 and January 6, 2000
respectively) will never be consolidated into Multi-Link's statements of
operations for any period.
The acquisition of VoiceLink was accounted for as a pooling of interests,
and the results of the VoiceLink business have been consolidated with those of
Multi-Link as if the two businesses had been merged throughout the periods
presented.
During fiscal 1999 Hellyer lost significant revenue and consequently
suffered substantial operating losses as a result of the termination of its
customer billing arrangement with Ameritech under which small charges for voice
mail service were added to each customer's Ameritech bill each month, and paid
to Hellyer as one monthly amount. This Ameritech billing arrangement was
restored prior to the date of acquisition by Multi-Link and as a result
management does not believe that Hellyer's fiscal 1999 statement of operations
and the pro-forma combining condensed statement of operations are indicative of
the expected future performance of the combined companies.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following financial statements of the business acquired are filed
herewith:
Balance Sheets of VoiceLink, Inc. at December 31, 1999 and March 31,
2000 (Unaudited)
Statements of Operations for VoiceLink, Inc. for the years ended
December 31, 1998 and 1999 and the three months ended March 31, 1999
and 2000 (Unaudited)
Statements of Changes in Stockholders' Equity for VoiceLink, Inc. for
the years ended December 31, 1998 and 1999 and the three months ended
March 31, 1999 and 2000 (Unaudited)
Statements of Cash Flows for VoiceLink, Inc. for the years ended
December 31, 1998 and 1999 and the three months ended March 31, 1999
and 2000 (Unaudited)
2
<PAGE>
(b) Pro Forma Financial Information.
The following pro forma financial statements of the Registrant are filed
herewith:
Combining, Condensed Statement of Operations of Multi-Link
Telecommunications, Inc., Hellyer Communications, Inc., One Touch
Communications, Inc., and VoiceLink, Inc. for the twelve months ended
September 30, 1999
Combining, Condensed Statement of Operations of Multi-Link
Telecommunications, Inc., Hellyer Communications, Inc., One Touch
Communications, Inc., and VoiceLink, Inc. for the twelve months ended
September 30, 1998
(c) Exhibits.
10.20 Stock Purchase Agreement dated March 25, 2000 by and among Multi-Link
Telecommunications, Inc., VoiceLink, Inc., L. Van Page and Larry Mays
(without exhibits).*
10.21 Registration Rights Agreement dated March 31, 2000 by and among L.
Van Page, Larry Mays, Nigel V. Alexander, Shawn B. Stickle and
Multi-Link Telecommunications, Inc. *
99.1 Press Release announcing signing of Stock Purchase Agreement. *
99.2 Press Release announcing completion of acquisition. *
* Filed with the Form 8-K on April, 14, 2000.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MULTI-LINK TELECOMMUNICATIONS, INC.
Date: June 12, 2000 By: /s/ David J. Cutler
----------------------------------------
David J. Cutler, Chief Financial Officer
4
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
VOICELINK, INC. ----
Independent Auditor's Report ............................................... F-2
Balance Sheets - December 31, 1999 and March 31, 2000 (Unaudited) .......... F-3
Statements of Operations - For the Years Ended December 31, 1998 and 1999
and the Three Months Ended March 31, 1999 and 2000 (Unaudited) .... F-4
Statements of Changes in Stockholders' Equity - For the Years Ended
December 31, 1998 and 1999 and the Three Months Ended
March 31, 1999 and 2000 (Unaudited) ............................... F-5
Statements of Cash Flows - For the Years Ended December 31, 1998 and 1999
and the Three Months Ended March 31, 1999 and 2000 (Unaudited) .... F-6
Notes to Financial Statements .............................................. F-7
MULTI-LINK TELECOMMUNICATIONS, INC., HELLYER COMMUNICATIONS, INC.,
ONE TOUCH COMMUNICATIONS, INC. AND VOICELINK, INC.
