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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000
Commission file Number 0 5388
COLLEGELINK.COM INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 16-0961436
(State or Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation)
55 Hammarlund Way, Middletown, RI 02842
(Address of Principal Executive Offices) (Zip Code)
(401) 845-8800
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $.001 Par Value - 15,090,934 shares as of September 30, 2000.
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FORWARD-LOOKING INFORMATION
THIS FORM 10-QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME
BY COLLEGELINK.COM INCORPORATED OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH
MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND
78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF OR CURRENT EXPECTATIONS OF COLLEGELINK.COM INCORPORATED AND MEMBERS OF
ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE
BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED
ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE
OPERATING RESULTS OVER TIME.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COLLEGELINK.COM INCORPORATED
BALANCE SHEETS
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<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
2000 2000
(Unaudited) (Audited)
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<S> <C> <C>
CURRENT ASSETS:
Cash $ 355,095 $ 2,236,430
Accounts receivable, net 497,078 422,005
Notes receivable, stockholders, current portion 180,000 60,000
Note receivable, other -- 89,170
Prepaid expenses and other current assets 279,877 158,490
----------- -----------
Total Current Assets 1,312,050 2,966,095
----------- -----------
PROPERTY AND EQUIPMENT, Net 733,011 759,829
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OTHER ASSETS:
Notes receivable, stockholders, less current portion -- 120,000
Goodwill, net 15,984,488 16,266,737
Other intangible, net 891,683 943,126
</TABLE>
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<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
2000 2000
(Unaudited) (Audited)
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<S> <C> <C>
Website development costs, net 346,822 378,350
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17,222,993 17,708,213
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TOTAL ASSETS $19,268,054 $21,434,137
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 421,008 $ 698,005
Unearned revenue 238,293 205,883
----------- -----------
TOTAL LIABILITIES 659,301 903,888
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COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $4.00 stated
value, $0.01 par value; 2,500,000 shares authorized,
1,140,000 shares issued and outstanding 4,584,980 4,584,980
Series B convertible preferred stock, $7.625 stated
value, $0.01 par value; 300,000 shares authorized,
-0- and 279,771 shares issued and outstanding -- 4,175,000
Series C convertible preferred stock, $4.00 stated
value, $0.01 par value; 1,000,000 shares authorized,
1,000,000 shares issued and outstanding 4,000,000 4,000,000
Common stock, $0.001 par value, 100,000,000 shares
authorized, 15,090,934 and 14,480,564 shares
issued and outstanding, respectively 15,091 14,481
Additional paid-in capital 24,337,952 20,077,354
Deferred compensation (266,908) (246,484)
Accumulated deficit (14,062,362) (12,075,082)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 18,608,753 20,530,249
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 19,268,054 $ 21,434,137
============ ============
</TABLE>
COLLEGELINK.COM INCORPORATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
REVENUES:
College and high school programs $ 716,828 $ 125,680
Web site hosting and web services -- 133,751
Other revenues 46,558 6,654
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763,386 266,085
</TABLE>
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
COST OF GOODS SOLD 790,560 --
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GROSS PROFIT (27,174) 266,085
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OPERATING EXPENSES:
Technology 390,021 143,038
Depreciation and amortization 418,763 111,591
Sales and marketing 388,075 254,828
General and administrative 688,531 1,117,769
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TOTAL OPERATING EXPENSES 1,885,390 1,627,226
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OPERATING INCOME (LOSS) (1,912,564) (1,361,141)
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OTHER INCOME (EXPENSES)
Interest income, net 14,454 --
Write-off of note receivable (89,170) --
----------- -----------
TOTAL OTHER INCOME (EXPENSES) (74,716) --
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (1,987,280) (1,361,141)
INCOME TAXES -- --
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NET INCOME (LOSS) $(1,987,280) $(1,361,141)
=========== ===========
Net Loss Per Share (Basis and Diluted) $ (0.13) $ (0.14)
=========== ===========
Weighted Average Common Shares Outstanding 14,767,082 9,485,324
=========== ===========
</TABLE>
COLLEGELINK.COM INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,987,280) $(1,361,141)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 418,763 111,591
Stock-based compensation 65,784 178,817
Write-off of note receivable 89,170 --
Changes in operating assets and liabilities:
Accounts receivable (75,073) (117,937)
Prepaid expenses and others (121,387) (32,365)
</TABLE>
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Other assets -- (64,210)
Accounts payable and accrued expenses (276,997) 573,974
Unearned revenue 32,410 (35,000)
Deferred rent credit -- 10,172
