UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
| [ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2006
OR
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission File Number 000-32311
(Exact name of small business issuer as specified in charter)
Nevada
(State or other jurisdiction of incorporation or organization) | 86-1010347
(I.R.S. Employer Identification No.) |
1940 Zinfandel Drive, Suite R, Rancho Cordova, CA 95670
(Address of principal executive offices)
(916) 768-2160
(Issuer's Telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since last report)
Check whether the issuer (1) has 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 o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 18, 2006, the Issuer had 7,000,000 shares of its common stock, par value $0.001 per share, issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes o No x
AMERALINK, INC.
FORM 10-QSB/A
Table of Contents
| | | Page |
| PART I - FINANCIAL INFORMATION | |
| | | |
| Item 1 | Financial Statements | 1 |
| | | |
| Item 2. | Management’s Discussion and Analysis or Plan of Operation | 7 |
| | | |
| Item 3. | Controls and Procedures | 10 |
| | | |
| | | |
| | | |
| PART II- OTHER INFORMATION | |
| | | |
| Item 1. | Legal Proceedings | 11 |
| | | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 11 |
| | | |
| Item 3. | Defaults upon Senior Securities | 11 |
| | | |
| Item 4. | Submission of Matters to a Vote of Security Holders | 11 |
| | | |
| Item 5. | Other Information | 11 |
| | | |
| Item 6. | Exhibits | 12 |
| | | |
| SIGNATURES | 13 |
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ameralink, Inc. has included its unaudited condensed balance sheets as of June 30, 2006 and December 31, 2005 (the end of our most recently completed fiscal year), and unaudited condensed statements of operations for the three and six months ended June 30, 2006 and 2005, and for the period from December 31, 1998 (date of inception) through June 30, 2006, and unaudited condensed statements of cash flows for the six months ended June 30, 2006 and 2005, and for the period from December 31, 1998 (date of inception) through June 30, 2006, together with unaudited condensed notes thereto. In the opinion of management of Ameralink, Inc., the financial statements reflect all adjustments, all of which are normal recurring adjustments, necessary to fairly present the financial condition, results of operations, and cash flows of Ameralink, Inc. for the interim periods presented. The financial statements included in this report on Form 10-QSB should be read in conjunction with the audited financial statements of Ameralink, Inc. and the notes thereto for the year ended December 31, 2005 included in our annual report on Form 10-KSB.
(A Development Stage Company)
Condensed Balance Sheets
(Unaudited)
| | | June 30, | | December 31, | |
| | | 2006 | | 2005 | |
ASSETS | |
| | | | | | |
Current Assets | | | | | |
| Receivable from attorney's trust account | | $ | 10,690 | | $ | - | |
| | | | | | | | |
Total Assets | | $ | 10,690 | | $ | - | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS' DEFICIT |
| | | | | | | | |
Current Liabilities | | | | | | | |
| Accounts payable | | $ | 7,461 | | $ | 8,071 | |
| Payable to officer/shareholder | | | 16,080 | | | 8,834 | |
| Advance from 518 Media, Inc. | | | 20,000 | | | - | |
Total Current Liabilities | | | 43,541 | | | 16,905 | |
| | | | | | | | |
Shareholders' Deficit | | | | | | | |
| Common stock, $0.001 par value; 25,000,000 shares authorized; 7,000,000 shares issued and outstanding | | | 7,000 | | | 7,000 | |
| Additional paid in capital | | | 16,525 | | | 16,525 | |
| Deficit accumulated during the development stage | | | (56,376 | ) | | (40,430 | ) |
Total Shareholders' Deficit | | | (32,851 | ) | | (16,905 | ) |
| | | | | | | | |
Total Liabilities and Shareholders' Deficit | | $ | 10,690 | | $ | - | |
| | | | | | | | |
The accompanying notes are an integral part of these condensed financial statements.