Pro Forma Combining Condensed Financial Information:
Introduction .............................................................. F-12
Combining, Condensed Statement of Operations - For the Twelve Months Ended
September 30, 1999 ............................................... F-13
Combining, Condensed Statement of Operations - For the Twelve Months Ended
September 30, 1998 ............................................... F-14
Notes to Combining, Condensed Financial Information ....................... F-15
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Shareholders and Board of Directors
VoiceLink, Inc.
Norcross, Georgia
We have audited the accompanying balance sheet of VoiceLink, Inc. as of December
31, 1999 and the related statements of operations, changes in stockholders'
equity, and cash flows for the years ended December 31, 1998 and 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VoiceLink, Inc. as of December
31, 1999 and of the results of its operations and its cash flows for the years
ended December 31, 1998 and 1999, in conformity with generally accepted
accounting principles.
/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Denver, Colorado
May 5, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
VOICELINK, INC.
BALANCE SHEETS
DECEMBER 31, MARCH 31,
1999 2000
----------- ----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 59,643 $ 143,611
Accounts receivable - trade, net of allowance for doubtful
accounts of $25,000 ............................................... 174,335 180,295
Prepaid expenses and other ............................................. 101,855 92,388
--------- ---------
Total current assets .......................................... 335,833 416,294
PROPERTY AND EQUIPMENT, net ................................................ 387,782 380,703
INTANGIBLE ASSETS, net of accumulated amortization of
$116,302 and $123,958 (unaudited), respectively ........................ 39,493 37,622
--------- ---------
TOTAL ASSETS ............................................................... $ 763,108 $ 834,619
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ....................................................... $ 69,621 $ 47,464
Accrued expenses ....................................................... 83,748 33,000
Notes payable, related party ........................................... -- 500,000
Notes payable and current portion of long-term debt .................... 72,905 --
--------- ---------
Total current liabilities ..................................... 226,274 580,464
LONG-TERM DEBT, less current portion ....................................... 375,154 --
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY:
Common stock, $.20 par value; 10,000,000 shares authorized,
520,850 shares issued and outstanding ............................. 104,170 104,170
Additional paid-in capital ............................................. 105,830 105,830
Treasury stock, at cost, 500,000 shares ................................ (308,122) (308,122)
Retained earnings ...................................................... 259,802 352,277
--------- ---------
Total stockholders' equity .................................... 161,680 254,155
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................. $ 763,108 $ 834,619
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
VOICELINK, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ ------------------------
1998 1999 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES ....................................... $ 2,306,660 $ 2,371,281 $ 574,496 $ 604,714
COST OF SERVICES AND PRODUCTS ...................... 454,356 374,879 93,243 87,170
----------- ----------- ----------- -----------
GROSS MARGIN ....................................... 1,852,304 1,996,402 481,253 517,544
OPERATING EXPENSES:
Sales and advertising .......................... 367,270 354,876 91,667 119,757
General and administrative ..................... 1,220,152 1,309,548 319,870 294,592
Depreciation ................................... 79,413 47,377 11,568 12,252
Amortization ................................... 40,000 32,969 10,000 7,656
----------- ----------- ----------- -----------
Total operating expenses ................... 1,706,835 1,744,770 433,105 434,257
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS ............................. 145,469 251,632 48,148 83,287
Interest income (expense), net ................. (90,821) (74,516) (14,693) (7,712)
----------- ----------- ----------- -----------
INCOME BEFORE TAX .................................. 54,648 177,116 33,455 75,575
Income Tax Benefit (Expense) ................... (14,208) (67,304) (12,713) 16,900
----------- ----------- ----------- -----------
NET INCOME ......................................... $ 40,440 $ 109,812 $ 20,742 $ 92,475
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
VOICELINK, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
Common Stock Additional Treasury Stock
----------------- Paid-In ------------------ Retained
Shares Amount Capital Shares Amount Earnings Total
