UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended October 28, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period _________to__________
Commission File Number 0-25002
------------------------
TELEHUBLINK CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 59-3200879
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
24 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MA 01803
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (781) 229-1102
N/A
(Former name, former address, and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of the issuer's classes of common
equity, as the latest practicable date: At December 8, 2000, there were
28,982,975 shares outstanding of common stock, $.01 par value per share.
Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No
<PAGE>
TELEHUBLINK CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets - October 28, 2000 (unaudited) and
January 29, 2000 ......................................................... 4
Condensed Consolidated Statements of Operations for the Thirteen Weeks
Ended October 28, 2000 and October 30, 1999 and the Thirty-Nine Weeks Ended
October 28, 2000 and October 30, 1999 (unaudited) ........................ 5
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks
Ended October 28, 2000 and October 30, 1999 (unaudited)................... 6
Notes to Condensed Consolidated Financial Statements....................... 8
Item 2. Management's Discussion and Analysis or Plan of Operation.......... 11
PART II. OTHER INFORMATION
Item 2. Change in Securities ............................................ 24
Item 6. Exhibits and Reports on Form 8-K ................................ 25
SIGNATURES............................................................... 26
<PAGE>
TELEHUBLINK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 28, JANUARY 29,
2000 2000
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,469,683 $ 26,549
Accounts receivable, net 552,549 44,223
Amount due from sale of assets -- 125,000
Prepaid expenses and other current assets 477,472 37,095
----------- -----------
Total current assets 4,499,704 232,867
Property and equipment, net 1,177,307 336,645
Intangible assets, net 2,764,806 1,981,793
Other assets 60,620 7,929
----------- -----------
Total assets $ 8,502,437 $ 2,559,234
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 808,890 $ 213,219
Accrued expenses 654,819 1,092,087
Subordinated convertible debentures, at accreted value
(liquidation value $600,000 at January 29, 2000) -- 280,300
Equipment loan 186,395 196,395
Notes payable to stockholders 15,200 --
----------- -----------
Total current liabilities 1,665,304 1,782,001
Deferred rent 212,588 --
----------- ------------
Total liabilities 1,877,892 1,782,001
----------- ------------
Stockholders' Equity:
Common stock 289,830 237,534
Additional paid-in capital 31,289,949 17,814,241
Stockholders' notes receivable -- (3,763)
Deferred compensation (437,059) (9,600)
Accumulated deficit (24,518,175) (17,261,179)
----------- -----------
Total stockholders' equity 6,624,545 777,233
----------- -----------
Total liabilities and stockholders' equity $ 8,502,437 $ 2,559,234
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TELEHUBLINK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS THIRTEEN WEEKS THIRTY-NINE THIRTY-NINE
ENDED ENDED WEEKS ENDED WEEKS ENDED
OCTOBER 28, 2000 OCTOBER 30, 1999 OCTOBER 28, 2000 OCTOBER 30, 1999
(As restated, (As restated,
see note 1) see note 1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 3,929,353 $ 212,043 $ 9,227,600 $ 1,023,120
Cost of revenue 4,211,039 131,215 8,824,871 600,011
------------ ------------ ------------ ------------
Gross profit (loss) (281,686) 80,828 402,729 423,109
------------ ------------ ------------ ------------
Operating expenses:
Stock-based charges 553,450 81,100 1,168,689 1,880,390
Research and development 1,164,475 -- 1,991,075 --
Selling, general and administrative expenses 1,377,071 708,381 2,845,042 1,121,787
Operating losses of WEC prior to acquisition -- 20,135 -- 178,135
Provision for bad debts 18,906 -- 304,922 --
Depreciation and amortization 541,224 48,324 1,197,794 80,450
------------ ------------ ------------ ------------
Total operating expenses 3,655,126 857,940 7,507,522 3,260,762
------------ ------------ ------------ ------------
Operating loss (3,936,812) (777,112) (7,104,793) (2,837,653)
Other income (expense):
Interest and other income 60,895 5,997 210,927 6,694
Interest expense (2,184) (145,650) (354,761) (170,149)
Foreign exchange gain (loss) (56,716) (3,970) (8,369) 9,802
------------ ------------ ------------ ------------
Net loss (3,934,817) (920,735) (7,256,996) (2,991,306)
Charge for pricing modification of warrants -- -- -- (228,800)
------------ ------------ ------------ ------------
Net loss available to common stockholders $ (3,934,817) (920,735) $ (7,256,996) (3,220,106)
============ ============ ============ ============
Basic and diluted net loss per share $ (.14) $ (.05) $ (.27) $ (.18)
============ ============ ============ ============
Weighted average common shares of common
stock outstanding used in computing basic
and diluted net loss per share 28,869,591 18,596,517 27,041,162 18,051,106
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TELEHUBLINK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE THIRTY-NINE
WEEKS ENDED WEEKS ENDED
OCTOBER 28, OCTOBER 30,
2000 1999
----------- -----------
(As restated,
see note 1)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(7,256,996) (2,991,306)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,197,794 80,450
Amortization of debt discount 319,700 151,000
Stock-based charges 1,168,689 1,880,390
Operating losses of WEC prior to acquisition -- 178,135
Changes in operating assets and liabilities, net of impact of business acquisitions:
Accounts receivable (110,016) (287,030)
Prepaid expenses and other current assets (432,743) (1,800)
Other assets (52,691) 11,690
Accounts payable 503,089 123,595
Accrued expenses (209,252) 148,322
Other liabilities 212,588 --
----------- -----------
Net cash used in operating activities (4,659,838) (706,554)
----------- -----------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired 310,624 (230,000)
Proceeds from sale of assets 125,000 --
Purchases of client data bases -- (104,649)
Purchases of licenses (380,632)
Purchases of property and equipment (929,889) (71,739)
----------- -----------
Net cash used in investing activities (874,897) (406,388)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 8,939,132 890,214
Proceeds from issuance of warrants 32,787 --