AMERALINK, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | For the Period from December 31, 1998 (date of inception) through June 30, | |
| | | 2006 | | 2005 | | 2006 | | 2005 | | 2006 | |
| | | | | | | | | | | | |
| General and administrative expense | | $ | 11,221 | | $ | 4,574 | | $ | 15,946 | | $ | 5,673 | | $ | 56,376 | |
| | | | | | | | | | | | | | | | | |
Net Loss | | $ | (11,221 | ) | $ | (4,574 | ) | $ | (15,946 | ) | $ | (5,673 | ) | $ | (56,376 | ) |
| | | | | | | | | | | | | | | | | |
Loss Per Common Share | | $ | - | | $ | - | | $ | - | | $ | - | | | | |
| | | | | | | | | | | | | | | | | |
Weighted-Average Common Shares Outstanding | | | 7,000,000 | | | 7,000,000 | | | 7,000,000 | | | 7,000,000 | | | | |
The accompanying notes are an integral part of these condensed financial statements.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
| | | For the Six Months Ended | | For the period from December 31, 1998 (date of inception) through | |
| | | June 30, | | June 30, | |
| | | 2006 | | 2005 | | 2006 | |
Cash Flows From Operating Activities | | | | | | | |
| Net loss | | $ | (15,946 | ) | $ | (5,673 | ) | $ | (56,376 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | |
| Changes in assets and liabilities: | | | | | | | | | | |
| Accounts payable | | | (610 | ) | | 395 | | | 7,461 | |
| Payable to officers/shareholders | | | 7,246 | | | 5,278 | | | 32,605 | |
| Receivable from attorney's trust account | | | (10,690 | ) | | - | | | (10,690 | ) |
Net Cash Used In Operating Activities | | | (20,000 | ) | | - | | | (27,000 | ) |
| | | | | | | | | | | |
Cash Flows From Investing Activities | | | - | | | - | | | - | |
| | | | | | | | | | | |
Cash Flows From Financing Activities | | | | | | | | | | |
| Advance received from 518 Media, Inc. | | | 20,000 | | | - | | | 20,000 | |
| Proceeds from the sale of common stock | | | - | | | - | | | 7,000 | |
Net Cash Provided By Financing Activities | | | 20,000 | | | - | | | 27,000 | |
Net Increase In Cash | | | - | | | - | | | - | |
Cash At Beginning Of Period | | | - | | | - | | | - | |
Cash At End Of Period | | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | | |
| Supplemental disclosure of noncash investing and financing activities: | | | | | | | | | | |
| Contribution of payable to officers/shareholders to additional paid-in capital | | $ | - | | $ | - | | $ | 16,525 | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these condensed financial statements.
AMERALINK, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(A) Organization, Change in Control and Significant Accounting Policies
Organization, Nature of Operations and Change in Control— Ameralink, Inc. ("the Company") was incorporated in the State of Nevada on December 31, 1998, organized to engage in any lawful corporate business, including but not limited to, participating in mergers with, and the acquisitions of, other companies. The Company is in the development stage and has not yet commenced any formal business operations other than organizational matters. On March 31, 2004, two individuals acquired 99.6% of the stock of the Company from shareholders of the Company for $225,000. At that time, control of the Company was transferred to a new board of directors. The change of control does not constitute a business combination or reorganization, and consequently, the assets and liabilities of the Company continue to be recorded at historical cost.
Condensed Interim Financial Statements- The accompanying unaudited condensed financial statements of Ameralink, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB. Accordingly, these financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the Company’s annual financial statements and the notes thereto for the year ended December 31, 2005 and for the period from December 31, 1998 (date of inception) through December 31, 2005, included in the Company’s annual report on Form 10-KSB. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s financial position as of June 30, 2006, its results of operations for the three months ended June 30, 2006 and 2005, and its results of operations and cash flows for the six months ended June 30, 2006 and 2005, and for the period from December 31, 1998 (date of inception), through June 30, 2006. The results of operations for the three months and the six months ended June 30, 2006, may not be indicative of the results that may be expected for the year ending December 31, 2006.