------ ------ ---------- ------ ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, January 1, 1998 ..................... 520,850 $ 104,170 $ 105,830 500,000 $(308,122) $ 109,550 $ 11,428
Net income .................................. -- -- -- -- -- 40,440 40,440
--------- --------- --------- --------- --------- --------- ---------
BALANCES, December 31, 1998 ................... 520,850 104,170 105,830 500,000 (308,122) 149,990 51,868
Net income .................................. -- -- -- -- -- 109,812 109,812
--------- --------- --------- --------- --------- --------- ---------
BALANCES, December 31, 1999 ................... 520,850 104,170 105,830 500,000 (308,122) 259,802 161,680
Net income (unaudited) ...................... -- -- -- -- -- 92,475 92,475
--------- --------- --------- --------- --------- --------- ---------
BALANCES, March 31, 2000 (Unaudited) .......... 520,850 $ 104,170 $ 105,830 500,000 $(308,122) $ 352,277 $ 254,155
========= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
VOICELINK, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- -------------------
1998 1999 1999 2000
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................................... $ 40,440 $ 109,812 $ 20,742 $ 92,475
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................. 119,413 80,346 21,568 19,908
Deferred taxes ............................................ -- -- -- --
Loss (profit) from associated company ..................... 16,995 15,063 (1,656) (2,785)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable ....................................... (41,986) (2,071) 34,478 (5,954)
Other receivables ......................................... 33,940 13,176 13,176 --
Prepaid expenses .......................................... 41,648 49,161 3,564 9,467
Increase (decrease) in:
Accounts payable .......................................... (50,946) 45,335 39,475 (22,161)
Accrued expenses .......................................... 8,681 1,097 (2,775) (50,749)
Deferred revenue .......................................... (4,736) -- -- --
--------- --------- --------- ---------
Net cash provided by operating activities .................... 163,449 311,919 128,572 40,201
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets ....................................... (108,108) (16,756) (6,122) (5,173)
Investment in associate company ................................ (16,500) (20,000) -- (3,001)
--------- --------- --------- ---------
Net cash used in investing activities ........................ (124,608) (36,756) (6,122) (8,174)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from related parties .................................. -- -- -- 500,000
Payment of notes payable ....................................... (55,355) (285,886) (99,818) (448,059)
--------- --------- --------- ---------
Net cash provided by (used in) financing activities .......... (55,355) (285,886) (99,818) 51,941
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................... (16,514) (10,723) 22,632 83,968
CASH AND CASH EQUIVALENTS, at beginning of period .................. 86,880 70,366 70,366 59,643
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, at end of period ........................ $ 70,366 $ 59,643 $ 92,998 $ 143,611
========= ========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest ......................................... $ 75,717 $ 59,455 $ 16,349 $ 10,498
========= ========= ========= =========
Cash paid for taxes ............................................ $ 3,460 $ 9,792 $ -- $ --
========= ========= ========= =========
Non-cash financing activities:
Fixed assets acquired through debt .......................... $ 116,082 $ -- $ -- $ --
========= ========= ========= =========
Write-off of non-compete agreement through
note payable ..................................... $ -- $ 25,000 $ 25,000 $ --
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VOICELINK, INC.
NOTES TO FINANCIAL STATEMENTS
(Information Subsequent to December 31, 1999 is Unaudited)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------
Nature of Operations - VoiceLink, Inc. (the "Company") was incorporated in the
State of Georgia in January 1991 and sells voice and fax messaging products and
paging services in the Atlanta local calling area.
Cash and Cash Equivalents - Cash and cash equivalents consist of cash and highly
liquid debt instruments with original maturities of less than three months.
Property and Equipment - Property and equipment is stated at cost. Depreciation
of property and equipment is calculated using the straight-line method over the
estimated useful lives of the assets. The estimated useful lives are as follows:
Furniture and fixtures 7 years
Computer equipment 5 years
Voice messaging equipment 15 years
Intangible Assets - The Company has entered into a five-year non-compete
agreement with a former shareholder for consideration of $175,000. The cost of
the non-compete agreement is being amortized on a straight-line basis over the
five-year term of the agreement and which expires in December 2001.
