<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NO. 0-29804
LINK.COM, INC.
(Exact name of registrant as specified in charter)
NEVADA 82-0255758
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(State or other Jurisdiction (IRS Employer Identification No.)
of Incorporation)
201 EAST MAIN STREET, BRADY, TEXAS 78625
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (915) 792-8400
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 NO X
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As of April 10, 2000, there were 11,111,111 shares of common stock, $.001 par
value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
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LINK.COM, INC.
MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) as of March 31, 2000 and
December 31, 1999.................................................................. 3
Consolidated Statements of Operations (unaudited) for the three months
ended March 31, 2000 and 1999 ..................................................... 4
Consolidated Statements of Cash Flows (unaudited) for the three months
ended March 31, 2000 and 1999..................................................... 5
Notes to Consolidated Financial Statements (unaudited)............................. 6
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................................. 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings................................................................... 8
Item 2. Changes in Securities and Use of Proceeds........................................... 8
Item 3. Defaults Upon Senior Securities..................................................... 8
Item 4. Submission of Matters to a Vote of Security Holders................................. 8
Item 5. Other Information................................................................... 8
Item 6. Exhibits and Reports on Form 8-K.................................................... 8
SIGNATURES........................................................................................... 9
</TABLE>
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
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<S> <C> <C>
Current assets
Cash and cash equivalents $ 119,165 $ 576,424
Accounts receivable - trade, net of allowance for doubtful
accounts of $29,855 and $30,864 at March 31, 2000
and December 31, 1999, respectively 25,314 20,162
Related party receivables 53,500 53,500
Other receivables 22,826 --
Prepaid expenses 175 175
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Total current assets 220,980 650,261
Property and equipment, net 21,012 20,150
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Total assets $ 241,992 $ 670,411
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Line of credit $ 400,000 $ 400,000
Notes payable 225,000 --
Payable to related parties 142,059 142,059
Accounts payable 23,375 10,000
Accrued liabilities 79,235 78,192
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Total current liabilities 869,669 630,251
Long-term debt, net of current maturities 1,204,750 1,217,750
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Total liabilities 2,074,419 1,848,001
Shareholders' deficit
Common stock - $0.001 par value; 50,000,000 shares authorized,
11,111,111 shares issued and outstanding at March 31, 2000
and December 31, 1999 11,111 11,111
Additional paid-in capital (deficit) (9,111) (9,111)
Receivable for the purchase of equity (2,000) (2,000)
Accumulated deficit (1,832,427) (1,177,590)
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Total shareholders' deficit (1,832,427) (1,177,590)
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Total liabilities and shareholders' deficit $ 241,992 $ 670,411
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</TABLE>
See notes to interim financial statements.
3
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LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Revenues $ 48,014 $ 66,533
Operating expenses 656,819 80,554
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Operating loss (608,805) (14,021)
Other income 498 --
Interest expense (46,530) (8,630)
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Net loss $ (654,837) $ (22,651)
============ ============
Net loss per common share - basic and diluted $ (0.06) $ (0.00)
============ ============
Weighted-average number of common shares outstanding - basic
and diluted 11,111,111 10,388,898
============ ============
</TABLE>
See notes to interim financial statements.
4
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LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities
Net loss $(654,837) $ (22,651)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 11,518 6,325
Changes in operating assets and liabilities
Accounts receivable - trade (5,152) (25,408)
Other receivables (22,826) --
Prepaid expenses -- 2,437
Accounts payable 13,375 (3,107)
Accrued liabilities 1,043 27,360
Deposits -- 2,437
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Cash flows used in operating activities (656,879) (12,607)
Cash flows from investing activities
Purchases of property and equipment (12,380) --
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Cash flows used in investing activities (12,380) --
Cash flows from financing activities
Payments on long-term debt (13,000) (11,414)
Borrowings on long-term debt 225,000 --
Payable to related parties -- 21,750
Bank overdraft -- (2,058)
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Cash flows provided by financing activities 212,000 8,278
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Net increase (decrease) in cash (457,259) (4,329)
Cash, beginning of period 576,424 7,283
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Cash, end of period $ 119,165 $ 2,954
========= =========
Supplemental disclosures for cash flow information:
Cash paid during the period for:
Interest $ 36,533 $ 16,088
========= =========
Income taxes $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
1. BASIS OF PRESENTATION
The interim financial statements of Link.com, Inc. and Subsidiaries (the
"Company" or "Link") at March 31, 2000, and for the three months ended March 31,
2000 and 1999, are unaudited, and include all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation. The December 31, 1999 balance sheet was derived from the balance
sheet included in the Company's audited financial statements as filed on Form
10-KSB for the year ended December 31, 1999.