Business Condition - The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses since its inception and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management’s plans include seeking a merger or acquisition candidate, or raising additional funds to meet its ongoing expenses through shareholder loans or private placement of its equity securities. There is no assurance that the Company will be successful in finding a merger or acquisition candidate or raising additional capital or loans, and if so, on terms favorable to the Company. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Basic Loss Per Share - Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. At June 30, 2006, there are no potentially dilutive common stock equivalents.
(B) Agreement to Acquire 518 Media, Inc.
Effective August 11 2006, the Company entered into a definitive acquisition agreement to acquire 518 Media, Inc. (518 Media). 518 Media is a small California company which owns interests in various films and film distribution rights. The terms remained substantially the same as set forth in the February 22, 2006 letter of intent. Under the terms of the agreement, 518 Media would take control of the combined corporations, receiving 5,300,000 of the issued and outstanding shares of common stock totaling 8,557,600 shares (without taking into account the shares to be issued in a private placement). The agreement was amended on September 6, 2006 to correct a misstatement of the number of shares to be issued and outstanding. The current owners of 518 Media would become the officers and directors of the Company with the addition of one additional board member selected by the Company’s current board of directors. This new board member will be granted a three year option to acquire 450,000 shares of Ameralink common stock at $0.40 per share as an inducement to become a board member. The grant will include registration rights.
The consummation of the transaction is subject to meeting a number of conditions precedent including (1) the delivery of audited financial statements of 518 Media reflecting shareholder equity of no less than $90,000; (2) the receipt of at least $400,000 in total proceeds from the sale of Company shares and warrants at no less than $0.40 per share; (3) the obtaining of director and officer liability insurance; (4) the change of the corporate name to 518 Media; (5) the receipt of undertakings from the principals of 518 Media that they would offer to the Company all film and media prospects on a first right of refusal basis; and (6) obtaining shareholder approval of the acquisition. The parties have until September 30, 2006 to complete the transaction.
518 Media advanced $20,000 into the trust account of the Company's legal counsel to assist the Company in the payment of expenses in completing the acquisition. If the Company fails to complete the acquisition, the Company is obligated to issue 425,000 shares of restricted common stock to 518 Media in lieu of repayment of the advance.
(C) Related Party Transactions
Since the inception of the Company through the date of the change of control described above, the operating expenses of the Company were paid by the former principal shareholder of the Company (with the exception of expenses paid by the initial proceeds from the sale of common stock). The total amount paid by the former principal shareholder was $16,525 through the date of the change of control. In connection with the change of control, the former principal shareholder contributed the amount owed to him by the Company totaling $16,525 back to the capital of the Company. Since March 31, 2004, a new officer and shareholder has advanced the Company $16,080 for the payment of expenses incurred since the change of control.
The Company neither owns nor leases any real or personal property. Office services are provided without charge by an officer and director of the Company. Such costs are not significant to the financial statements and accordingly, have not been reflected herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
This discussion and analysis is designed to be read in conjunction with the Management’s Discussion and Analysis set forth in Ameralink, Inc.’s Form 10-KSB for the fiscal year ended December 31, 2005. As used herein, “we,” “our,” “us” and the like refer to Ameralink, Inc.
This report and other information made publicly available by Ameralink, Inc. from time to time may contain certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other information relating to Ameralink, Inc. and its business that are based on the beliefs of our management and assumptions made concerning information then currently available to management. Such statements reflect the views of our management at the time they are made and may not be accurate descriptions of the future. The discussion of future events, including the business prospects of Ameralink, Inc., is subject to the material risks listed below and based on assumptions made by management. These risks include our ability to identify and negotiate transactions that provide the potential for future shareholder value, our ability to attract the necessary additional capital to permit us to take advantage of opportunities with which we are presented, and our ability to generate sufficient revenue such that we can support our current cost structure and planned future operations, as well as to pay prior liabilities incurred. Should one or more of these or other risks materialize or if the underlying assumptions of management prove incorrect, actual results of Ameralink, Inc. may vary materially from those described in the forward looking statements. We do not intend to update these forward-looking statements, except as may occur in the regular course of our periodic reporting obligations.