Impairment of Long-Lived and Intangible Assets - In the event that facts and
circumstances indicate that the cost of long-lived and intangible assets may be
impaired, an evaluation of recoverability would be performed. If an evaluation
were required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow value is required.
Concentration of Credit Risk and Significant Vendors - Concentration of credit
risk is limited to trade accounts receivable. The nature of the Company's
business is such that no single customer represents more than 2% of net accounts
receivable. The Company does not require collateral or other security to support
customer's receivables but conducts periodic reviews of customer payment
practices to minimize collection risk on trade accounts receivable. Allowances
are maintained for potential credit losses and such losses have been within
management's expectations.
The Company currently uses services provided by Bell South for interconnection
to the public telephone network. There are other local telephone companies which
could provide the Company with a similar interconnection. However, in the event
that Bell South was to experience difficulties in providing the Company with
interconnection in its present configuration, it could materially adversely
affect the Company's business in the short-term. An appropriate time period
would be required to enable the Company to establish a new interconnection to
the public telephone network.
F-7
<PAGE>
VOICELINK, INC.
NOTES TO FINANCIAL STATEMENTS
(Information Subsequent to December 31, 1999 is Unaudited)
Financial Instruments - The estimated fair values for financial instruments are
determined at discrete points in time based on relevant market information.
These estimates involve uncertainties and cannot be determined with precision.
The carrying amounts of note receivable, accounts receivable, accounts payable,
and accrued liabilities approximate fair value because of the short-term
maturities of these instruments. The fair value of notes payable approximates
their carrying value as generally their interest rates reflect the Company's
current effective annual borrowing rate.
Income Taxes - The Company currently accounts for income taxes under the
liability method, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statements and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Revenue Recognition - Revenues are recognized at the time services are performed
or products are delivered.
Advertising Costs - Costs associated with advertising are expensed in the year
incurred. Advertising expense was $6,000 and $29,000 for the years ended
December 31, 1998 and 1999.
Comprehensive Income - Comprehensive income is defined as all changes in
stockholders' equity, exclusive of transactions with owners, such as capital
investments. Comprehensive income includes net income or loss, changes in
certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries, and certain
changes in minimum pension liabilities. The Company's comprehensive income was
equal to its net income for all the periods presented.
Use of Estimates - The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates.
Recently Issued Accounting Pronouncements - SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, was issued in June 1998. This
statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that entities recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for the Company's financial statements for the year ended December 31,
2000 and the adoption of this standard is not expected to have a material effect
on the Company's financial statements.
Unaudited Information - The balance sheet as of March 31, 2000 and the
statements of operations for the three-month periods ended March 31, 1999 and
2000 were taken from the Company's books and records without audit. However, in
the opinion of management, such information includes all adjustments (con
sisting only of normal recurring accruals) which are necessary to properly
reflect the financial position of the Company as of March 31, 2000 and the
results of operations for the three months ended March 31, 1999 and 2000.
F-8
<PAGE>
VOICELINK, INC.
NOTES TO FINANCIAL STATEMENTS
(Information Subsequent to December 31, 1999 is Unaudited)
2. PROPERTY AND EQUIPMENT:
----------------------
Property and equipment comprise of the following as of December 31, 1999:
Furniture and fixtures $ 57,160
Computer equipment 78,918
Voice messaging equipment 360,852
---------
496,930
Accumulated depreciation (109,148)
---------
$ 387,782
=========
3. NOTES PAYABLE AND LONG-TERM DEBT:
--------------------------------
Notes payable and long term debt consist of the following as of December 31,
1999:
A 10-year SBA guaranteed, variable rate promissory note
repayable in monthly installments maturing April 2005
bearing interest at prime plus 2% (10.5% at December 31,
1999), collateralized by substantially all assets of the and
Company guaranteed by stockholder. $ 366,940
A 5-year equipment lease to purchase voice messaging
equipment repayable in monthly installments maturing
December 2002 bearing interest at 11.25%, collateralized by
equipment. 81,119
---------
448,059
Less current portion (72,905)
---------
$ 375,154
=========
Subsequent to December 31, 1999, the new parent company, Multi-Link
Telecommunications, Inc. (see Note 6) advanced the Company $500,000 to pay off
all debt.
