Securities & Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-25764
OneLink Communications, Inc.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1675041
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10340 Viking Drive, Suite 150
Eden Prairie, MN 55344
(Address of principal executive offices)
612-996-9000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,966,696 shares outstanding
as of 4/30/97, par value $.01 per share.
Transitional Small Business Disclosure Format (check one); YES [ ] NO [X]
<PAGE>
OneLink Communications, Inc.
Form 10-QSB
Quarter Ended March 31, 1997
Table of Contents
PART I Financial Information Page No.
Item 1. Financial Statements (Unaudited)
Balance Sheets at December 31, 1996 and
March 31, 1997 3
Statements of Operations for the three month
period ended March 31, 1997 and 1996 4
Statements of Cash Flows for the three month
period ended March 31, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II Other Information 9
Item 1. Legal Proceedings 9
Item 6 Exhibits and Reports on Form 8-K 9
SIGNATURES 10
Exhibit Index 11
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
OneLink Communications, Inc.
Balance Sheets
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(unaudited) 1996
-----------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 172,602 $ 709,026
Trade accounts receivable, net of allowance for
doubtful accounts of $60,000 in 1996 and $53,023 in 1997 327,706 114,601
Minimum lease payments receivable 34,200 34,200
Computer parts and supplies, net of reserve for
obsolescence of $12,000 in 1996 and $12,000 1997 42,079 40,969
Prepaid expenses 53,292 40,254
----------- -----------
Total current assets 629,879 939,050
Property and equipment:
Furniture and equipment 922,569 951,848
Equipment leased to others 409,500 315,745
----------- -----------
1,332,069 1,267,593
Accumulated depreciation (635,340) (563,054)
----------- -----------
696,730 704,539
Other assets:
Goodwill 564,985 592,542
Investment in sales type 17,100 17,100
leases
Deposits 62,885 285,885
----------- -----------
644,970 895,527
----------- -----------
Total Assets 1,971,580 2,539,116
=========== ===========
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 219,174 $ 239,277
Current maturities of long-term debt 66,207 69,206
Customer deposits 71,438 197,175
Deferred revenue 119,414 45,649
Other accrued liabilities 293,938 312,437
----------- -----------
Total current liabilities 770,171 863,744
Long-term debt, net of current maturities 41,604 52,689
Shareholders' equity:
Common stock, par value $.01 per share, Authorized shares--
50,000,000; Issued and outstanding shares: 1997
and 1996--2,966,696 and 2,931,415, respectively 29,438 29,438
Additional paid-in capital 6,346,663 6,346,663
Accumulated deficit (5,216,297) (4,753,418)
----------- -----------
Total shareholders' equity 1,159,804 1,622,683
----------- -----------
Total liabilities and shareholders' equity $ 1,971,580 $ 2,539,116
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
OneLink Communications, Inc.
Statements of Operations
(unaudited)
Three months ended March 31,
1997 1996
----------------------------
Revenues $ 446,840 $ 218,645
Cost of revenues 258,870 86,818
----------- -----------
Gross profit 187,970 131,827
Operating expenses:
Selling 176,886 75,320
General and administrative 420,618 285,179
Research and development 47,728 166,328
----------- -----------
Total operating expenses 645,232 526,827
----------- -----------
Operating loss (457,262) (395,000)
Interest income 6,984 32,098
Interest expense (3,528) (4,762)
Other income (8,671) 16,520
----------- -----------
Loss before income taxes (462,477) (351,144)
Provision for income taxes 400 300
----------- -----------
Net loss $ (462,877) $ (351,444)
=========== ===========
Net loss per share $ (0.16) $ (0.12)
Weighted average number of shares outstanding 2,947,388 2,931,415
<PAGE>
OneLink Communications, Inc.
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1997 1996
----------------------------
<S> <C> <C>
Operating Activities
Net Loss $ (462,877) $ (351,444)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization of goodwill 99,842 64,522
Write-off of A/P 24,000 11,000
Net gain on sale of property
and (5,520)
equipment
Changes in operating assets and liabilities:
Accounts receivable (213,105) (70,658)
Minimum lease pmts 0 8,550
receivable
Computer parts and supplies (1,110) (21,279)
Prepaid expenses and deposits 209,736 (44,508)
Accounts payable (44,103) (27,971)
Accrued liabilities (144,238) (20,897)
Deferred revenue 73,765 (20,067)
----------- -----------
Net cash used in operating activities (458,090) (478,272)
Investing Activities:
Sale of property and equipment -- 79,684
Purchases of property and equipment (64,476) (57,054)
----------- -----------
Net cash used in investing activities (64,476) 22,630
Financing activities:
Payments on short-term and long-term notes payable (14,083) (13,275)
----------- -----------
Net cash (used) provided by financing activities (14,083) (13,275)
----------- -----------
Decrease in cash and cash (536,651) (468,917)
equivalents
Cash and cash equivalents at beginning of period 709,253 2,720,771
----------- -----------
Cash and cash equivalents at end of period $ 172,602 $ 2,251,854
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
OneLink Communications, Inc.
