<PAGE> 1
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): (SEPTEMBER 20, 1999)
ECLICKMD, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
(STATE OR OTHER JURISDICTION OF INCORPORATION)
000-29804 82-0255758
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
----------------------
201 EAST MAIN STREET
BRADY, TEXAS 78625
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE)
(915) 792-8400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This filing serves to amend a Form 8-K filed on October 5, 1999 by
Link.com, Inc.(1) (the "Company") by filing certain unaudited financial
statements and unaudited pro forma financial information (listed under headings
(a) and (b) below) related to:
(1) acquisitions by the Company of National Health Care
Information Systems, LLC, a Texas limited liability company
organized on November 4, 1998, and Venture Information
Systems, LLC, a Texas limited liability company organized on
August 7, 1996, and
(2) the subsequent reverse acquisition (the "Transaction") of
Link.Com by Center Star Gold Mines, Inc.(2)
(a) Financial Statements of Businesses Acquired.
Financial Statements and Report of Independent Certified Public
Accountants for National Health Care Information Systems, L.L.C. as of
December 31, 1998 and August 31, 1999 (unaudited)
Financial Statements and Report of Independent Certified Public
Accountants for Venture Information Systems, L.L.C. as of December 31,
1998 and 1997 and August 31, 1999 (unaudited)
(b) Pro forma financial information.
Background to Pro Forma Consolidated Financial Information (unaudited)
Pro Forma Consolidated Balance Sheet as of August 31, 1999 (unaudited)
Pro Forma Consolidated Statement of Operations for the period ended
August 31, 1999 (unaudited)
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1998 (unaudited)
Notes to Pro Forma Consolidated Financial Information (unaudited)
--------
(1) Effective as of July 25, 2000, the Company changed its name to eClickMD,
Inc.
(2) Prior to the Company being known as "Link.com, Inc.," the Company's name was
Center Star Gold Mines, Inc. which entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") with Link.com, Inc., a
privately-held Nevada corporation (as the dominant entity in the Transaction,
Center Star Gold Mines, Inc. subsequently changed its name to Link.com, Inc.).
Pursuant to the Reorganization Agreement, the shareholders of privately held
Link.com, Inc. agreed to exchange 100% of the issued and outstanding shares of
common stock, or 25,000 shares, in exchange for 10,388,898 shares of the
Company's common stock, par value $.001 (the "Common Stock") (collectively the
"Transaction"). For accounting purposes, the Transaction is treated as a
recapitalization of Link.com, Inc. with Link.com, Inc. as the acquiror (a
reverse acquisition). Accordingly, the historical financial statements are those
of Link.com, Inc. and its predecessors National Health Care Information Systems,
LLC and Venture Information Systems, LLC.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ECLICKMD, INC.
(Registrant)
Date: August__, 2000 By: /s/ M. Robert Rice
---------------------------------------
M. Robert Rice, Chief Executive Officer
<PAGE> 4
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
Background to pro forma consolidated financial information (unaudited)
The unaudited pro forma consolidated balance sheet of Link. com, Inc. ("Link"),
Venture Information Systems, L.L.C. ("Venture") and National Health Care
Information Systems, L.L.C. ("NCIS") as of August 31, 1999, reflects the
acquisition of the assets of Venture and NCIS by Link and the subsequent reverse
acquisition of Link by Center Star Gold Mines, Inc., as if they had occurred on
August 31, 1999.
The unaudited pro forma consolidated statement of operations for the period
ended August 31, 1999, and the year ended December 31, 1998, reflects the
acquisitions as if they had occurred on January 1, 1998.
The unaudited pro forma consolidated balance sheet and statements of operations
should be read in conjunction with the separate historical financial statements
of the Company, Venture and NCIS, and related notes appearing elsewhere in this
Form 8-K/A. The pro forma information is not necessarily indicative of the
results that would have been reported had such events actually occurred on the
dates specified, nor is it necessarily indicative of the future results of the
combined entities.