Proceeds from exercise of stock options 12,187 --
Proceeds from stockholders' note receivable 3,763 --
Proceeds from issuance of subordinated convertible debentures -- 600,000
Advances to WEC -- (211,000)
Repayments from WEC -- 32,865
Proceeds from equipment loan -- 4,058
Payments on equipment loan (10,000) --
----------- -----------
Net cash provided by financing activities 8,977,869 1,316,137
----------- -----------
Net increase in cash and cash equivalents 3,443,134 203,195
Cash and cash equivalents, beginning of period 26,549 --
----------- -----------
Cash and cash equivalents, end of period $ 3,469,683 203,195
=========== ===========
Supplemental disclosure information:
Cash paid during the period for interest $ 839 4,199
=========== ===========
Non-cash investing and financing activities:
Net liabilities assumed on reverse merger with WAW $ -- 569,451
=========== ===========
Conversion of subordinated convertible debentures and accrued interest thereon to common stock $ 660,000 --
=========== ===========
Conversion of accounts payable to common stock $ 150,000 --
=========== ===========
Debt discount from beneficial conversion feature of subordinated convertible debentures $ -- 600,000
=========== ===========
Charge for pricing modification of warrants $ -- 228,800
=========== ===========
Business acquisitions:
Fair value of assets acquired $ 1,934,908 500,900
Liabilities assumed (107,782) --
Issuance of common stock (2,137,750) (270,900)
----------- -----------
Cash paid 100,000 230,000
Less cash acquired 410,624 --
----------- -----------
Cash paid for acquisitions, net of cash acquired $ (310,624) 230,000
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TELEHUBLINK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of
Telehublink Corporation (the "Company") have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the
information and notes required by generally accepted accounting
principles for complete financial statements. The unaudited consolidated
condensed financial statements have not been examined by independent
accountants in accordance with generally accepted auditing standards, but
in the opinion of management, all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation have
been included. These unaudited interim consolidated condensed financial
statements should be read in conjunction with the Company's Annual Report
on Form 10-KSB for the fiscal year ended January 29, 2000 filed on July
19, 2000.
The unaudited consolidated condensed financial statements as of and for
the the thirteen weeks ended May 1, 1999, twenty-six weeks ended July 31,
1999 and thirty-nine weeks ended October 30, 1999 have been restated to
reflect various adjustments to previously reported financial statements
and are presented in the Company's amended Form 10-QSB/A as filed on July
24, 2000, August 29, 2000 and November 3, 2000, respectively.
Operating results for the thirty-nine weeks ended October 28, 2000 are
not necessarily indicative of the results that may be expected for a full
fiscal year.
(2) ACQUISITION OF BUSINESS
On August 7, 2000, the Company acquired 100% of the issued and
outstanding stock of MVP Systems, Inc. ("MVP") for $100,000 in cash,
530,000 shares of its unregistered common stock and 70,000 shares of its
registered common stock. MVP is a software and hardware engineering
consulting firm specializing in critical applications and programs. The
acquisition has been accounted for under the purchase method and,
accordingly the results of MVP's operations have been included in the
Company's consolidated financial statements from August 7, 2000. The
purchase price of approximately $1,878,000 has been allocated to the
identifiable tangible and intangible assets acquired based on their
estimated fair values. The Company allocated approximately $650,000 to
employment and non-compete agreements, $430,000 to work force in place
and $35,000 to goodwill and is amortizing the balances over a three-year
period. Prior to the MVP acquisition, during fiscal 2001, the Company
paid approximately $386,000 in consulting fees to MVP for research and
development services.
The following unaudited pro forma financial information presents the
combined results of operations of the Company and MVP as if the
acquisition had occurred as of the beginning of fiscal year 2001 and
2000, after giving effect to certain adjustments, including amortization
of intangible assets, elimination of intercompany sales and related
income tax effects. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred
had the Company and MVP constituted a single entity during such periods.
<TABLE>
<CAPTION>
Thirty-nine Year ended
weeks ended January 29,2000
October 28, 2000
---------------- ---------------
(unaudited)
(In thousands)
<S> <C> <C>
Revenue $10,139 3,085
======== ========
Net loss available to
common stockholders $(7,177) (16,918)
======== ========
Net loss per share $ (.26) (.92)
======== ========
</TABLE>
<PAGE>
(3) PRIVATE PLACEMENT
On August 14, 2000, the Company completed a private placement sale of
327,869 shares of the Company's unregistered common stock for $1,000,000
and 327,869 warrants to purchase common stock exercisable at $4.50 at
$0.10 per warrant purchase. The gross proceeds to the Company were
$1,032,787. The warrants expire on March 4, 2005.
(4) STOCK OPTION GRANTS
During the thirteen weeks ended October 28, 2000, the Company granted
300,000 options to certain employees and directors of the Company at an
exercise price of $4.00. Of the total options granted 20,000 of the
shares became exercisable on October 31, 2000, 160,000 of the shares
become exercisable equally by quarter starting December 31, 2000, 70,000
of the shares become exercisable equally on each annual anniversary of
the option grant and 50,000 of the shares become exercisable on March 1,
2002.
On March 10, 2000, the Company granted 150,000 options to an employee of
the Company at an exercise price of $4.00. Of the total options granted
one third of the shares vested on September 10, 2000, while the remaining
two thirds of the options were exercisable on each annual anniversary of
the option grant. In connection with the stock option grant, the Company
had recorded deferred compensation totaling $1,155,000 representing the
difference between the fair value of the unregistered common stock and
the exercise price on the date of grant. Subsequently on September 18,
2000, the Company terminated the employee. As a result, the Company
reversed the unearned portion of the unrecognized deferred compensation
totaling $770,000.