Notes to Financial Statements
March 31, 1997
(Unaudited)
Note. 1. Summary of Significant Accounting Policies.
Interim Financial Information
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. Operating
results for the three months ended March 31, 1997 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1997. The
accompanying financial statements and related notes should be read in
conjunction with the audited financial statements of the Company, and notes
thereto, for the fiscal year ended December 31, 1996, included in the Company's
Form 10-KSB for the year ended December 31, 1996 and the Company's 1996 Annual
Report to Shareholders.
The financial information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of the interim periods presented.
Reclassifications
Certain prior year items have been reclassified to conform with the 1997
presentation.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth certain Statement of Operations data as a
percentage of revenues.
First First
Quarter 1997 Quarter 1996
Revenues 100.0% 100.0%
Cost of revenues 57.9 39.7
Gross profit 42.1 60.3
Operating expense:
Selling 39.6 34.5
General & administrative 94.1 130.4
Research & development 10.7 76.1
Total other income (expense) (1.2) 20.0
Net loss (103.6)% (160.7)%
Revenues
The Company's revenues of $446,840 increased $228,195 or 204% for the three
months ended March 31, 1997 compared to $218,645 for the three months ended
March 31, 1996. The increase in revenue was attributed to the sale of an IVR
system and revenue from the access card operation. The Company recognized
approximately $55,000 in revenue from the sale of an IVR system and $165,000
sales of access cards. The Company acquired its access card operation in August
1996 as a result of its acquisition of Provident Worldwide Communications, Inc.
As a result, the Company did not have comparable revenues from sales of access
cards for the three months ended March 31, 1996.
Cost of Revenues
The Company's costs of revenues of $258,870 increased $172,052 or 298% for the
three months ended March 31, 1997 compared to $86,818 for the three months ended
March 31, 1996. A large portion of this increase, approximately $162,000, is due
to the telephone access card operation and the sale of the IVR system.
Selling
The Company's selling expenses of $176,886 increased $101,566 or 234% for the
three months ended March 31, 1997 compared to $75,320 for the three months ended
March 31, 1996. This increase was largely due to increased sales staff and
additional travel related to new business prospects.
General and Administrative
The Company's general and administrative expenses of $420,618 increased $135,439
or 47% for the three months ended March 31, 1997 compared to $285,179 for the
three months ended March 31, 1996. The increase in general and administrative
expenses are primarily related to the acquisition of the access card operation
and the transfer of GIS personnel to general and administrative from research
and development, which accounted for approximately $106,000 of the increase. In
addition, the Company incurred additional travel expenses related to new
business opportunities and miscellaneous expenses related to the Company's name
change.
<PAGE>
Research and Development
The Company's research and development expenses of $47,728 decreased $118,600 or
71% for the three months ended March 31, 1997 compared to $166,328 for the three
months ended March 31, 1996. The decline in research and development expenses is
attributed to the completion of the development phase of the UNIX system in 1996
and the transfer of GIS personnel to general and administrative in 1997.
Other Income and Expense
Interest income declined to $6,984 from $32,098 for the three months ended March
31, 1997 compared to the three months ended March 31, 1996. The decline is a
result of the decrease in cash and cash equivalents held by the Company during
the three month period ended March 31, 1997. Cash and cash equivalents on March
31, 1997 were $172,602 compared to $2,251,854 on March 31, 1996.
The Company had other expense of $8,671 for the three months ended March 31,
1997 compared to other income of $16,520 for three months ended March 31, 1996.
The Company ceased the pursuit of the its N11 service in 1995 and is in the
process of writing off accounts payable balances associated with the N11
service. For the three months ended March 31, 1997 and 1996 the company wrote
off $24,000 and $11,000, respectively. In the three months ended March 31, 1997,
the Company also recognized amortization expenses of $32,573 related to the
acquisition of Provident Worldwide Communications, Inc.
Net Loss
The Company incurred a net loss of $462,877 for the three months ended March 31,
1997 compared to a net loss of $351,444 for the three months ended March 31,
1996.