<PAGE> 5
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
PROFORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
August 31, 1999
<TABLE>
<CAPTION>
ASSETS
Pro Forma Pro Forma
Venture NCIS Adjustments Balance
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets
Accounts receivable - trade, net $ 15,624 $ -- $ -- $ 15,624
Related party receivables 53,500 1,500 -- 55,000
------------ ------------ ------------ ------------
Total current assets 69,124 1,500 -- 70,624
Property and equipment, net 22,146 -- -- 22,146
Deposits 2,437 -- -- 2,437
------------ ------------ ------------ ------------
Total assets $ 93,707 $ 1,500 $ -- $ 95,207
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Bank overdraft $ 1,539 $ 482 $ -- $ 2,021
Line of credit 400,000 20,000 -- 420,000
Payable to related parties 25,140 64,250 -- 89,390
Accounts payable 20,406 -- -- 20,406
Accrued liabilities 4,170 614 -- 34,784
------------ ------------ ------------ ------------
Total current liabilities 481,255 85,346 -- 566,601
Shareholders' deficit
Common stock -- -- 11,111 (A) 11,111
Additional paid-in capital (deficit) -- -- (9,111)(A) (9,111)
Receivable for the purchase of equity (1,000) (1,000) -- (2,000)
Accumulated deficit (386,548) (82,846) (2,000)(A) (471,394)
------------ ------------ ------------ ------------
Total shareholders' deficit (387,548) (83,846) -- (471,394)
------------ ------------ ------------ ------------
Total liabilities and shareholders' deficit $ 93,707 $ 1,500 $ -- $ 95,207
============ ============ ============ ============
</TABLE>
<PAGE> 6
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Period Ended August 31, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Venture NCIS Adjustments Balance
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 138,256 $ 1,005 $ -- $ 139,261
Operating expenses 187,109 72,634 -- 259,743
------------ ------------ ------------ ------------
Operating loss (48,853) (71,629) -- (120,482)
Other income 44 -- -- 44
Interest expense (25,044) -- -- (25,044)
------------ ------------ ------------ ------------
Net loss $ (73,853) $ (71,629) $ -- $ (145,482)
============ ============ ============ ============
Net loss per common share - basic
and diluted $ (0.01)
============
Weighted-average number of common
shares outstanding - basic and diluted 10,388,898
============
</TABLE>
<PAGE> 7
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Venture NCIS Adjustments Balance
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 249,369 $ 4,500 $ -- $ 253,869
Operating expenses 340,472 16,717 -- 357,189
------------ ------------ ------------ ------------
Operating loss (91,103) (12,217) -- (103,320)
Interest income 4,937 4,937 4,937
Other income 3,187 -- -- 3,187
Interest expense (32,676) -- -- (32,676)
------------ ------------ ------------ ------------
Net loss $ (115,655) $ (12,217) $ -- $ (127,872)
============ ============ ============ ============
Net loss per common share - basic
and diluted $ (0.01)
============
Weighted-average number of common
shares outstanding - basic and diluted 10,388,898
============
</TABLE>
<PAGE> 8
LINK.COM, INC. AND SUBSIDIARIES
(Formerly Center Star Gold Mines, Inc.)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
(A) Link.com, Inc. Common Stock
a. To record the issuance of Link common stock in connection with
the acquisition of the assets of Venture and NCIS and,
b. To reflect the reverse acquisition of Link by Center Star Gold
Mines, Inc.
<PAGE> 9
Financial Statements and
Report of Independent Certified Public Accountants
VENTURE INFORMATION SYSTEMS, L.L.C.