(5) EXTENSION OF EXERCISE PERIOD OF REDEEMABLE COMMON STOCK WARRANTS
On August 9, 2000, the Company's Board of Directors approved an exercise
period extension of its publicly redeemable common stock purchase
warrants from October 31, 2000 to January 31, 2001. On December 11, 2000,
the Company's Board of Directors approved an exercise period extension of
its publicly traded redeemable common stock purchase warrants from
January 31, 2001 to January 31, 2002.
(6) SEGMENT REPORTING
As of October 28, 2000, the Company's operations are classified in three
reportable business segments; secure wireless encryption segment,
Internet customer contact service center segment and telecom services
segment. The secure wireless encryption segment began in fiscal 2000 and
is in its development stage. Research and development costs totaling
$1,164,475 for the thirteen-week period ending October 28, 2000 relate
solely to the secure wireless encryption segment. The Internet customer
service contact center segment began in fiscal 2001 and is also in its
development stage. The majority of the Company's revenue is derived from
call center teleservices, which are provided through the telecom services
segment by the Canadian operating branch. The revenue from the wireless
encryption segment relates primarily to consulting services performed by
MVP during the period from the acquisition date (August 7, 2000) through
October 28, 2000. The following is a tabulation of business segment
information for the thirteen weeks ending October 28, 2000 and October
30, 1999:
<PAGE>
<TABLE>
<CAPTION>
INTERNET
CUSTOMER
SECURE CONTACT
WIRELESS SERVICE TELECOM
ENCRYPTION CENTER SERVICES
SEGMENT SEGMENT SEGMENT TOTAL
---------- ---------- ---------- ----------
OCTOBER 28, 2000
----------------
<S> <C> <C> <C>
Revenue $ 229,434 -- 3,699,919 3,929,353
Operating loss (2,607,400) (721,621) (607,791) (3,936,812)
Assets 6,603,711 973,946 924,780 8,502,437
Depreciation and
amortization 464,284 30,663 46,277 541,224
Additions to
long-lived assets 1,423,417 638,108 26,806 2,088,331
OCTOBER 30, 1999
----------------
Revenue $ -- -- 212,043 212,043
Operating loss (643,671) -- (133,441) (777,112)
Assets 721,539 -- 688,339 1,409,878
Depreciation and
amortization -- -- 48,324 48,324
Additions to
long-lived assets -- -- 416,539 416,339
GEOGRAPHIC AREA UNITED
INFORMATION STATES CANADA TOTAL
------------------- ------------ -------- ----------
OCTOBER 28, 2OOO
----------------
Revenue $ 3,929,353 -- 3,929,353
Long-lived assets 2,587,087 1,355,026 3,942,113
OCTOBER 30, 1999
----------------
Revenue $ 168,739 43,304 212,043
Long-lived assets 463,494 334,063 797,557
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF OUR PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED HERE. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS."
BACKGROUND AND OVERVIEW OF THE COMPANY
TeleHubLink Corporation, formerly known as What A World!, Inc.,
WAW, was incorporated under the laws of the State of Delaware in July
1993. Until May 1997, we operated as a mall-based specialty retailer. In
May 1997, we sold substantially all of our assets to Natural Wonders,
Inc. for cash in the amount of $517,795 plus the assumption by Natural
Wonders, Inc. of specified liabilities. The completion of this sale
terminated our active operations, and for the period May 1997 through
February 3, 1999, we sought to serve as a vehicle to effect an
acquisition, whether by merger, exchange of capital stock, acquisition of
assets or other similar business combination.
<PAGE>
In February 1999, we acquired the outstanding capital stock of
TeleHubLink Corporation, TeleHub, a privately held company organized
under the laws of the Province of Ontario, Canada. TeleHub was engaged in
the business of providing teleservices to business clients. We acquired
all the outstanding capital stock of TeleHub from the TeleHub
shareholders in exchange for an aggregate of 13,011,339 shares of our
common stock. As a result of this transaction, TeleHub became an
operating subsidiary of the Company. In connection with the TeleHub
transaction, we changed our corporate name to TeleHubLink Corporation.
For accounting purposes, this transaction has been treated as a
reverse acquisition. TeleHub has been deemed the acquiring enterprise for
financial statement purposes, as it received a majority of the voting
interests in the combined enterprise. The SEC staff has taken the
position that a business combination between an operating enterprise and
a "shell company" in which the shell company is the issuer of securities
and the operating enterprise is determined to be the acquiring enterprise
for financial statement purposes, the transaction should be treated for
financial statement purposes as an issuance of securities by the
operating enterprise. Therefore, the tangible net liabilities of WAW at
the date of the transaction of approximately $207,288 have been recorded
at their fair market value with an offset credit to paid-in capital and
the operations of WAW are reflected in the operations of combined
enterprise from the date of acquisition. In addition, the 1999 financial
statements have been retroactively restated to reflect the number of
shares TeleHub received in the business combination. Costs related to
this transaction of approximately $362,163 have been charged directly to
paid-in capital. As a result of this and other transactions, we restated
our quarterly financial statements for the year ended on January 29,
2000. The majority of these transactions are non-cash related valuation
items and do not affect the Company's liquidity, cash and operating
capabilities. We restated our first, second and third quarter financial
statements for our fiscal year 2000 on July 24, 2000, August 24, 2000 and
November 3, 2000, respectively.
OUR BUSINESSES
We separate our company's function into the following business
areas: Wireless Encryption Technology, Internet Customer Contact Service
Center and Telecom Services.