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CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,854,610) (736,099)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (26,725) (60,416)
Payments for acquisitions -- (706,243)
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CASH FLOW PROVIDED BY (USED IN) INVESTING ACTIVITIES (26,725) (766,659)
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CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from issuance of preferred stock -- 4,434,980
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NET INCREASE (DECREASE) IN CASH (1,881,335) 2,932,222
CASH, Beginning 2,236,430 1,371,000
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CASH, Ending $ 355,095 $ 4,303,222
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest $ -- $ --
=========== ===========
Taxes $ -- $ --
=========== ===========
Non-cash investing and financing activities:
Conversion of preferred stock to common stock $ 4,175,000 $ --
=========== ===========
Options grant $ 86,208 $ --
=========== ===========
Stock issued for acquisition $ -- $ 7,751,640
=========== ===========
</TABLE>
COLLEGELINK.COM INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation:
The accompanying unaudited financial statements of CollegeLink.Com Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
prepare them for inclusion as part of the Form 10QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The financial
statements for the periods ended September 30, 2000 and 1999 are
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unaudited and include all adjustments necessary to a fair statement of the
results of operations for the periods then ended. All such adjustments are of a
normal recurring nature. The results of the Company's operations for any interim
period are not necessarily indicative of the results of the Company's operations
for a full fiscal year. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report (Form
10KSB) filed with the Securities and Exchange Commission for the year ended June
30, 2000.
2. The Company:
The Company provides an extensive range of in-school and online services
directed at high school students and their parents, high school counselors,
college admissions officers and corporations which target the teen marketplace.
3. Going Concern:
As shown in the accompanying unaudited financial statements, the Company
incurred a net loss of $1,987,280 during the period ended September 30, 2000. In
addition, cash available at October 31, 2000 is able to support the Company's
operations at present levels only through the middle of December 2000. The
Company needs to raise more capital through public or private financing. The
Company does not know if additional financing will be available or, if
available, whether it will be available on attractive terms. If the Company does
raise more capital in the future, it is probably that it will result in
substantial dilution to its shareholders. These factors create substantial doubt
as to the Company's ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent upon the success of the
capital offering or alternative financing arrangements. The Company is currently
under preliminary discussions with potential buyers to sell the Company or one
or more of its business segments. The financial statements do not include any
adjustments to the financial statements that might be necessary should the
Company be unable to continue as a going concern.
4. Impairment of Intangible Assets:
As indicated in Note 3, the Company is in the preliminary discussions with
potential buyers to sell the Company or one of its business segments. The
unaudited financial statements include intangible assets in the amount of
$17,222,993, which may be sold to the potential buyers for a value to be
determined. As of September 30, 2000, it's not possible to estimate the
impairment, if any, of such intangible assets at this time. Accordingly, the
financial statements do not include any adjustments relating to the
recoverability and impairment of the recorded assets.
5. Income (Loss) Per Share:
The Company adopted SFAS No. 128, "Earnings per Share". SFAS No. 128 eliminates
the presentation of primary and fully dilutive earnings per share ("EPS") and
requires presentation of basic and diluted EPS. Basic EPS is computed by
dividing income (loss)
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available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS is based on the weighted-average
number of shares of common stock and common stock equivalents outstanding for
the period. Common stock equivalents are not included in the computation of
diluted EPS for the periods ended September 30, 2000 and 1999 as such inclusion
is antidiluted.
6. Equity Transaction:
In August 2000, 279,771 shares of Series B convertible preferred stock were
converted into 550,370 shares of common stock.
During the quarter ended September 30, 2000, the Company granted options to its
employees to purchase 140,176 shares of its common stock at an exercise price of
$0.01 per share, which is less than market value at the grant date. Accordingly,
the Company recorded deferred compensation costs of $41,205 and recognized
$45,003 in compensation expenses for the vested options.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1999.
Revenue. Revenues of approximately $717,000 from high school and college
programs for the quarter ending September 30, 2000 were 470% greater than the
same period last year because of the introduction of our "Making It Count"
in-school presentation programs in September 2000. These programs were the
principal asset of Student Success, Inc., which we acquired in February 2000.