August 31, 1999 (Unaudited) and
December 31, 1998 and 1997
<PAGE> 10
VENTURE INFORMATION SYSTEMS, L.L.C.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.............................................................3
FINANCIAL STATEMENTS
Balance Sheets at August 31, 1999 (unaudited) and December 31, 1998 and 1997................................4
Statements of Operations for the eight months ended August 31, 1999 (unaudited)
and for the years ended December 31, 1998 and 1997.........................................................5
Statement of Changes in Members' Deficit for the eight months ended August 31, 1999 (unaudited)
and for the years ended December 31, 1998 and 1997.........................................................6
Statements of Cash Flows for the eight months ended August 31, 1999 (unaudited)
and for the years ended December 31, 1998 and 1997.........................................................7
Notes to Financial Statements...............................................................................8
</TABLE>
The accompanying notes are an integral part of these financial statements 2
<PAGE> 11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE MEMBERS OF
VENTURE INFORMATION SYSTEMS, L.L.C.
We have audited the accompanying balance sheets of Venture Information Systems,
L.L.C. (a Limited Liability Company), as of December 31, 1998 and 1997 and the
related statements of operations, changes in members' deficit, and cash flows
for the years then ended. 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 audits 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 Venture Information Systems,
L.L.C. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As described in Note 3, the accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
experienced recurring losses and has liabilities significantly in excess of
assets at December 31, 1998. Additionally, the Company has generated negative
cash flows from operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Unless the Company obtains
additional financing, it will not be able to meet its obligations as they come
due and it will be unable to execute its long-term business plan. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
March 17, 2000 3
<PAGE> 12
VENTURE INFORMATION SYSTEMS, L.L.C.
BALANCE SHEETS
At August 31, 1999 (Unaudited)
and December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS
August 31, December 31,
1999 ------------------------------
(Unaudited) 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ -- $ -- $ 1,359
Accounts receivable - trade, net of allowance for
doubtful accounts of $25,862 at August 31, 1999
and $11,165 and $0 in 1998 and 1997, respectively 15,624 15,750 --
Related party receivables 53,500 53,500 75,559
Prepaid and other current assets -- 2,437 2,291
------------ ------------ ------------
Total current assets 69,124 71,687 79,209
Property and equipment, net 22,146 41,951 58,857
Deposits 2,437 2,437 --
------------ ------------ ------------
Total assets $ 93,707 $ 116,075 $ 138,066
============ ============ ============
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities
Bank overdraft $ 1,539 $ 2,059 $ --
Line of credit 400,000 400,000 321,500
Accounts payable 20,406 3,107 7,149
Payable to related parties 25,140 21,139 --
Accrued liabilities 34,170 3,465 7,457
------------ ------------ ------------
Total current liabilities 481,255 429,770 336,106
Members' deficit
Receivable for the purchase of members' equity (1,000) (1,000) (1,000)
Members' deficit (386,548) (312,695) (197,040)
------------ ------------ ------------
Total members' deficit (387,548) (313,695) (198,040)
------------ ------------ ------------
Total liabilities and members' deficit $ 93,707 $ 116,075 $ 138,066
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements 4
<PAGE> 13
VENTURE INFORMATION SYSTEMS, L.L.C.
STATEMENTS OF OPERATIONS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Eight months
ended Year ended
August 31, December 31,
1999 ------------------------
(Unaudited) 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues $ 138,256 $ 249,369 $ 127,989
Operating expenses 187,109 340,472 277,455
--------- --------- ---------
Operating loss (48,853) (91,103) (149,466)
Other income (expense)
Interest income -- 4,937 --
Other income 44 3,187 --
Interest expense (25,044) (32,676) (7,458)
--------- --------- ---------
Total other income (expense) (25,000) (24,552) (7,458)
--------- --------- ---------
Net loss $ (73,853) $(115,655) $(156,924)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements 5
<PAGE> 14
VENTURE INFORMATION SYSTEMS, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' DEFICIT
For the eight months ended August 31, 1999 (Unaudited)
and the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Notes Members'
Receivable Deficit Total
------------ ------------ ------------
<S> <C> <C> <C>
Balances at January 1, 1997 $ (1,000) $ (40,116) $ (41,116)
Net loss for the year (156,924) (156,924)
------------ ------------ ------------
Balances at December 31, 1997 (1,000) (197,040) (198,040)
Net loss for the year (115,655) (115,655)
------------ ------------ ------------
Balances at December 31, 1998 (1,000) (312,695) (313,695)
Net loss for the period (unaudited) (73,853) (73,853)
------------ ------------ ------------
Balances at August 31, 1999 (unaudited) $ (1,000) $ (386,548) $ (387,548)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements. 6
<PAGE> 15
VENTURE INFORMATION SYSTEMS, L.L.C.