WIRELESS ENCRYPTION
On January 27, 2000, we acquired the outstanding capital stock of
wirelessEncryption.com, Inc., or WEC. WEC is developing, under its
trademark, Hornet(TM), formely called iNSECT, a technology that we
believe may, if successfully developed, permit ultra-secure communication
signal protection and enhanced communication signal recovery. Hornet(TM)
is based on advanced cryptographic and mathematical principles and
sophisticated signal-processing techniques, for wireless and Internet
communications and other data transmission methods. We believe that this
technology, if successfully developed, can be embedded in low-cost
microchip devices known as application specific integrated circuits, or
ASICS, which are used in mobile and hard wired telephones, computers, fax
machines, fiber optic transmission devices, and smart cards.
In April 2000, we announced the completion of the Hornet(TM)
Simulator. Our simulator is intended to be used as an engineering and
business development tool to demonstrate our wireless encryption
technology. The simulation is conducted using two computers that
represent sending and receiving parties. The simulation produces a
transmission of data, in an advanced compressed, encrypted and "smeared"
form, on one computer, and decompresses or "de-smears" on the other
computer after authentication. The simulator is expected to be used to
analyze what the characteristics and detailed behavior of the ASIC will
be and how the technology may perform between communication devices.
Communications devices may include cellular
<PAGE>
phones and other wireless products in real time. We believe that our
technology may offer a cost effective solution to wireless device
manufacturers such as makers of cellular phones. We cannot assure you
that we will successfully complete the development and testing of our
technology, obtain any patent protection for our technology or that our
technology will not infringe the intellectual property rights of others
or we will achieve commercial acceptance of our technology.
In December 2000, we announced the completion of a Field
Programmable Gate Array (FPGA) board aimed at securing all voice and data
transmissions through wireless devices such as cellular telephones. The
FPGA board will be part of an elaborate technology evaluation toolkit,
which we intend to use with customers for an in-depth presentation of our
Hornet(TM) technology. The FPGA board is an exact hardware-based replica
of the content the Company is putting into its planned microchip design.
It is built as a fast-turnaround prototype that only differs from the
planned actual chip in size and a time scaling factor. In our technology
evaluation toolkit, we intend to use the FPGA board as the engine that
encrypts and authenticates real-time communications and associated
software, which the company expects to have ready in 2001. We expect that
this toolkit will allow customers to evaluate the company's technology
without having to actually wait for silicon prototypes of the planned
microchip.
INTERNET CUSTOMER CONTACT SERVICE CENTER
Our Internet Customer Contact Center, called WorldWideAssist, was
completed in December 2000 using advanced technology offering traditional
voice, voice over Internet protocol, IP, video over IP, chat, e-mail and
fax. We offer business clients the opportunity to outsource their
customer care functions in a cost-effective manner. Our customer contact
center may utilize an integrated mix of traditional call center and
e-commerce customer services for our clients that require "customer
care." While in the past online consumers were obliged to communicate by
phone or e-mail with a Web-based company to obtain responses to inquiries
concerning a company's products, new Computer Telephony Integration and
Internet Telephony technologies allow consumers to have live interactions
via the Internet with sales and technical support personnel. We envision
that our customer contact center will be a support facility in which our
customer contact representatives will interact with our clients'
customers over multiple communications channels, including traditional
telephone, fax, e-mail and online voice and data exchange via the
Internet.
TELECOM SERVICES
Our Telecom Services Division is a multi-station call center
located in Montreal, Canada. Telecom Services are provided through
facilities known as call centers. Call centers make the direct
communication by telephone of information to, and from, current and
prospective customers of the call center's business clients. Call
campaigns provided by call centers involve outbound and/or inbound
calling programs that follow prepared scripts targeted at specific
markets or customers previously determined by the call center business
clients.
We believe the Telecom Services business can expand by further
providing "content" products to the industry. We plan to continue selling
the Triple Gold product that was introduced during the second quarter of
fiscal 2001. Triple Gold is a consumer group discount package that
permits them to buy goods and services at reduced prices compared to
traditional providers throughout North America.
OUR LONG-TERM STRATEGY
Our long-term strategy is to migrate to a technology-based company.
We intend to develop our wireless encryption technology business while
providing cash from the other two business areas, Internet customer care
service center and telecom services. This focus would re-direct the
primary resources of the Company toward secure wireless encryption
technology while attempting to drive cash-flow enhancing operations in
the other businesses.
<PAGE>
WIRELESS ENCRYPTION TECHNOLOGY STRATEGY
We intend to build an infrastructure for the secured wireless
encryption business that supports the development of the Hornet(TM)
technology. We plan to hire the necessary people to support all
functional areas of the business. We plan to subcontract the
manufacturing of the ASICs. We also intend to acquire companies that may
enhance the internal development of the Hornet(TM) technology including
software engineering, cryptography and ASIC architecture.
INTERNET CUSTOMER CONTACT SERVICE CENTER STRATEGY
We are offering various services to clients in the emerging
electronic commerce service market through our Internet Customer Contact
Center or World-Wide Assist business. Worldwide Assist is a new business
located in Canada to serve as a Web-based customer contact center, which
offers Internet-related inbound/outbound communications services.
TELECOM SERVICES STRATEGY
Another part of our strategy is to expand our telecom services by
providing content products to consumers through selected telecom call
center clients. We plan on restructuring the existing call center in
Montreal to support our existing business clients, new customers and
expand into providing content to traditional North American teleservicing
companies. We plan to transition from the traditional call center
approach to an Internet Customer Contact Center, which will service
Internet clients. We are in the early stages of developing the process of
establishing a Web-based customer contact center which may provide these
Internet-related inbound/outbound communications services.
Our plan of operation and prospects will be largely dependent on
the Company's ability to successfully establish a technology development
team, and establish and equip an Internet customer contact center on a
timely and cost effective basis; hire and retain skilled technical,
marketing and other personnel; successfully expand into the Internet
market and attract and retain significant numbers of clients.