Risk factors
The material risks that we believe are faced by the Company as of the date of this report are set forth below. This discussion of risks is not intended to be exhaustive. The risks set forth below and other risks not currently anticipated or fully appreciated by the management could adversely affect the business and prospects of the Company. These risks include:
Development Stage Company - The Company has no current operations or revenues. The Company faces all of the risks inherent in the start-up of a new business and does not have a historical basis on which to evaluate whether or not its proposed business can be successful, including whether it can: implement a business model and pricing strategy that will permit it to operate profitably; hire and retain management and employees with the necessary skills to successfully implement its business strategy; and successfully develop and implement administrative and support systems such as personnel management, accounting records and controls, service and support, record keeping and office administration. 518 Media, Inc., which we wish to acquire, is also a newly-formed entity with only a small amount of revenue to date. Thus, the development stage risk factor will remain even upon the completion of the merger.
Dependence on Management - The Company is heavily dependent upon the skill, talents, and abilities of its president, Robert Freiheit. Mr. Freiheit will be primarily responsible for the decisions concerning the implementation of a business model. Mr. Freiheit will not devote his fully business time to the Company and will continue to be engaged in outside business activities. The Company will be dependent upon the business acumen and expertise of management and the applicability of their backgrounds to the business decisions required to be made on behalf of the Company. The proposed acquisition will also be heavily dependent upon its management.
No Trading Market for the Common Stock - There is no existing trading market for the Common Stock and it is unlikely that one will develop in the foreseeable future. The shares of Common Stock may be subject to the Penny Market Reform Act of 1990 (the “Reform Act”). In October 1990, Congress enacted the Reform Act to counter fraudulent practices common in penny stock transactions. If the shares are determined to be subject to the Reform Act, this may also adversely affect the ability to sell shares in the future.
Lack of Dividends - It is anticipated that the Company will invest any profits generated from its operations, and therefore, it is unlikely that the Company will pay dividends on its Common Stock in the foreseeable future.
Control of the Company by Management- The two directors of the Company currently hold voting and dispositive power over an aggregate of 6,973,600 shares of Common Stock, which represents 99.6% of the currently issued and outstanding Common Stock. Since action by the stockholders on most matters, including the election of directors, only requires approval by a vote of the majority of shares voted on the mater, the current directors and executive officers of the company will be able to significantly influence if not control the election of directors of the Company and the outcome of other matters submitted to the stockholders for consideration. Upon the successful acquisition of 518 Media, its management shall take control of the Company and succeed to the powers associated with such control.
No Assurance of Completion of Acquisition The consummation of the merger with 518 Media is subject to a number of conditions precedent including but not limited to the raising of at least $400,000 by way of a private placement. There is no assurance that the transaction will be completed. If the transaction fails, we will be required to issue an additional 425,000 shares of common stock, and be forced to resume searching for another business opportunity, incurring both the cost and time associated therewith.
Unforeseen Risks - In addition to the above risks, the future business of the Company will be subject to risks not currently foreseen or fully appreciated by management of the Company.
Should one or more of these or other risks materialize, or if the underlying assumptions of management prove incorrect, actual results may vary materially from those described in the forward-looking statements. We do not intend to update these forward-looking statements, except as may occur in the regular course of our periodic reporting obligations.
Overview
Ameralink, Inc. was incorporated in the State of Nevada on December 31, 1998, organized to engage in any lawful corporate business, including but not limited to, participating in mergers with, and the acquisitions of, other companies. We are in the development stage and have not yet commenced any formal business operations. All activities since December 31, 1998 relate to our formation and the seeking of investment or merger opportunities. On March 31, 2004, control of Ameralink, Inc. was transferred to a new board of directors.
Plan of Operation
We were formed to engage in a merger with or acquisition of an unidentified foreign or domestic company which desires to become a reporting ("public") company whose securities are qualified for trading in the United States secondary market. We currently meet the definition of a "blank check" company contained in Section (7)(b)(3) of the Securities Act of 1933, as amended. We have been in the developmental stage since inception and have no operations to date.