STATEMENTS OF CASH FLOWS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Eight months
ended Year ended
August 31, December 31,
1999 ------------------------------
(Unaudited) 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss from operations $ (73,853) $ (115,655) $ (156,924)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 20,584 30,110 19,121
Gain on sale of equipment -- (1,267) --
Bad debt expense 14,697 11,165 --
Changes in operating assets and liabilities:
Accounts receivable - trade (14,571) (26,915) --
Related party receivables -- 22,059 (75,559)
Prepaid and other current assets 2,437 (146) (2,291)
Deposits -- (2,437) --
Accounts payable 17,299 (4,042) 7,149
Accrued liabilities 30,705 (3,992) 4,502
------------ ------------ ------------
Net cash used in operating activities (2,702) (91,120) (204,002)
Cash flows from investing activities
Purchases of property and equipment (779) (16,409) (56,674)
Proceeds from sale of equipment -- 4,472 --
------------ ------------ ------------
Net cash used in investing activities (779) (11,937) (56,674)
Cash flows from financing activities
Proceeds from line of credit -- 78,500 321,500
Payable to related parties 4,001 21,139 (55,642)
Bank overdraft (520) 2,059 (3,823)
------------ ------------ ------------
Net cash provided by financing activities 3,481 101,698 262,035
------------ ------------ ------------
Net increase (decrease) in cash -- (1,359) 1,359
Cash, beginning of period -- 1,359 --
------------ ------------ ------------
Cash, end of period $ -- $ -- $ 1,359
------------ ------------ ------------
Supplemental disclosures for cash flow information:
Cash paid during the period for:
Interest $ 27,058 $ 38,119 $ --
------------ ------------ ------------
Supplemental non-cash financing and investing activities:
Receivable issued in exchange for equity $ -- $ -- $ 1,000
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 7
<PAGE> 16
VENTURE INFORMATION SYSTEMS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
1. NATURE OF OPERATIONS
Venture Information Systems, L.L.C. ("Venture" or the "Company"), a Texas
limited liability company organized on August 7, 1996, provides
development, marketing, licensing, service, and support of software called
"Doclink," which is designed for the health care industry. The software
provides for the paperless transfer and signatures of certain HCFA forms
for health care providers. The Company's operations are conducted in Brady,
Texas and its sales are made to health care providers throughout the United
States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
Accounts Receivable
The Company extends unsecured credit in the normal course of business to
virtually all of its customers. Management has provided an allowance for
doubtful accounts which reflects its opinion of amounts which may
ultimately become uncollectible. In the event of non-performance of
accounts receivable, the maximum exposure to the Company is the recorded
amount shown on the balance sheet.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance
and repairs are charged directly against income. Major renewals and
betterments are capitalized. Depreciation on property and equipment is
calculated using the straight-line method over the estimated useful lives
of the assets, which range from 3 to 5 years.
Software Development Costs
Costs incurred in the research and development of new software products and
enhancements to existing software products are expensed as incurred until
technological feasibility has been established. After technological
feasibility is established, any additional costs are capitalized in
accordance with SFAS No. 86, "Accounting for the Costs of Computer Software
to Be Sold, Leased or Otherwise Marketed". Because the Company believes
that its current process for developing software is essentially completed
concurrently with the establishment of technological feasibility, no
software development costs have been capitalized as of August 31, 1999
(unaudited) and December 31, 1998.
Income Taxes
The Company has elected to be taxed as a partnership for federal income tax
purposes. As such, federal income taxes are payable by the members and the
Company is not subject to federal income tax. Accordingly, federal income
taxes are not reflected in the accompanying financial statements.