OUR MARKETS
WIRELESS ENCRYPTION TECHNOLOGY
We believe if this technology is developed, tested, and accepted by
the industry, we may be able to offer original equipment manufacturers
(OEMs) and others a family of low-cost ASICs that may provide security or
enhanced signal recovery or both. This may also allow us to license this
technology to others on a per-unit royalty basis. We may pursue strategic
relationships with wireless hardware manufacturers and companies involved
in the development of secured wireless encryption. We may also pursue
strategic alliances with manufacturers and other companies through a
licensing program using the Hornet(TM) technology.
INTERNET CUSTOMER CONTACT SERVICE CENTER AND TELECOM SERVICES
Traditionally, businesses that have included teleservices in their
marketing and customer service programs have primarily used in-house
personnel and facilities. We believe that businesses are increasingly
outsourcing their telephone-based marketing and customer services needs
to third party providers as part of overall efforts to reduce costs and
focus internal resources on their core competencies.
Companies that outsource their customer care activities are likely
to demand an integrated customer care provider that can deliver
consistent support across multiple communication channels voice, video,
fax and the Internet. In addition, being able to provide an end-to-end
solution is expected to be a key competitive factor. In particular, the
Internet has created a new market for customer care. Forrester Research
shows that 75% to 90% of online customers prefer human interaction.
Forrester Research also
<PAGE>
indicates that spending on Internet and e-commerce services, including
customer support services, may grow to $22 billion by 2002. As e-commerce
grows, companies are seeing an increasing percentage of their revenue
becoming dependent on their ability to service customers over the
Internet.
RECENT FINANCINGS
In March 2000, we raised $8.1 million through a private placement
sale of 2,699,999 shares of our restricted common stock at $3.00 per
share and the issuance of warrants to purchase up to 2,699,999 shares of
common stock at $4.50 per share with GE Capital, ZERO.NET, Inc., First
Global Ventures LLC and other individuals, including the Company's Chief
Executive Officer and its Chairman of the Board, who acquired an
aggregate of 116,666 shares of common stock for $350,000. The proceeds
are being used for the development of our secured wireless encryption
technology, the expansion of the telecom business and developing our
business into servicing the Internet customer care market.
On August 14, 2000, we completed a private placement sale of
327,869 shares of restricted common stock for $1,000,000 and 327,869
warrants to purchase common stock exercisable at $4.50 at $0.10 per
warrant purchase. The gross proceeds to the Company were $1,032,787.
RESEARCH AND DEVELOPMENT
The wireless encryption technology, Hornet(TM), is in the
development stage. We have made significant cash and non-cash investments
in the research and development, and expect that we will be required to
continue to make substantial cash investments in our technology. Our
focus on the research and development of the Hornet(TM) technology has
allowed us to develop our initial working simulator model of the
technology.
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED October 28, 2000 AND OCTOBER, 30 1999
Revenue for the thirteen weeks ended October 28, 2000 (the "Third
Quarter of Fiscal 2001") increased to $3,929,353 from $212,043 for the
comparable thirteen-week period ended October 30, 1999 (the "Third
Quarter of Fiscal 2000"). The increase was primarily from sales of a new
product called "Triple Gold," which was introduced during the Second
Quarter of Fiscal 2001. Triple Gold is a consumer discount content
package sold through our Canadian operating branch.
The cost of revenue for the Third Quarter of Fiscal 2001 was 107%
of revenue as compared to 62% for the Third Quarter of Fiscal 2000. The
increase in cost of revenue was primarily attributable to a shift in
business from traditional call center activities to sales of discount
packages. These costs include the costs of license royalties, acquiring
the content for the product and establishing the distribution channel.
During the Third Quarter of Fiscal 2001, sales returns were approximately
$1.5 million higher versus the Second Quarter of Fiscal 2001. This
increase was caused by returns of certain third quarter sales due to a
loss of a credit card offer included in the "Triple Gold" product during
the Third Quarter of Fiscal 2001. Despite the sales returns, the Company
was obligated to pay certain commissions and royalties, which increased
the overall cost of revenue. During the third quarter, the Company
entered into a new arrangement with a bank to resume the credit card
offer.
Stock-based charges for the Third Quarter of Fiscal 2001 were
$553,450 as compared to $81,100 for the Third Quarter of Fiscal 2000. The
stock-based charge for the Third Quarter of Fiscal 2001 represents
amortization of deferred compensation in connection with stock option
grants to employees and consultants. The increase in stock-based charges
results from option grants during the first, second, and Third Quarter of
Fiscal 2001.
Research and development expenses for the Third Quarter of Fiscal
2001
<PAGE>
were $1,164,475 as compared to zero for the comparable period in Fiscal
2000. This increase is due to the Company's focus on development of the
wireless encryption segment. In the same period for the prior fiscal
year, we incurred costs of $20,135 as a result of loans made to WEC prior
to our acquisition, which are reported separately on the condensed
consolidated statements of operations. WEC was under capitalized and
repayment of the loans was in doubt and therefore the loans were
expensed.
Selling, general and administrative expenses ("SG&A") were
$1,377,071 in the Third Quarter of Fiscal 2001, as compared to $708,381
for the comparable period in Fiscal 2000. The major increase in SG&A
expenses was primarily attributable to an increase in personnel,
professional fees and other costs associated with the development and
growth of our company. We also experienced increased legal and audit fees
resulting from significant efforts to bring our regulatory filings
up-to-date. The balance of the increase is related to growth in
infrastructure costs. The primary components of SG&A are rent, salaries
(including commissions and fringe benefits), consulting fees, travel and
promotion, and corporate overhead expenses (including primarily
professional fees, insurance and administrative salaries including fringe
benefits).
Depreciation and amortization for the Third Quarter of Fiscal 2001
was $541,224 as compared to $48,324 for the Third Quarter of Fiscal 2000.
The increase results primarily from increased amortization relating to
additions of intangible assets from business acquisitions and customer
lists purchased during the past twelve months. The increase also reflects
increased depreciation relating to additions of telecommunications
equipment and other equipment added during the past twelve months.