F-9
<PAGE>
VOICELINK, INC.
NOTES TO FINANCIAL STATEMENTS
(Information Subsequent to December 31, 1999 is Unaudited)
Principal payments on the above obligations at December 31, 1999 are due as
follows:
2000 $ 72,901
2001 85,807
2002 95,316
2003 72,205
2004 79,964
Thereafter 41,866
---------
$ 448,059
=========
4. COMMITMENTS:
-----------
The Company leases certain equipment and its office under lease agreements
classified as operating leases. Minimum future equipment and office rental
payments are as follows.
2000 $ 64,664
2001 60,680
2002 21,280
---------
$ 146,624
=========
5. INCOME TAXES:
------------
The actual income tax expense differs from the "expected" tax expense (computed
by applying the U.S. Federal corporate income tax rate of 34% for each period)
as follows:
Years Ended December 31,
-----------------------------------
1998 1999
----------------- --------------
Amount % Amount %
------ ----- ------ -----
Statutory rate $ 18,580 34.00% $ 60,219 34.00%
State income taxes, net of Federal income
tax benefit 2,164 3.96% 7,014 3.96%
Non-deductible expenses and other (6,536) (11.96%) 71 .04%
------- ------- ------- ------
Total income tax expense $ 14,208 26.00% $ 67,304 38.00%
======= ======= ======= ======
F-10
<PAGE>
VOICELINK, INC.
NOTES TO FINANCIAL STATEMENTS
(Information Subsequent to December 31, 1999 is Unaudited)
Income tax expense (benefit) consists of the following:
Years Ended
December 31,
----------------------
1998 1999
---- ----
Current $ 10,208 $ 71,304
Deferred 4,000 (4,000)
-------- --------
Total income tax expense $ 14,208 67,304
======== ========
Temporary differences between the financial statement carry amounts and tax
basis of assets and liabilities that give rise to the net deferred tax liability
relates primarily to the use of the cash method of accounting for tax.
6. SUBSEQUENT EVENTS:
-----------------
Effective March 31, 2000, 100% of the Company's issued share capital was
acquired by Multi-Link Telecommunications, Inc. (Multi-Link), a publicly quoted
provider of voice messaging related telecommunications services, in a share for
share exchange. Stockholders of VoiceLink received a total of 406,488 Multi-Link
shares in exchange for their shares in VoiceLink.
F-11
<PAGE>
MULTI-LINK TELECOMMUNICATIONS, INC.
HELLYER COMMUNICATIONS, INC.
ONE TOUCH COMMUNICATIONS, INC.
AND
VOICELINK, INC.
INTRODUCTION
The accompanying unaudited pro forma combining, condensed statement of
operations combine the operations of Multi-Link Telecommunications, Inc. and
subsidiary (the Company) for the years ended September 30, 1999 and 1998, the
operations of Hellyer Communications, Inc. (Hellyer) for the years ended October
31, 1999 and 1998, the operations of One Touch Communications, Inc. (One Touch)
for the years ended December 31, 1999 and 1998, and the operations of VoiceLink,
Inc. for the year ended December 31, 1999, as if the acquisitions had been
completed at the beginning of the period presented. Hellyer and One Touch were
accounted for under the purchase method of accounting and VoiceLink, Inc. was
accounted for as a pooling-of- interests. The pro forma combining, condensed
financial information has been prepared on the basis of the assumptions included
in the notes to the pro forma combining, condensed financial information.