The remaining portion of our revenue, $46,558, related to the sales of our
online application package to colleges, to ad development services offered to
our sponsors, and to database list sales. We sold our web site hosting and web
services businesses in our fiscal year 2000 and therefore did not generate any
revenue from these sources during the quarter ending September 30, 2000. Revenue
from web site hosting and web services businesses for the quarter ending
September 30, 1999 was approximately $134,000.
Cost of Revenues. Our cost of revenues was $790,560 for the quarter ended
September 30, 2000. These costs related entirely to the operation and
administration of the "Making It Count" programs, which we did not offer in the
quarter ending September 30, 1999.
Operating Expenses. Operating Expenses for the quarter ended September 30,
2000 were $1,885,390 compared to $1,627,226 for the quarter ended September 30,
1999, an increase of approximately 16%. This increase is attributable
principally to the increase in the scope of our operations. In particular, the
increase reflects a greater than 50% increase in our marketing and sales efforts
and a 275% increase in depreciation and amortization expense as a result of the
acquisitions of ECI, Inc. and Student Success, Inc. and a license from the
Online Scouting Network, Inc. during the last fiscal year.
LIQUIDITY AND CAPITAL RESOURCES. Cash and accounts receivable available at
October 31, 2000 are able to support our operations at present levels only
through the middle of December
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2000. We therefore need to raise more capital through public or private
financing. We do not know if additional financing will be available to us or, if
it is available, whether it will be available on attractive terms. If we do
raise more capital in the future, it is probably that it will result in
substantial dilution to our stockholders. In addition, we have announced that we
are seeking a buyer for the Company but that discussions are in preliminary
stages and that it is too early to know whether the Company will engage in a
transaction and if so, under what terms. Alternatively, we may seek to sell one
or more of the Company's business segments. If we cannot raise more capital or
find a buyer for the Company or one or more of its business segments, we may
need to curtail our business activities, possibly quite substantially, or cease
business operations entirely.
We wrote off a note receivable from Online Scouting Network, Inc. in the amount
of approximately $89,000. In March 2000, we acquired a non-exclusive license to
certain OSN technology and data in exchange for shares of our common stock and
the note.
Net cash used in operating activities was $1,854,610 for the quarter ended
September 30, 2000 and $736,099 for the quarter ended September 30, 1999. As of
September 30, 2000 the Company had working capital of $743,224 compared to
$3,669,717 as of September 30, 1999.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no pending claims against us regarding infringement of any patents or
other intellectual property rights of others. We are not a party to any material
pending legal proceedings, other than ordinary routine litigation incidental to
our business.
ITEM 2. CHANGES IN SECURITIES.
On September 13, 2000, we issued 60,000 shares of our common stock in
replacement of securities which we expect will be cancelled but which have not
been cancelled as of November 13, 2000. In addition, we issued 140,176 incentive
options to 25 employees to purchase our common stock exercisable at a nominal
price.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
The following exhibits are filed as part of or incorporated by reference into
this Report:
EXHIBIT DESCRIPTION
------- -----------
2.1 Articles of Merger between the Company and Cytation Corporation,
dated February 11, 1999(1)
2.2 Plan of Merger of the Company and Cytation Corporation, dated
February 11, 1999(1)
2.3 Articles of Merger between CollegeLink.com Incorporated and
ECI, Inc., dated August 10, 1999(2)
2.4 Certificate of Merger of CollegeLink.com Incorporated and ECI, Inc.,
dated August 10, 1999(2)
2.5 Agreement and Plan of Merger of the Company and ECI, Inc., dated
August 10, 1999(2)
2.6 Certificate of Ownership and Merger between the Company and
CollegeLink.com Incorporated, dated November, 15, 1999(2)
2.7 Agreement and Plan of Merger between the Company and CollegeLink.com
Incorporated, dated November 15, 1999(2)
3.1 Amended and Restated Certificate of Incorporation of the Company(2)
3.2 By-Laws of the Company(2)
4.1 Please see Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Certificate of Incorporation and By-Laws of the Company