Interest and other income for the Third Quarter of Fiscal 2001 was
$60,895 as compared to $5,997 for the Third Quarter of Fiscal 2000. The
increase is primarily due to income from short-term investments in money
market funds as a result of cash received through private placement sales
of unregistered common stock and warrants to purchase common stock.
Interest expense for the Third Quarter of Fiscal 2001 was $2,184 as
compared to $145,650 for the Third Quarter of Fiscal 2000. This decrease
in interest expense is primarily attributable to the Fiscal 2000 non-cash
charge for amortization of the value assigned to the beneficial
conversion feature of the subordinated convertible debentures. This value
was being treated as a debt discount and was being amortized over the
one-year term of the subordinated convertible debentures. The debt
discount was fully amortized by the Second Quarter of Fiscal 2001.
The foreign exchange loss for the Third Quarter of Fiscal 2001 was
$56,716 as compared to $3,970 for the Third Quarter of Fiscal 2000. The
increase is due to an overall increase in Canadian based operations.
No provision for income taxes has been recorded for the Third
Quarter of Fiscal 2001 and the Third Quarter of Fiscal 2000 as the
Company has incurred net operating losses for tax purposes. We
established a full valuation allowance against the deferred tax assets
because we believe that it is more likely than not the tax benefits may
not be realized under the criteria established by FAS No. 109.
THIRTY NINE WEEKS ENDED OCTOBER 28, 2000 AND OCTOBER 30, 1999
Revenue for the thirty-nine weeks ended October 28, 2000 increased
to $9,227,600 from $1,023,120 for the comparable thirty-nine weeks ended
October 30, 1999. The increase was from sales of the new product called
"Triple Gold", sold through our Canadian operating branch.
The cost of revenue for the thirty-nine weeks ended October 28,
2000 was approximately 96% of revenue as compared to approximately 59%
for the comparable thirty-nine weeks ended October 30, 1999. The increase
<PAGE>
in cost of revenue was primarily attributable to a shift in business from
traditional call center activities to sales of discount packages. These
costs include the cost of license royalties, acquiring the content for
the product and establishing the distribution channel. During the Third
Quarter of Fiscal 2001, sales returns were approximately $1.5 million
higher this quarter versus the Second Quarter of Fiscal 2001. This
increase was caused by returns of certain third quarter sales due to a
loss of a credit card offer included in the "Triple Gold" during the
Third Quarter of Fiscal 2001. Despite the sales returns, the Company was
obligated to pay certain commissions and royalties, which increased the
overall cost of revenue. During the Third Quarter, the Company entered
into a new arrangement with a bank to resume the credit card offer.
Stock-based charges were $1,168,689 for the thirty-nine weeks ended
October 28, 2000 as compared to $1,880,390 for the comparable thirty-nine
weeks ended October 30, 1999. The stock-based charge for the thirty-nine
weeks ended October 28, 2000 primarily consists of charges recognized in
connection with the February 5, 1999 private placement and represents the
difference between the fair value of our common stock issued and the cash
proceeds received. The stock-based charges recognized for the thirty-nine
weeks ended October 28,2000 represents amortization of deferred
compensation in connection with stock options granted to employees and
consultants.
Research and development expenses for the thirty-nine weeks ended
October 28, 2000 were $1,991,075 as compared to zero for the comparable
thirty-nine weeks ended October 30, 1999. This increase is due to our
focus on development of the wireless encryption segment. During the
thirty-nine week period ended October 30, 1999, we incurred costs of
$178,135 as a result of loans made to WEC prior to our acquisition and as
reported separately on the condensed consolidated statement of
operations. WEC was under capitalized and repayment of the loans was in
doubt, therefore the loans were expensed.
Selling, general and administrative expenses for the thirty-nine
weeks ended October 28, 2000 was $2,845,042 as compared to $1,121,787 for
the comparable thirty-nine weeks ended October 30, 1999. The major
increase in selling, general and administrative expenses was primarily
attributable to an increase in personnel, professional fees and other
costs associated with the development and growth of our company. We also
experienced increased legal and audit fees resulting from significant
efforts to bring our regulatory filings up-to-date. The balance of the
increase is related to growth in infrastructure costs. The primary
components of SG&A are rent, salaries (including commissions and fringe
benefits), professional and consulting fees, travel and promotion, and
corporate overhead expenses.
The provision for bad debts totaling $304,922 for the thirty-nine
weeks ended October 28, 2000 primarily includes the write-off of certain
receivables with Platinum 2000.
Depreciation and amortization for the thirty-nine weeks ended
October 28, 2000 was $1,197,794 as compared to $80,450 for the comparable
thirty-nine weeks ended October 30, 1999. The increase results from
increased depreciation relating to additions of telecommunications
equipment added during the past twelve months and increased amortization
relating to additions of intangible assets from business acquisitions and
customer lists purchased during the past twelve months.
Interest and other income for the thirty-nine weeks ended October
28, 2000 was $210,927 as compared to $6,694 for the thirty-nine weeks
ended October 30, 1999. The increase is primarily due to income from
short-term investments in money market funds as a result of cash received
in March 2000 in connection with the private placement sales of
unregistered common stock and warrants to purchase common stock.
Interest expense for the thirty-nine weeks ended October 28, 2000
was $354,761 as compared to $170,149 for the comparable thirty-nine weeks
ended October 30, 1999. This increase in interest expense is primarily
attributable to the non-cash charge for amortization of the value
assigned to the
<PAGE>
beneficial conversion feature of the subordinated convertible debentures.
This value is being treated as a debt discount and is being amortized
over the one-year term of the subordinated convertible debentures. The
debt discount was fully amortized by the Second Quarter of Fiscal 2001.