These statements are not necessarily indicative of future operations or the
actual results that would have occurred had the merger been consummated at the
beginning of the period indicated.
The unaudited pro forma combined, condensed financial statements should be read
in conjunction with the historical financial statements and notes thereto,
included elsewhere in the document or in prior filings with the Securities and
Exchange Commission.
F-12
<PAGE>
<TABLE>
<CAPTION>
MULTI-LINK TELECOMMUNICATIONS, INC., HELLYER COMMUNICATIONS, INC.
ONE TOUCH COMMUNICATIONS, INC., AND VOICELINK, INC.
PRO FORMA, COMBINING, CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
Multi-Link Hellyer One Touch
TeleCommunications, Communications, Communications, VoiceLink,
Inc. Inc. Inc. Inc.
------------------ -------------- --------------- ---------
<S> <C> <C> <C> <C>
Net revenues ...................... $ 2,217,468 $ 8,900,622 $ 1,186,383 $ 2,371,281
Cost of services and products ..... 410,623 3,181,876 266,606 374,879
------------ ------------ ------------ -----------
Gross margin ...................... 1,806,845 5,718,746 919,777 1,996,402
Operating expenses ................ 1,215,256 10,064,884 540,125 1,744,770
------------ ------------ ------------ -----------
Operating income (loss) ........... 591,589 (4,346,138) 379,652 251,632
Interest expense .................. (200,330) (210,598) (15,268) (74,516)
------------ ------------ ------------ -----------
Net income (loss) before tax ...... 391,259 (4,556,736) 364,384 177,116
Provision for income taxes ........ -- -- -- (67,304)
------------ ------------ ------------ -----------
Net income (loss) ................. $ 391,259 $ (4,556,736) $ 364,384 $ 109,812
============ ============ ============ ===========
Net income (loss) per common share:
Basic ......................... $ 0.18 N/A N/A N/A
Diluted ....................... $ 0.16 N/A N/A N/A
Weighted average number of shares:
Basic ......................... 2,203,992 N/A N/A N/A
Diluted ....................... 2,400,075 N/A N/A N/A
<CAPTION>
Hellyer One Touch VoiceLink, Inc.
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Combined
----------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Net revenues ...................... $ -- $ -- $ -- $ 14,675,754
Cost of services and products ..... -- -- -- 4,233,984
------------ ------------ ------------ -------------
Gross margin ...................... -- -- -- 10,441,770
Operating expenses ................ 229,297 (a) 183,738 (d) -- 13,978,070
------------ ------------ ------------ -------------
Operating income (loss) ........... (229,297) (183,738) -- (3,536,300)
Interest expense .................. 138,862 (b) 8,906 (e) 34,682 (g) (318,262)
------------ ------------ ------------ -------------
Net income (loss) before tax ...... (90,435) (174,832) 34,682 (3,854,562)
Provision for income taxes ........ -- -- 67,304 (h) --
------------ ------------ ------------ -------------
Net income (loss) ................. $ (90,435) $ (174,832) $ 101,986 $ (3,854,562)
============ ============ ============ =============
Net income (loss) per common share:
Basic ......................... N/A N/A N/A $ (1.28)
Diluted ....................... N/A N/A N/A $ (1.28)
Weighted average number of shares:
Basic ......................... 150,000 (c) 246,718 (f)406,488 (i) 3,007,198
Diluted ....................... 150,000 (c) 246,718 (f)406,488 (i) 3,007,198
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
MULTI-LINK TELECOMMUNICATIONS, INC., HELLYER COMMUNICATIONS, INC.
ONE TOUCH COMMUNICATIONS, INC., AND VOICELINK, INC.
PRO FORMA, COMBINING, CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
Multi-Link Hellyer One Touch
TeleCommunications, Communications, Communications, VoiceLink,
Inc. Inc. Inc. Inc.