8
<PAGE> 17
VENTURE INFORMATION SYSTEMS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes revenue from software sales at the time of product
shipment, or in accordance with terms of licensing contracts. Maintenance
and service revenue are recognized ratably over the contractual period or
as the services are provided. Advance billings are recorded as deferred
revenue.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosure About Fair
Value of Financial Instruments", requires disclosure about the fair value
of all financial assets and liabilities for which it is practicable to
estimate. At August 31, 1999 (unaudited) and December 31, 1999 and 1998 the
carrying value all of the Company's accounts receivable, accounts payable
and accrued liabilities approximate fair value because of their short term
nature.
Lines of credit and long-term debt carrying values approximate fair values
based on the borrowing rates currently available to the Company for loans
with similar terms.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities as of the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") during the fiscal year ended December 31, 1998. SFAS 131
establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information
for those segments to be presented in interim financial reports. SFAS 131
also establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial
information is available for evaluation by the chief operating decision
maker, or decision making group, in making decisions about how to allocate
resources and assess performance. The Company has only one operating
segment at August 31, 1999 (unaudited) and December 31, 1999 and 1998.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133", which establishes accounting and reporting standards
for derivative instruments. SFAS No. 137 is effective for all fiscal
quarters for all fiscal years beginning after June 15, 2000. The adoption
of SFAS 137 is not expected to have a significant impact on the Company's
results of operations.
9
<PAGE> 18
VENTURE INFORMATION SYSTEMS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Interim Information
Interim information is unaudited; however, in the opinion of the Company's
management, all adjustments necessary for a fair statement of interim
results have been included in accordance with generally accepted accounting
principles. All adjustments are of a normal recurring nature. The results
for interim periods are not necessarily indicative of results to be
expected for the entire year. These financial statements and notes should
be read in conjunction with the Company's annual financial statements and
the notes thereto for the fiscal year ended December 31, 1998.
3. GOING CONCERN
The financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company sustained net
operating losses of $28,447, $91,103, and $149,466 during the period ended
August 31, 1999 (unaudited) and the years ended December 31, 1998 and 1997,
respectively, and has accumulated losses at August 31, 1999 (unaudited) of
$366,142. Cash used in operating activities for the same periods aggregated
$2,702, $91,121, and $204,002, respectively. Total liabilities at August
31, 1999 (unaudited) of $460,849 exceed total assets of $93,707. 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 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.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
August 31, December 31,
1999 ---------------------------
(Unaudited) 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Computer equipment $ 90,654 $ 89,875 $ 78,430
Furniture and fixtures 1,711 1,711 656
----------- ----------- -----------
92,365 91,586 79,086
Less accumulated depreciation and amortization 70,219 49,635 20,229
----------- ----------- -----------
$ 22,146 $ 41,951 $ 58,857
=========== =========== ===========
</TABLE>
Depreciation expense for the period ended August 31, 1999 (unaudited) and
for the years ended December 31, 1998 and 1997 was $20,584, $30,110 and
$19,121, respectively.
10
<PAGE> 19
VENTURE INFORMATION SYSTEMS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
5. LINE OF CREDIT
During September 1997, the Company entered into a revolving credit
agreement with a financial institution which provides for borrowings up to
$400,000. Borrowings under the agreement bear interest at a variable rate
equal to the prime lending rate in effect plus one percent (9.25%, 8.75%,
and 9.5% at August 31, 1999 (unaudited) and December 31, 1998 and 1997
respectively). Principal and interest payments are due on demand, but if no
demand is made, at maturity. The Company renewed the agreement during
September 1999 extending the maturity date to March 2000. Outstanding
borrowings under this agreement were $400,000 at August 31, 1999
(unaudited) and December 31, 1998, and $321,500 at December 31, 1997.