The total amortization of the debt discount was $319,700 for the
thirty-nine weeks ended October 28, 2000 and $151,000 for the thirty-nine
weeks ended October 30, 1999.
No provision for income taxes has been recorded for the thirty-nine
weeks ended October 28, 2000 or in the comparable thirty-nine weeks ended
October 30, 1999 as we incurred net operating losses for tax purposes. We
established a full valuation allowance against the deferred tax assets
because we believe that it is more likely than not the tax benefits may
not be realized under the criteria established by FAS No. 109.
LIQUIDITY AND CAPITAL RESOURCES
Since inception (July 31, 1998), we financed operating and capital
needs, including cash used for acquisitions, capital expenditures and
working capital, from sales of equity securities, issuance of
subordinated convertible debentures and an equipment loan borrowing. At
October 28, 2000, we had cash and cash equivalents of $3,469,683 and a
working capital of $2,834,400. At January 29, 2000, we had cash and cash
equivalents of $26,549 and working capital deficit of $1,549,134. The
increase in cash and cash equivalents is primarily attributable to cash
proceeds from two private placements during the First and Third Quarters
of Fiscal 2001.
In March 2000, we raised $8.1 million through a private placement
sale of 2,699,999 shares of common stock and the issuance of warrants to
purchase up to 2,699,999 shares of common stock.
In July 2000, we received notice from the holders of the
subordinated convertible debentures that they had chosen to convert the
debt and accrued interest to shares of our common stock. As a result, we
issued 1,320,000 shares of common stock and 1,200,000 warrants at an
exercise price of $2.00 per warrant. The accompanying condensed
consolidated balance sheet reflects the conversion of subordinated
convertible debentures and issuance of common stock. This conversion of
the subordinated convertible debentures has substantially reduced our
outstanding debt.
On August 14, 2000, we completed a private placement sale of
327,869 shares of the Company's restricted common stock for $1,000,000
and 327,869 warrants to purchase common stock exercisable at $4.50 at
$0.10 per warrant purchase. The gross proceeds to the Company were
$1,032,787.
Since our inception, we experienced net losses from operations and,
as of October 28, 2000 had an accumulated deficit of $24,518,175. A large
portion of this accumulated deficit is related to non-cash stock based
charges related to issuances of our common stock and stock options. We
expect to incur substantial additional expenses resulting in losses at
least through the period ending January 27, 2001 due to minimal revenues
associated with the initial market entry of the secured wireless
encryption technology, continued research and development costs as well
as increased sales, marketing and other operational expenses associated
with telecom services and Internet customer care business.
The Company believes it currently has cash available for operations
to continue through March 2001. The Company is currently evaluating
financing options and is attempting to raise additional capital necessary
to develop WEC and other areas of operations. If the Company is
unsuccessful in raising additional capital, it intends to significantly
reduce operations and development of WEC. There can be no assurance that
the Company will be successful in obtaining additional capital on terms
and conditions satisfactory to management.
<PAGE>
MARKET RISKS
We cannot assure you that our business or operations will not
change in a manner that would consume available resources more rapidly
than anticipated. We also cannot assure you that we will not require
substantial additional funding before we can achieve profitable
operations. Our capital requirements depend on numerous factors,
including the following:
- our ability to enter into additional collaborative agreements;
- competing technological and market developments;
- changes in any collaborative relationships;
- the cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights;
- the purchase of additional capital equipment;
- the expansion of our facilities;
- the progress of our existing revenue producing activities; and
- the availability of additional funding, if necessary, and if at
all, on favorable terms.
IMPACT OF INFLATION
We do not believe inflation has had a material impact on our
business or operating results during the periods presented.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Our exposure to market risk is principally confined to our cash
equivalents and investments, all of which have maturities of less than
one year. We maintain a non-trading investment portfolio of investment
grade, liquid debt securities that limits the amount of credit exposure
to any one issue, issuer or type of instrument. The fair value of these
securities approximates their cost.
RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 44 (the "Interpretation"), "Accounting for
Certain Transactions Involving Stock Compensation," an interpretation of
APB Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No.
25"). This Interpretation clarifies the application of APB No. 25 for
only certain issues, which include, among others, (i) definition of an
employee for purposes of applying APB No. 25, (ii) criteria for
determining whether a plan qualifies as a non-compensatory plan, (iii)
the accounting consequences for various modifications to the terms of a
previously fixed stock option or award and (iv) the accounting for an
exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation covers specific events that occur after December 15, 1998
or January 12, 2000. The adoption of the interpretation did not have a
material effect on our consolidated financial position, results of
operations or cash flows.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act
that involve risks and uncertainties. Discussions containing
forward-looking statements may be found in the material set forth under
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" as well as in this report generally. We generally use
words such as "believe," "may," "could," "will," "intend," "expect,"
"anticipate," "plan," and similar
<PAGE>
expressions to identify forward-looking statements. You should not place
undue reliance on these forward-looking statements. Our actual results
could differ materially from those anticipated in the forward-looking
statements for many reasons, including the risks described above and
elsewhere in this report.
Although we believe the expectations reflected in the
forward-looking statements are reasonable, they relate only to events as
of the date on which the statements are made, and we cannot assure you
that our future results, levels of activity, performance or achievements
will meet these expectations. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of the
forward-looking statements. We do not intend to update any of the
forward-looking statements after the date of this report to conform these
statements to actual results or to changes in our expectations, except as
required by law.
FACTORS AFFECTING FUTURE RESULTS
Our future operations are subject to various risk factors,
including the following:
The limited funds currently available to us may not be adequate for
us to pursue our business objectives, and there is no assurance funds
will be available from any source and, if not available, we will be
required to limit our operations to those that can be financed from
existing funds.
As a holding company, our success will depend on the operations,
financial condition and management of our subsidiaries. If we do not have
the resources or are otherwise unable to diversify our operation into a
number of areas, we may become subject to economic fluctuations within a
particular business or industry and thereby increase the risks associated
with our operations.
