UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
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[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: SEPTEMBER 30, 2002
[ ] Transition period under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
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Commission file No. 0-30220
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ACTIVE LINK COMMUNICATIONS, INC.
--------------------------------
(Name of Small Business Issuer in Its Charter)
Colorado 84-0917382
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1840 Centre Point Drive, Naperville, IL 60563
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(Address of principal executive offices) (Zip Code)
(630) 955-9755
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Issuer's Telephone Number, Including Area Code
7388 S. Revere Parkway, Suite 1000, Englewood, Colorado 80112
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(Former Address of Issuer)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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
----- ----
The aggregate market value of the voting stock held as of November 8, 2002 by
non affiliates of the issuer was $1,930,000. As of November 8, 2002 the issuer
had 20,959,497 shares of its no par value Common Stock issued and outstanding.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
2
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 2002
(IN THOUSANDS OF DOLLARS)
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<Table>
ASSETS
Current assets:
Cash $ 43
Trade accounts and current portion of notes receivable, less allowance for
doubtful accounts of $513 768
Inventory 575
Prepaid product purchases 176
Prepaid expenses and other current assets 148
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Total current assets 1,710
Property and equipment, net 90
Deposits and other assets 73
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$ 1,873
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable $ 4,489
Revolving lines of credit and other short term borrowings 897
Current portion of notes payable (including $282 due to a related party) 5,451
Accrued interest payable 470
Accrued expenses and deposits 1,772
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Total current liabilities 13,079
Notes payable - Long term 1,973
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Total liabilities 15,052
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Stockholders' deficit:
Preferred stock, 3,000,000 shares authorized: --
Common stock, no par value, 75,000,000 shares authorized,
shares issued and outstanding: 20,959,497 322
Additional paid-in capital 4,312
Excess of liabilities assumed over assets acquired, net (4,348)
Accumulated deficit (13,465)
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Total stockholders' deficit (13,179)
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$ 1,873
==========
</Table>
See accompanying notes to consolidated financial statements
3
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(IN THOUSANDS OF DOLLARS, EXCEPT EARNINGS PER SHARE DATA)
=============================================================================
<Table>
<Caption>
For the Three Months Ended September 30,
----------------------------------------
2002 2001
------------ ------------
Revenue:
Equipment sales and service $ 1,792 $ 3,118
Other revenue 5 30
------------ ------------
1,797 3,148
------------ ------------
Costs and expenses:
Cost of equipment sales and service 1,516 2,585
Selling 200 314
General and administrative 1,361 457
Depreciation and amortization 28 7
Interest expense 1,253 26
------------ ------------
4,358 3,389
Net income (loss) $ (2,561) $ (241)
============ ============
Income (loss) per common share:
Basic and Diluted
Net income (loss) $ (.12) $ (.02)
============ ============
Weighted average number of shares outstanding:
Basic and Diluted 20,835,584 9,959,651
============ ============
</Table>
See accompanying notes to consolidated financial statements
4
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(IN THOUSANDS OF DOLLARS, EXCEPT EARNINGS PER SHARE DATA)
================================================================================
<Table>
<Caption>
For the Six Months Ended September 30,
--------------------------------------
2002 2001
------------ ------------
Revenue:
Equipment sales and service $ 4,300 $ 6,921
Other revenue 8 43
------------ ------------
4,308 6,964
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Costs and expenses:
Cost of equipment sales and service 3,424 5,694
Selling 495 659
General and administrative 2,276 1,321
Depreciation and amortization 54 15
Interest expense 2,559 57
------------ ------------
8,808 7,746
Net income (loss) $ (4,500) $ (782)
============ ============
Income (loss) per common share:
Basic and Diluted
Net income (loss) $ (.22) $ (.08)
============ ============
Weighted average number of shares outstanding:
Basic and Diluted 20,897,202 9,959,651
============ ============
</Table>
See accompanying notes to consolidated financial statements
5
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(IN THOUSANDS OF DOLLARS)
================================================================================
<Table>
<Caption>
2002 2001
------- -------
Cash flows from operating activities:
Income (loss) from operations $(4,500) $ (782)
Adjustments to reconcile to net cash used
by operating activities:
Depreciation and amortization 54 15
Provision for losses on accounts and notes receivable 15 50
Amortization of debt discount and debt issuance costs 1,942 --
Changes in operating assets and liabilities:
Trade accounts and notes receivable 849 1,425
Inventories 271 (113)
Deposits and other assets 335 6
Checks issued in excess of funds on deposit (169) (889)
Trade accounts payable and accrued expenses (249) (219)
------- -------
Net cash used by operating activities (1,452) (507)
------- -------
Cash flow from investing activities:
Proceeds from (advances to) officer, net -- 498
Pre acquisition advances to parent -- (200)
Acquisition Costs Incurred & Amortized -- (337)
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Net cash used by investing activities -- (39)
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Cash flows from financing activities:
Net borrowings (repayment) under line-of-credit agreement 117 (20)
Proceeds from issuance of convertible debt and other notes 1,589 400
Contribution from shareholder -- 520
Issuance of common stock for services rendered 54 --
Repayment of notes (231) --
Repayment of capital lease obligations (34) --
------- -------
Net cash provided by (used in) financing activities 1,495 900
------- -------
Net increase (decrease) in cash 43 354
Cash at beginning of the period 0 26
------- -------
Cash at end of the period $ 43 $ 380
======= =======
Supplemental disclosures of cash flow information:
Interest paid $ 333 $ 57
Non-cash debt discount 994 --
</Table>
See accompanying notes to consolidated financial statements
6
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
(1) BASIS OF PRESENTATION
The consolidated condensed interim financial statements included herein
have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures are adequate
to make information presented not misleading.