Effective August 11, 2006, we entered into a definitive acquisition agreement to acquire 518 Media. 518 Media is a small California company which owns interests in various films and film distribution rights. The terms remained substantially the same as set forth in the Februrary 22, 2006 letter of intent. Under the terms of the agreement, 518 Media would take control of the combined corporations, receiving 5,300,000 of the issued and outstanding shares of common stock totaling 8,557,600 shares (without taking into account the shares to be issued in a private placement). The agreement was amended on September 6, 2006 to correct a mistatement reflecting that there would only be 8,534,000 issued and outstanding. The misstatement was included in the original Form 10-QSB filing for the period ending June 30, 2006 thus necessitating this amendment. The current owners of 518 Media would become the officers and directors of the Company with the addition of one additional board member selected by the Company’s current board of directors. The new board member will be granted a three year option to acquire 450,000 shares of Ameralink common stock at $0.40 per share as an inducement to become a board member. The grant will include registration rights.
The consummation of the transaction is subject to meeting a number of conditions precedent including (1) the delivery of audited financial statements of 518 Media reflecting shareholder equity of no less than $90,000; (2) the receipt of at least $400,000 in total proceeds from the sale of our shares and warrants at no less than $0.40 per share; (3) the obtaining of director and officer liability insurance; (4) the change of the corporate name to 518 Media; (5) the receipt of undertakings from the principals of 518 Media that they would offer to the Company all film and media prospects on a first right of refusal basis; and (6) obtaining shareholder approval of the acquisition The parties have until September 30, 2006 to complete the transaction.
518 Media advanced $20,000 into the trust account of our legal counsel to assist in the payment of expenses in completing the acquisition. If we fail to complete the acquisition, we will issue 425,000 of our restricted common stock to 518 Media in lieu of repayment of the advance. We expect to deliver the materials for shareholder consideration within 30 days.
Our audit reflects the fact that we have no current source of income. Further, that without realization of additional capital, it would be unlikely for the Company to continue as a going concern. Our majority stockholder has agreed that he will advance any additional funds which are needed for operating capital and for costs in connection with completing the transaction.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (SFAS 123R), which addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for either equity instruments of that company or liabilities that are based on the fair value of that company’s equity instruments, or that may be settled by issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and requires that such transactions be accounted for using a fair value-based method and recognized as expense in the statement of operations. SFAS 123R was effective beginning January 1, 2006. The adoption of SFAS 123R did have any immediate effect on the Company as the Company does not currently have stock options or any other share-based payment arrangement outstanding. The future impact of adoption will be dependent on several factors, including but not limited to, our future stock-based compensation strategy and our stock price volatility.
In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, that provides guidance on the accounting for uncertainty in income taxes recognized in financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006, with earlier adoption permitted. We do not expect the adoption of FIN 48 to have a material effect on our financial position, results of operations, or cash flows.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In accordance with Section 302 of the Sarbanes-Oxley Act of 2002 and the Securities Exchange Act of 1934 Rules Section 13a-15(e) and 15d-15(e), we maintain disclosure controls and procedures pursuant to which management under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out, as of the end of the quarter ended June 30, 2006, a review and evaluation of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by Ameralink in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported with the time periods specified by the SEC’s rules and forms.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Exhibit Number | | SEC Reference Number | | Title of Document | | Location |
| | | | | | | |
| 1 | | (10) | | Agreement and Plan of Merger | | This filing |
| | | | | | | |
| 2 | | (10) | | Amendment to Agreement and Plan of Merger | | This filing |
| | | | | | | |
| 3 | | (31) | | Rule 13(a) - 14(a)/15(d) - 14(a) Certification | | This filing |
| | | | | | | |
| 4 | | (32) | | Section 1350 Certification | | This filing |
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | AMERALINK, INC. |
| | | |
| | | |
| | | |
| Dated: September 6, 2006 | By | /s/ Robert Freiheit |
| | | Robert Freiheit, President and Chief Executive Officer |
| | | (Principal Executive Officer) |
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