We may be unable to successfully complete acquisitions of assets or
shares of complementary companies which are necessary to expand our
business, and we may be not be able to successfully integrate into our
operations the operations of any business we may acquire.
Although we previously operated a retail sales business, our
current operations commenced in July 1998. Accordingly, we may be
considered to be a start-up company and, as such, may be subject to the
problems, expenses, difficulties, complications and delays a company
establishing a new business frequently encounters.
The Internet Customer Care center, located in Montreal, opened in
December 2000 may be unable to: secure contracts with clients or generate
revenues under any such contracts it does secure; successfully develop
and utilize its acquired infrastructure and develop databases to perform
for our clients; successfully implement marketing and sales methods for
its services; acquire and implement quality telecommunications and
computer technology and equipment and end user database and software
products necessary for our operations; correspond to changing
technological developments and acquire and implement new equipment and
systems to meet changing customer needs on a timely and cost-effective
basis; all of which could have a material adverse effect on our future
financial condition, operations, results and cash flow.
Our inability to obtain adequate local or long distance telephone
service, for our Montreal call center or our Internet customer care
center or any interruption in such service or rate increases relating
thereto, could materially adversely affect our future cash flows, results
of operations and financial condition.
We may be unable to successfully complete the development of our
secure wireless encryption technology, thereby being unable to produce
products to successfully provide a business.
We may not be able to procure, hire and train on a timely basis a
<PAGE>
sufficient labor force of qualified employees or independent contractors
to operate our businesses, which could have a material adverse effect on
our future financial condition, operations, results and cash flow.
Our failure to retain the services of our key employees or our
failure to hire additional qualified management personnel when required
to support our planned growth could have a material adverse effect on us.
The security encryption and customer communications industry is
highly competitive. We may not be able to compete effectively against our
current competitors or future competitors, many of whom may be
substantially larger and better capitalized than we are.
Any changes to existing U.S. federal or Canadian provincial or
state laws or regulations governing our existing business or any
additional laws or regulations, could limit our current or future
activities or could significantly increase our cost of compliance.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not involved in any legal proceedings that are material to
our business or financial condition.
ITEM 2. CHANGES IN SECURITIES
In January 2000, we acquired, in a private transaction, all the
issued and outstanding shares of capital stock of wirelessEncryption.com,
Inc. in exchange for 5,000,000 shares of the Company's unregistered
common stock.
On March 6, 2000, we consummated a private placement of 2,699,999
shares of common stock at $3.00 per share and issued warrants to purchase
up to 2,699,999 shares of common stock at $4.50 per share. The warrants
are exercisable at the option of the holder at any time up to the
expiration date of March 4, 2005. In connection with the private
placement, we issued an additional 16,666 shares and warrants to purchase
16,666 shares at a price of $4.50 per share.
On March 24, 2000, we acquired, in a private transaction, 100% of
the membership interests in COMSEC Solutions, LLC for 100,000 shares of
unregistered common stock.
In July 2000, we received notice from the holders of the
subordinated convertible debentures that they have chosen to convert the
debt and accrued interest to shares of our common stock. As a result, we
issued 1,320,000 shares of common stock and issue 1,200,000 warrants at
an exercise price of $2.00 per warrant. The accompanying condensed
consolidated balance sheet reflects the conversion of subordinated
convertible debentures and issuance of common stock.
On August 14, 2000, we completed a private placement sale of
327,869 shares of the Company's restricted common stock for $1,000,000
and 327,869 warrants to purchase common stock exercisable at $4.50 at
$0.10 per warrant purchase. The gross proceeds to the Company were
$1,032,787.
During the Quarter ended October 28, 2000, we granted 300,000
options at exercise prices of $4.00 per share to employees.
On August 3, 2000, we issued 150,000 shares of unregistered common
stock for legal services performed relating to the February 1999 reverse
merger.
On August 7, 2000, we acquired, in a private transaction 100% of
the membership interests in MVP Systems, Inc. for 530,000 shares of
unregistered common stock and 70,000 shares of registered common stock.
<PAGE>
The securities issued in the foregoing transactions were either (i)
offered and sold in reliance upon exemptions from the Securities Act of
1933 ("Securities Act") registration requirements set forth in Sections
3(b) and 4(2) of the Securities Act, and any regulations promulgated
thereunder, relating to sales by an issuer not involving any public
offering, or (ii) in the case of certain options to purchase shares of
common stock and shares of common stock issued upon the exercise of such
options, such offers and sales were made in reliance upon an exemption
from registration under Rule 701 promulgated under Section 3(b) of the
Securities Act. No underwriters were involved in the foregoing sales of
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NO. DESCRIPTION
---------- -----------
11 Statement re Computation of Per Share Earnings (not required
because the relevant computations can be clearly determined
from material contained in the financial statements included
herein).
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K:
We filed with the Securities and Exchange Commission on August 16, 2000 a
Current Report on Form 8-K regarding the consummation of the acquisition
by the Company of all the issued and outstanding stock of MVP Systems,
Inc., a California corporation. The Company filed an amended Form 8-K on
October 23, 2000 and October 24, 2000 concerning the MVP Systems, Inc.
acquisition reported previously on Form 8-K filed on August 16, 2000 to
include the audited financial statements of MVP as well as pro forma
financial statements which are required to be filed.
<PAGE>
SIGNATURES
In accordance with 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.
TeleHubLink Corporation
Date: December 12, 2000 By: /s/ BRUCE W. YOUNG
----------------------------------
Bruce W. Young
Chief Executive Officer and President
Date: December 12, 2000 By: /s/ DOUGLAS A. MILLER
----------------------------------
Douglas A. Miller
Vice President of Finance
(Principal Financial and Accounting
Officer)