Liquidity and Capital Resources
The Company had cash of $172,602 and negative working capital of ($140,292) at
March 31, 1997. Cash used in operating activities during the three month period
ended March 31, 1997 was $458,090. Cash used for investing activities was
$64,476, primarily used for the purchase of property and equipment. The Company
is currently raising additional capital and implementing a plan to reduce its
losses and improve its cash flow.
The Company is in the process of raising approximately $800,000 in short term
capital by selling units (the "Units") consisting of unsecured convertible notes
(the "Notes") and common stock warrants (the "Warrants") to accredited
investors. Interest on the Notes will be paid at an annual rate of 9% per annum
quarterly and the principal is due nine months from the date of issuance unless
extended by the Company. The Notes are convertible prior to maturity into equity
of the Company on the same terms of the Company's next equity offering. The
Warrants are exercisable at a price equal to the fair market value of the
Company's Common Stock on date of issuance or any five day trading average of
the Company's common stock during the term of the note, whichever is lower and
expires three years from the date of issuance.
<PAGE>
The Company's ability to continue its operations is dependent on the closing the
sale of the Units. Management believes that if the Company successfully raises
the $800,000, it will be able to continue operations for approximately five (5)
months from the date the Unit offering closes. Following the closing of the
Units, the Company currently believes it will need approximately $1,000,000 of
additional capital in 1997. The Company is currently investigating its financing
options including debt and equity financing. The Company's ability to obtain
additional capital is severely restricted and, if obtainable at all, would
likely result in substantial dilution and would likely be at terms unfavorable
to the Company. Therefore, the Company's ability to fund its working capital
requirements in fiscal 1997 will be almost entirely dependent on (i) generating
sales which exceed the Company's fiscal 1996 sales; (ii) avoiding any
significant increase in expenses and (iii) obtaining approximately $1,000,000 in
additional working after completion of the Unit offering. There is no assurance
the Company will be able to raise additional working capital in the future from
the sale of Company debt or equity or from any other sources.
PART II Other Information
Item 1. Legal Proceedings
On March 8, 1996, Don Lomax, a former employee of the Company, filed suit
against the Company in Hennepin County District Court for the State of
Minnesota. The suit alleges breach of an unsigned employment agreement between
Mr. Lomax and the Company. The terms of the unsigned instrument provide for the
annual payment of salary and for the issuance of a certain number of shares of
Company Common Stock to Mr. Lomax upon the execution of such instrument. Mr.
Lomax is seeking specific performance of the terms of the instrument. The
Company has sought legal counsel with respect to such suit. Management of the
Company believes the suit will be resolved in its favor.
Items 2. through 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibits
11. Computation of Earnings Per Common Share
27. Financial Data Schedule
Reports on Form 8-K
None
OneLink Communications, Inc.
SIGNATURES
Pursuant to the registration requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ONELINK COMMUNICATIONS, INC.
(Registrant)
Date: May 12, 1997 BY: /s/ Nicholas C. Bluhm
President and Chief Executive Officer
BY: /s/ Michael J. Ryan
Chief Financial Officer
<PAGE>
Exhibit Index
OneLink Communications, Inc.
Form 10-QSB
Exhibit Number Description
11 Computation of Earnings Per Common Share
27 Financial Data Schedule (filed only in electronic format)
OneLink Communications Inc.
Exhibit 11
Computation of Earnings Per Common Share
Net income (loss) per common share is calculated based on the net income and net
loss for the respective period and the weighted average number of common shares
outstanding during the period. Common Stock equivalents (options and warrants)
and not dilutive and anti-dilutive for the respective three month periods ended
March 31, 1997 and 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 172,602
<SECURITIES> 0
<RECEIVABLES> 380,729
<ALLOWANCES> (53,023)
<INVENTORY> 42,079
<CURRENT-ASSETS> 629,879
<PP&E> 1,332,069
<DEPRECIATION> (635,340)
<TOTAL-ASSETS> 1,971,580
<CURRENT-LIABILITIES> 770,171
<BONDS> 0
0
0
<COMMON> 29,438
<OTHER-SE> 1,130,366
<TOTAL-LIABILITY-AND-EQUITY> 1,971,580
<SALES> 446,840
<TOTAL-REVENUES> 446,840
<CGS> 258,870
<TOTAL-COSTS> 258,870
<OTHER-EXPENSES> 645,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,528)
<INCOME-PRETAX> (462,477)
<INCOME-TAX> 400
<INCOME-CONTINUING> (462,877)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (462,877)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