6. RELATED PARTY TRANSACTIONS
During 1999 and 1998, the Company incurred liabilities to its members for
unpaid compensation. Total amounts accrued for unpaid compensation were
$25,139 and $21,139 at August 31, 1999 (unaudited) and December 31, 1998,
respectively.
Additionally, during 1998, the Company advanced $53,500 to a member. This
advance is non-interest bearing and there are no stated repayment terms.
The receivable amount at August 31, 1999 (unaudited) and December 31, 1998
was $53,500. The receivable balance was paid in full in 2000.
During 1997, the Company advanced cash to a party, related through common
ownership, totaling approximately $75,000. The receivable amount at
December 31, 1997 was $75,589 and was fully prepaid in 1998.
7. BUSINESS AND CREDIT CONCENTRATIONS
The Company has one customer that accounted for 10% of accounts receivable
at August 31, 1999 (unaudited) and December 31, 1998. Additionally, the
Company had two customers that accounted for 24% of sales for the year
ended December 31, 1997.
8. LEASES
The Company leases its office facility and office equipment under various
non-cancelable operating lease agreements which expire through September
2002. Total rent expense associated with these leases was $32,979, $53,804,
and $25,087 for the period ended August 31, 1999 (unaudited) and the years
ended December 31, 1998 and 1997 respectively.
9. MEMBERS' EQUITY
At August 31, 1999 (unaudited) and December 31, 1998 and 1997, there were
1,000 member units outstanding with a stated value of $1 per unit.
11
<PAGE> 20
VENTURE INFORMATION SYSTEMS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the years ended December 31, 1998 and 1997
10. CHANGE OF CONTROL
Effective August 31, 1999, the Company and National Health Care Information
Systems, LLC (a company controlled by the members of Venture) were merged
into Link.com, Inc. in exchange for stock. Link.com, Inc. was subsequently
merged with a publicly held "shell" Corporation, a transaction which was
treated as a reverse acquisition with a subsequent name change to Link.com,
Inc.
12
<PAGE> 21
Financial Statements and
Report of Independent Certified Public Accountants
NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
December 31, 1998 and August 31, 1999 (unaudited)
<PAGE> 22
NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.............................................................3
FINANCIAL STATEMENTS
Balance Sheets at August 31, 1999 (unaudited) and December 31, 1998.........................................4
Statements of Operations for the eight months ended August 31, 1999 (unaudited)
and the period November 2, 1998 (date of inception) through December 31, 1998..............................5
Statement of Changes in Members' Deficit for the eight months ended August 31, 1999
(unaudited) and the period November 2, 1998 (date of inception) through December 31, 1998..................6
Statements of Cash Flows for the eight months ended August 31, 1999 (unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998..................................7
Notes to Financial Statements...............................................................................8
</TABLE>
2
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE MEMBERS OF
NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
We have audited the accompanying balance sheet of National Health Care
Information Systems, L.L.C. (a Limited Liability Company), as of December 31,
1998 and the related statements of operations, changes in members' deficit, and
cash flows from the period November 2, 1998 (date of inception) through December
31, 1998. 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 audit.
We conducted our audit 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 audit provides 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 National Health Care
Information Systems, L.L.C. as of December 31, 1998, and the results of its
operations and its cash flows for the period November 2, 1998 (date of
inception) through December 31, 1998, in conformity with generally accepted
accounting principles.