------------------ -------------- --------------- ---------
<S> <C> <C> <C> <C>
Net revenues ...................... $ 1,859,276 $ 10,177,413 $ 914,682 $ 2,306,660
Cost of services and products ..... 371,391 2,603,283 218,950 454,355
------------ ------------ ------------ -----------
Gross margin ...................... 1,487,885 7,574,130 695,732 1,852,305
Operating expenses ................ 1,019,984 7,077,752 488,758 1,706,836
------------ ------------ ------------ -----------
Operating income (loss) ........... 467,901 496,378 206,974 145,469
Interest (expense) ................ (635,518) (119,913) (25,267) (90,821)
------------ ------------ ------------ -----------
Net income (loss) before tax ...... (167,617) 376,465 181,707 54,648
Provision for income taxes ........ -- -- -- (14,208)
------------ ------------ ------------ -----------
Net income (loss) ................. $ (167,617) $ 376,465 $ 181,707 $ 40,440
============ ============ ============ ===========
Net income (loss) per common share:
Basic ......................... $ (0.11) N/A N/A N/A
Diluted ....................... $ (0.11) N/A N/A N/A
Weighted average number of shares:
Basic ......................... 1,496,905 N/A N/A N/A
Diluted ....................... 1,496,905 N/A N/A N/A
<CAPTION>
Hellyer One Touch VoiceLink, Inc.
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Combined
----------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Net revenues ...................... $ -- $ -- $ -- $ 15,258,031
Cost of services and products ..... -- -- -- 3,647,979
------------ ------------ ------------ -------------
Gross margin ...................... -- -- -- 11,610,052
Operating expenses ................ 229,297 (a) 183,738 (d) -- 10,706,365
------------ ------------ ------------ -------------
Operating income (loss) ........... (229,297) (183,738) -- 903,687
Interest (expense) ................ 138,862 (b) -- -- (732,657)
------------ ------------ ------------ -------------
Net income (loss) before tax ...... (90,435) (183,738) -- 171,030
Provision for income taxes ........ -- -- 14,208 (h) --
------------ ------------ ------------ -------------
Net income (loss) ................. $ (90,435) $ (183,738) $ 14,208 $ 171,030
============ ============ ============ =============
Net income (loss) per common share:
Basic ......................... N/A N/A N/A $ 0.07
Diluted ....................... N/A N/A N/A $ 0.07
Weighted average number of shares:
Basic ......................... 150,000 (c) 246,718 (f)406,488 (i) 2,300,111
Diluted ....................... 150,000 (c) 246,718 (f)406,488 (i) 2,300,111
</TABLE>
F-14
<PAGE>
MULTI-LINK TELECOMMUNICATIONS, INC.
HELLYER COMMUNICATIONS, INC.
ONE TOUCH COMMUNICATIONS, INC.
AND
VOICELINK, INC.
(Unaudited)
NOTES TO COMBINING, CONDENSED FINANCIAL INFORMATION
(a) To reflect amortization expense related to the consultancy agreement (2
years), non-compete agreement (5 years) and goodwill (15 years) incurred in the
acquisition of Hellyer.
(b) To reflect the reduction in interest expense arising from negotiated
settlement of Hellyer notes payable at the time of acquisition.
(c) To reflect the issuance of 150,000 shares in the Company for the acquisition
of consultancy and non-compete agreements.
(d) To reflect the amortization expense related to goodwill over 15 years
incurred in the acquisition of One Touch.
(e) To reflect the reduction in interest expense arising from the repayment of
One Touch's leasing liabilities at closing.
(f) To reflect the issue of 246,718 shares in the Company as part of the
purchase consideration for the acquisition of the One Touch.
(g) To reflect the reduction in interest expense arising from the repayment of
VoiceLink's loan and lease liabilities at closing. Interest expense reduced from
the date of Multi-Link's closing of its public offering in May 1999.
(h) To reflect the offset of the Company's tax losses against VoiceLink's
taxable income.
(i) To reflect the issue of 405,488 shares in the Company as the purchase
consideration for the acquisition of the VoiceLink, Inc.
F-15