These statements reflect all adjustments, consisting of normal
recurring adjustments that, in the opinion of management, are necessary
for fair presentation of the information contained therein. It is
suggested that these consolidated condensed financial statements be
read in conjunction with the financial statements and notes thereto, at
March 31, 2002 as filed in the Company's report on Form 10-KSB. The
Company follows the same accounting policies in preparation of interim
reports.
Results of operations for the interim periods are not necessarily
indicative of annual results.
(2) GOING CONCERN, RESULTS OF OPERATIONS, AND MANAGEMENT'S PLANS
The Company's financial statements for the six months ended September
30, 2002 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. The
Company has historically reported net losses, including reporting a
loss from operations of $4,500,000 for the six months ended September
30, 2002 and has a working capital deficit of $11,369,000 as of
September 30, 2002. The working capital deficit includes Subordinated
Convertible Notes and accrued interest of approximately $3,755,000 due
between September 30 and October 31, 2002, which is convertible into
the Company's common stock at $.25 per common share. Subsequent to
September 30, 2002 approximately $1,323,000 of the convertible debt and
accrued interest was converted to common stock and $2,370,000 was
extended to April 30, 2003. The Company is not generating sufficient
cash flow from operations to fund operations or to repay obligations as
they become due.
The Company's operations have historically been adversely affected by a
lack of working capital. The Company uses lines of credit from a
lending institution, which are limited to the extent of available
collateral. The Company's lines of credit are fully utilized to the
extent of available collateral at September 30, 2002. Additionally, the
Company is currently in default under the payment terms on many of its
other notes, including a note with a telecommunications vendor
associated with the Company's discontinued operations. Furthermore, the
Company's
7
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) CONTINUED
================================================================================
(2) GOING CONCERN, RESULTS OF OPERATIONS, AND MANAGEMENT'S PLANS (CONTINUED)
major product vendor, for its continuing operations, has notified the
Company it will only sell to the Company on a cash basis. The
President/CEO and major shareholder of the Company has personally
guaranteed payment of the obligation. The lack of available funding
impedes the Company's ability to fund additional product purchases and to
expand its business operations.
To address its cash flow concerns, subsequent to the merger, the Company
has borrowed funds. During the current reporting period the company has
borrowed funds as follows:
o $250,000 Due in November 2002, secured by a second mortgage on
the Company President's personal residence.
o $850,000 Advance provided by an investor to allow the Company to
purchase product for resale and other working capital needs.
Subsequent to September 30, 2002 this advance was converted into
a Convertible Promissory Note, due in November 2005. The investor
agreed to provide a total of between $2,000,000 and $3,000,000 to
the Company, subject to arrangements by the Company with its
creditors satisfactory to the investor.
Management cannot provide assurance that the Company will ultimately
achieve profitable operations or be cash positive or raise necessary
additional debt and/or equity capital. However, the Company has
demonstrated its ability to raise capital. Management believes that if
the Company can obtain additional funding, the Company will have adequate
capital resources to continue operating and maintain its business
strategy during fiscal 2003. The Company is currently attempting to raise
between $3,000,000 and $5,000,000 in private placements of its common
stock and convertible debentures. If substantial losses continue and/or
the Company is unable to raise additional capital, liquidity problems
could cause the Company to curtail operations, liquidate assets, seek
additional capital on less favorable terms and/or pursue other such
actions that could adversely affect future operations. These financial
statements do not include any adjustments relating to the recoverability
and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
(3) NOTES PAYABLE
During the period ended September 30, 2002 the Company received net
proceeds of $250,000 from a Promissory Note secured by the personal
residence of the Company's President. This Note is due October 14, 2002
with a one-time option to extend 30 days. The Company elected to exercise
this extension. Principal and interest of 20% on the note is due November
14, 2002. Additionally, the Company issued 300,000 shares of stock to the
note holder as compensation for services rendered.
8
ACTIVE LINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) CONTINUED
================================================================================
(3) NOTES PAYABLE (CONTINUED)
The Company received advances in the amount of $850,000 from an
investor to fund purchases of product for resale as well as for other
working capital needs. These amounts were converted into a Promissory
Note on November 12, 2002. This Promissory Note is convertible into
company stock at an exercise price of $.25 per share. Due to these
advances and the related warrants, the Company recorded an additional
$706,000 in deferred financing charges during the period. These charges
relate to a beneficial conversion and associated warrants and will be
amortized over the life of the note.