As described in Note 3, the accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
experienced losses and has liabilities significantly in excess of assets at
December 31, 1998. Additionally, the Company has generated negative cash flows
from operations. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Unless the Company obtains additional
financing, it will not be able to meet its obligations as they come due and it
will be unable to execute its long-term business plan. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
March 17, 2000
3
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NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
BALANCE SHEETS
At August 31, 1999 (unaudited) and December 31, 1998
<TABLE>
<CAPTION>
ASSETS
August 31, 1999 December 31,
(Unaudited) 1998
--------------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ -- $ 7,283
Accounts receivable - trade -- 4,871
Related party receivables 1,500 --
-------- --------
Total current assets $ 1,500 $ 12,154
======== ========
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities
Bank overdraft $ 482 $ --
Line of credit 20,000 10,000
Accrued liabilities 614 371
Related party payables 64,250 14,000
-------- --------
Total current liabilities 85,346 24,371
Members' deficit
Receivable for the purchase of members' equity (1,000) (1,000)
Members' deficit (82,846) (11,217)
-------- --------
Total members' deficit (83,846) (12,217)
-------- --------
Total liabilities and members' deficit $ 1,500 $ 12,154
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements. 4
<PAGE> 25
NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
STATEMENTS OF OPERATIONS
For the eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
<TABLE>
<CAPTION>
Eight months
ended Period ended
August 31, 1999 December 31,
(Unaudited) 1998
--------------- -------------
<S> <C> <C>
Revenues $ 1,005 $ 4,500
Expenses 72,634 16,717
-------- --------
Net loss $(71,629) $(12,217)
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements. 5
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NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' DEFICIT
For the eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
<TABLE>
<CAPTION>
Notes Members'
Receivable Deficit Total
---------- --------- --------
<S> <C> <C> <C>
Units issued $ (1,000) $ 1,000 $ -
Net loss for the period (12,217) (12,217)
-------- -------- --------
Balances at December 31, 1998 (1,000) (11,217) (12,217)
Net loss for the period (unaudited) (71,629) (71,629)
-------- -------- --------
Balances at August 31, 1999 (unaudited) $ (1,000) $(82,846) $(83,846)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements. 6
<PAGE> 27
NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
STATEMENT OF CASH FLOWS For the
eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
<TABLE>
<CAPTION>
Eight months
ended Period ended
August 31, 1999 December 31,
(Unaudited) 1998
--------------- ------------
<S> <C> <C>
Cash flows from operating activities
Net loss from operations $(71,629) $(12,217)
Changes in operating assets and liabilities:
Accounts receivable - trade 4,871 (4,871)
Related party receivables (1,500) --
Accrued liabilities 243 371
-------- --------
Net cash used in operating activities (68,015) (16,717)
Cash flows from financing activities
Bank overdraft 482 --
Related party payables 50,250 14,000
Proceeds from line of credit 10,000 10,000
-------- --------
Net cash provided by financing activities 60,732 24,000
-------- --------
Net increase (decrease) in cash (7,283) 7,283
Cash, beginning of period 7,283 --
-------- --------
Cash, end of period $ -- $ 7,283
======== ========
Supplemental non-cash financing and investing activities:
Receivable issued in exchange for members' equity $ -- $ 1,000
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements. 7
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NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
1. NATURE OF OPERATIONS
National Health Care Information Systems, L.L.C. (the "Company"), a Texas
limited liability company organized on November 2, 1998, develops and sells an
internet based service that audits for compliance and completeness certain
Medicare home health admission documents.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Accounts Receivable
The Company extends unsecured credit in the normal course of business to
virtually all of its customers. In the event of non-performance of accounts
receivable, the maximum exposure to the Company is the recorded amount shown on
the balance sheet.
Software Development Costs
Costs incurred in the research and development of new software products and
enhancements to existing software products are expensed as incurred until
technological feasibility has been established. After technological feasibility
is established, any additional costs are capitalized in accordance with SFAS No.
86, "Accounting for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed". Because the Company believes that its current process for
developing software is essentially completed concurrently with the establishment
of technological feasibility, no software development costs have been
capitalized as of August 31, 1999 (unaudited) and December 31, 1998.
Income Taxes
The Company has elected to be taxed as a partnership for federal income taxes
purposes. As such, federal income taxes are payable by the members and the
Company is not subject to federal income tax. Accordingly, federal income taxes
are not reflected in the accompanying financial statements.
Revenue Recognition
The Company recognizes revenue from software sales at the time of product
shipment, or in accordance with terms of licensing contracts. Maintenance and
service revenue are recognized ratably over the contractual period or as the
services are provided. Advance billings are recorded as deferred revenue.