The accompanying unaudited interim financial statements are for interim periods
and do not include all disclosures normally provided in annual financial
statements, and should be read in conjunction with the Company's audited
financial statements. The accompanying unaudited interim financial statements
for the three months ended March 31, 2000, are not necessarily indicative of the
results which can be expected for the entire fiscal year.
2. GOING CONCERN
The consolidated financial statements for the year ended December 31, 1999 were
prepared on the assumption that the Company will continue as a going concern.
The Company's continued existence depends upon the success of management's
efforts to raise additional capital necessary to meet the Company's obligations
as they come due and to obtain sufficient capital to execute its business plan.
The Company intends to obtain capital primarily through issuances of equity.
There can be no degree of assurance given that the Company will be successful in
completing additional financing transactions.
The consolidated financial statements do not include any adjustments to reflect
the possible effects on the recoverability and classification of assets or
classification of liabilities which may result from the inability of the Company
to continue as a going concern.
3. CONVERTIBLE DEBENTURES
From August to December 1999, the Company issued an aggregate amount of
$1,217,750 of convertible debentures to approximately 50 individuals. These
securities were issued pursuant to an exemption from registration available
under Section 4(2) of the Securities Act of 1933, as amended. However,
management of the Company determined that such offering may have violated such
registration requirements and, therefore, the Company made a rescission offer to
the debenture holders during the first quarter of 2000. In March 2000, the
Company completed its rescission offer, and all but two of the debenture holders
elected not to rescind the purchase of their securities. The Company paid an
aggregate amount of approximately $13,000 of principal and interest to these two
individuals in connection with the rescission offer.
During the quarter ended March 31, 2000, the Company raised $225,000 in the
form of a convertible note which is due in 90 days.
4. STOCK SPLIT
On September 23, 1999, the Board of Directors of the Company approved a reverse
split of the outstanding common shares at the rate of one share for every 4.5
shares outstanding. Shareholders representing a majority of the outstanding
shares of common stock approved such actions, subject to the notification of the
shareholders as required by the rules and regulations of the Securities and
Exchange Commission. The split became effective March 7, 2000. Share and per
share data for all periods presented herein have been adjusted to give effect to
the stock split.
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FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-QSB contains certain "forward-looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to the Company's management. When used in
this report, the words "anticipate," "believe," "estimate," "expect" and
"intend" and words or phrases of similar import, as they relate to the Company
or its subsidiaries or Company management, are intended to identify
foward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitations, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein and in other
filings made by the company with the Securities and Exchange Commission. Based
upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company's business is connecting physicians, home health agencies and
nursing homes via electronic medical records ("EMR") products and services. The
Company has developed a systems solution that transforms the EMR into an
interactive document. This paperless communication between the provider and
physician is achieved through electronic order and signature software, which can
be layered onto Internet communications, enterprise systems, databases, and
other technology. The physician can review the EMR and return to the provider,
with signatures, through this paperless system. The software also allows the
physician to electronically track and bill for Care Plan Oversight ("CPO"); the
time a physician can bill per month per patient. Many physicians overlook the
CPO billings, primarily due to the increased paperwork to manually track the
billing. DocLink automatically tracks the time spent and produces reports that
can be used as the source document for billing. The Company has several other
products in development, two of which are Internet products which involve
increased regulations in home health agencies and nursing homes derived from the
Outcomes Assessment Information Set ("OASIS").