defining the rights of holders of the common stock of the Company
10.1 Series A Convertible Stock Purchase Agreement, dated April 2, 1999,
between the Company and Provident Life and Accident Insurance
Company (3)
10.2 Escrow Agreement by and among the Company, Gerald A. Paxton,
Thomas J. Burgess and Eastern Bank and Trust Company dated as of
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August 10, 1999(2)
10.3 Registration Agreement by and among the Company, Gerald A. Paxton,
Thomas J. Burgess and ECI, Inc., dated as of August 10, 1999(2)
10.4 Consulting Agreement by and among the Company, Gerald A. Paxton and
CollegeLink.com Incorporated dated as of August 10, 1999(2)
10.5 Letter Agreement by and among the Company, ECI, Inc. and USA Group
Noel-Levitz, Inc. dated as of July 28, 1999(2)
10.6 Registration Rights Agreement by and among the Company and USA Group
Noel-Levitz, Inc. dated as of July 28, 1999(2)
10.7 Lease by and between Victoria S. Tarsagian and Web Services
International, Inc. dated as of July 29, 1996(2)
10.8 1996 Stock Plan(2)
10.9 1999 Stock Option Plan(2)
10.10 Stock Purchase Agreement, dated September 30, 1999, between the
Company and PNC Investment Corp.(2)
10.11 Marketing Services and Administrative Agreement, dated September 30,
1999, between the Company and PNC Investment Corp.(2)
10.12 Employment Agreement, dated February 11, 1999, between the Company
and Richard Fisher(2)
10.13 Employment Agreement, dated February 11, 1999, between the Company
and Kevin High(2)
10.14 Agreement, dated June 30, 1999, between the Company and the College
Entrance Examination Board(2)
10.15 Form of Lock-Up Agreement(2)
10.16 Lease dated September 22, 1999 between the Company and Midview, LLC(2)
10.17 Agreement and Plan of Merger dated as of October 20, 1999 by and
among Cytation.com Incorporated, CollegeLink.com, Incorporated,
Student Success, Inc., Bradford J. Baker, Patrick S. O'Brien and the
Patrick S. O'Brien Stock Trust(2)
10.18 Support Agreement dated as of October 20, 1999 by and between the
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Company and Bradford J. Baker(2)
10.19 Support Agreement dated as of October 20, 1999 by and between the
Company and Patrick S. O'Brien(2)
10.20 Support Agreement dated as of October 20, 1999 by and between the
Company and the Patrick S. O'Brien Stock Trust(2)
10.21 Noncompetition and Employment Agreement dated as of October 20, 1999
among CollegeLink.com Incorporated, Cytation.com Incorporated and
Bradford J. Baker(2)
10.22 Noncompetition and Employment Agreement dated as of October 20, 1999
among CollegeLink.com Incorporated, Cytation.com Incorporated and
Patrick S. O'Brien(2)
10.23 Series A Convertible Preferred Stock Purchase Agreement, dated as of
October 26, 1999, between the Company and Bost & Co.(2)
10.24 Partner Contract dated September 8, 1999 between Student Advantage,
Inc. and CollegeLink.com(2)
10.25 FastWeb CollegeLink Agreement dated November 22, 1999 between
FastWeb.com LLC and CollegeLink.com Incorporated(2)
10.26 Employment Agreement, dated as of July 1, 1999, between the Company
and Thomas Burgess(2)
10.27 Amendment dated as of November 11, 1999, to Employment Agreement
between Cytation.com Incorporated and Richard A. Fisher(2)
10.28 Amendment dated as of November 11, 1999, to Employment Agreement
between Cytation.com Incorporated and Kevin J. High(2)
10.29 Consulting Agreement dated October 13, 1999, between Cytation.com
Incorporated and Bruce Sundlun(2)
10.30 Series A Lock-Up Agreement(2)
10.31 Consulting Agreement dated September 8, 2000 between CollegeLink.com
and Bradford J. Baker(4)
10.32 Consulting Agreement dated September 8, 2000 between CollegeLink.com
and Patrick S. O'Brien(4)
21.1 List of Subsidiaries of the Company(2)
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27.1 Financial Data Schedule
(1) Incorporated by reference from the Company's Form 8-K, Current Report,
filed March 18, 1999, and later amended on April 2, 1999.
(2) Filed as Exhibit to the Company's Registration Statement No. 333-85079
on Form SB-2 and incorporated herein by reference.
(3) Incorporated by reference from the Company's Form 8-K, Current Report,
filed April 27, 1999.
(4) Filed herewith.
(b) No reports on Form 8-K were filed during the quarter ended September
30, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has
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duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
COLLEGELINK.COM INCORPORATED
By: /s/ Richard A Fisher
-----------------------------------------
Richard A. Fisher
Chairman
DATE: November 17, 2000
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