8
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NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosure About Fair Value
of Financial Instruments", requires disclosure about the fair value of all
financial assets and liabilities for which it is practicable to estimate. At
December 31, 1999 and 1998 the carrying value all of the Company's accounts
receivable, accounts payable and accrued liabilities approximate fair value
because of their short term nature.
Lines of credit and long-term debt carrying values approximate fair values based
on the borrowing rates currently available to the Company for loans with similar
terms.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as of the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131") during the fiscal year ended December 31, 1998. SFAS 131 establishes
standards for reporting information regarding operating segments in annual
financial statements and requires selected information for those segments to be
presented in interim financial reports. SFAS 131 also establishes standards for
related disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions about
how to allocate resources and assess performance. The Company has only one
operating segment at August 31, 1999 (unaudited) and December 31, 1998.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133", which establishes accounting and reporting standards for
derivative instruments. SFAS No. 137 is effective for all fiscal quarters for
all fiscal years beginning after June 15, 2000. The adoption of SFAS 137 is not
expected to have a significant impact on the Company's results of operations.
Interim Information
Interim information is unaudited; however, in the opinion of the Company's
management, all adjustments necessary for a fair statement of interim results
have been included in accordance with generally accepted accounting principles.
All adjustments are of a normal recurring nature. The results for interim
periods are not necessarily indicative of results to be expected for the entire
year. These financial statements and notes should be read in conjunction with
the Company's annual financial statements and the notes thereto for the period
November 2, 1998 (date of inception) through December 31, 1998.
9
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NATIONAL HEALTH CARE INFORMATION SYSTEMS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the eight months ended August 31, 1999 (Unaudited) and
the period November 2, 1998 (date of inception) through December 31, 1998
3. GOING CONCERN
The financial statements have been prepared on the assumption that the Company
will continue as a going concern. The Company sustained net losses of $71,629
and $12,217 during the eight months ended August 31, 1999 (unaudited) and the
period November 2, 1998 (date of inception) through December 31, 1998,
respectively, and has accumulated losses at August 31, 1999 (unaudited) of
$82,846. Cash used in operating activities for the same periods aggregated
$68,015, and $16,717, respectively. Total liabilities at August 31, 1999
(unaudited) of $85,346 exceed total assets of $1,500. 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
renew its line of credit agreement. There can be no degree of assurance given
that the Company will be successful in completing additional financing
transactions.
The 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.
4. LINE OF CREDIT
During November 1998, the Company entered into a revolving credit agreement with
a financial institution which provides for borrowings up to $25,000. Borrowings
under the agreement bear interest at a variable rate equal to the prime lending
rate in effect plus one percent (9.25% and 8.75% at August 31, 1999 (unaudited)
and December 31, 1998, respectively). Principal and interest payments are due on
demand, but if no demand is made, at maturity. The credit agreement has a
maturity date of November 12, 1999. Outstanding borrowings under this agreement
were $20,000 at August 31, 1999 (unaudited) and $10,000 at December 31, 1998.
5. RELATED PARTY TRANSACTIONS
During 1999 and 1998, the Company accrued liabilities to its members for unpaid
compensation. Total amounts due for unpaid compensation were $64,250 and $14,000
at August 31, 1999 (unaudited) and December 31, 1998, respectively. Compensation
expense to members for the eight months ended August 31, 1999 and the period
November 2, 1998 (date of inception) through December 31, 1998 totaled $50,250
and $16,000, respectively.
6. MEMBERS' EQUITY
At August 31, 1999 and December 31, 1998, there were 1,000 member units
outstanding with a stated value of $1 per unit.
7. CHANGE OF CONTROL
Effective August 31, 1999, the Company and Venture Information Systems, LLC were
merged into Link.com, Inc. in exchange for stock. Link.com, Inc. was
subsequently merged with a publicly held "shell" Corporation, a transaction
which was treated as a reverse acquisition with a subsequent name change to
Link.com, Inc.
10