Results of Operations
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Revenues for the three months ended March 31, 2000 were $48,014 compared to
$66,533 in the same period in 1999. The decrease in revenue was primarily
attributable to the closings of many home health care agencies in the Company's
primary markets, Texas and Louisiana. These closings were caused by changes in
the Medicare home health payment system as implemented due to the Balanced
Budget Amendment of 1997. As a result of this amendment, Congress instituted the
Interim Payment System for home health agencies, which eventually forced many
providers out of business. Management believes that there will continue to be
adequate home health and other providers to use its software products in the
future.
Operating expenses were $656,819 for the three months ended March 31, 2000
compared to $80,554 for the three months ended March 31, 1999. The increase in
operating expenses was primarily attributable to salaries and marketing expenses
to expand the visibility and use of the DocLink product. The additional expenses
were also related to the conversion of the original DocLink product to a browser
based product.
Interest expense for the quarter ended March 31, 2000 was $46,530 compared
to $8,630 in 1999 due to borrowings from long-term debt incurred in September
1999 to fund increased marketing and product development of the Company's
product lines.
Liquidity and Capital Resources
In September 1999, the Company raised $1.2 million in long-term debt to
increase the marketing and visibility of its core product, DocLink. In March
2000, the Company raised $225,000 in the form of a convertible note due in
ninety days. This note is convertible into Preferred Stock of the Company which
is expected to be available in June 2000. Cash provided by these financings and
from operations provided the funding for the period ended March 31, 2000. As of
March 31, 2000, each of the individual debenture holders may convert these notes
into approximately 600,000 shares of the Company's common stock.
The Company has a line of credit at a bank in the amount of $400,000 which
is currently fully borrowed. The line of credit has a maturity date of October
2001.
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The Company has limited cash resources and intends to raise additional
capital through convertible notes and the issuance of preferred stock or
additional common stock. The Company believes the additional capital will allow
it to continue its marketing efforts in its core products and develop the new
browser based version of DocLink. The availability of cash through such
resources is not assured and if the Company is not able to raise enough cash to
complete these goals, the outcome would be uncertain.
The consolidated financial statements have been prepared on the assumption
that the Company will continue as a going concern. The Company's continued
existence depends upon the success of management's efforts to raise additional
capital necessary to meet the Company's obligations as they come due and to
obtain sufficient capital to execute its business plan. There can be no degree
of assurance given that the Company will be successful in completing additional
financing transactions.
The consolidated financial statements do not include any adjustments to
reflect the possible effects on the recoverability and classification of assets
or classification of liabilities which may result from the inability of the
Company to continue as a going concern.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
27.1 Financial Data Schedule
b) REPORTS ON FORM 8-K
On March 13, 2000, the Company filed a Form 8-K to report a change in the
Company's principal independent accountants to King Griffin & Adamson P.C., and
the Company
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filed a Form 8-K/A on March 24, 2000 to include a letter from the Company's
former independent accountants regarding such change in auditors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this quarterly Report to be signed on its behalf by
the undersigned thereunto duly authorized.
LINK.COM, INC.
(Registrant)
Date: May 15, 2000 By: /s/ M. Robert Rice
------------------------------------
M. Robert Rice, President and Chief
Executive Officer (Principal Executive
Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 119,165
<SECURITIES> 0
<RECEIVABLES> 55,169
<ALLOWANCES> 29,855
<INVENTORY> 0
<CURRENT-ASSETS> 220,980
<PP&E> 111,627
<DEPRECIATION> (90,615)
<TOTAL-ASSETS> 241,992
<CURRENT-LIABILITIES> 869,669
<BONDS> 0
0
0
<COMMON> 11,111
<OTHER-SE> (1,843,538)
<TOTAL-LIABILITY-AND-EQUITY> 241,992
<SALES> 48,014
<TOTAL-REVENUES> 48,014
<CGS> 0
<TOTAL-COSTS> (656,819)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (46,530)
<INCOME-PRETAX> (654,837)
<INCOME-TAX> 0
<INCOME-CONTINUING> (654,837)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (654,837)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