In April 2002, the Company negotiated a restructuring of existing
amounts payable to its major supplier into a promissory note. During
the quarter ended September 30, 2002 the supplier has agreed with the
Company's request to modify the payment terms on the Company's note.
The new agreement is comprised of a minimum monthly payment and
additional payments based on purchasing incentives. At September 30,
2002 the balance due was $2,032,000.
(4) SUBSEQUENT EVENTS
On November 12, 2002 the Company converted amounts advanced from an
investor into a Convertible Promissory Note for $3,000,000. At November
12, 2002 the Company had received $1,500,000 from the investor. The
investor has agreed to provide a total of between $2,000,000 and
$3,000,000 in a series of advances. The note is unsecured and carries
an interest rate of 5% per annum. These advances are contingent upon
certain creditors of the Company agreeing to restructure, extending
and/or converting to equity their obligations. This Promissory Note is
convertible into Company stock at an exercise price of $.25 per share.
Additionally, the Company issued to the investor 3,000,000 warrants
exercisable through November 12, 2006 at an exercise price of $.25 per
share. As a result of the advances being converted into a Promissory
Note, and given the increased amount of the loan, there may be an
impact on the calculation for the deferred financing charges associated
with the note and warrants. As of November 12, 2002 the Company has
drawn $1,500,000 in advances against this note.
Subsequent to September 30, 2002 the Company received commitments from
convertible note holders to convert $1,323,000 of convertible debt and
accrued interest that was due between September 30 and October 31, 2002
into common stock and $2,370,000 of the convertible debt and accrued
interest was extended to April 30, 2003.. The conversion rate for the
note holders that opted to convert was reset to $.25 per share.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Statements herein, other than historical fact, may be deemed forward-looking.
These statements may be accompanied by words such as "believe," "estimate,"
"project," "expect," "anticipate," or "predict," that convey the uncertainty of
future events or outcomes. These statements are based on assumptions that the
Company believes are reasonable; however, many factors could cause the Company's
actual results in the future to differ materially from the forward-looking
statements made herein and in any other documents or oral presentations made by,
or on behalf of, the Company. Important factors which could cause actual results
to differ materially from those in forward-looking statements, include, among
others, the ability to obtain additional financing, which is not assured; price
and product competition by foreign and domestic competitors, including new
entrants; rapid technological developments and changes; the Company's
relationship with its suppliers and suppliers' ability to provide products on a
timely basis; the achievement of lower costs and expenses; reliance on large
customers; the Company's ability to attract acquisition candidates and to
successfully integrate acquisitions into the Company's business; interest rate
fluctuations and other general economic conditions, as discussed in the
Company's report on Form 10-KSB for the year ended March 31, 2002. In light of
the assumptions and uncertainties inherent in forward-looking information, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the plans of the Company will be realized.
Results of Operations and Cash Flows
For the three and six month periods ended September 30, 2002, the Company
reported net losses of $2,561,000 and $4,500,000 respectively, as compared to a
net loss of $241,000 and $782,000 for the comparable periods ended September 30,
2001. Total revenue for the quarter ended September 30, 2002 was $1,797,000
compared to total revenue of $3,148,000 for the quarter ended September 30,
2001. For the six month period ended September 30, 2002, total revenue was
$4,308,000 compared to total revenue of $6,964,000 for the six month period
ended September 30, 2001.
The decrease in sales for both the three month and six month periods was
predominately caused by supplier requirements to prepay product purchases,
thereby limiting sales based upon available capital. Also, the implementation of
several major customer projects was delayed. The gross margin percentage on
direct equipment sales and service decreased from 17% to 15% for the three
months ended September 30, 2001 to the three months ended September 30, 2002.
This decrease can be attributed to the significant decrease in overall revenues
and the proportionately larger base of lower margin hardware sales versus higher
margin project business. The gross margin for the six months ended September 30,
2002 compared to the six months ended September 30, 2001 increased from 18% to
20%. The increase in the fiscal year to date gross margin reflects the impact of
positive inventory adjustments of $116,000 recorded in the first fiscal quarter.
The gross margin percentage adjusted to exclude the impact of the inventory
adjustments is 18% for the six months ended September 30, 2001 which is flat to
the gross margin for the six months ended September 30, 2001.
Selling expenses for the three month and six month periods ended September 30,
2002 were $200,000 and $495,000, respectively. This represents a reduction of
$114,000 and $164,000, respectively from the same two periods of the prior
year's selling expenses of $314,00 and 659,000. The decrease of 36% for the
three month period was due to a change in the commission program which defers
the payment of commissions based on annual goals.
10
The increase in general and administrative expenses was $904,000, an increase
from $457,000 for the three month period ended September 30, 2001 to $1,361,000
for the same period for the current fiscal year. The increase includes redundant
corporate staff and related expenses in Denver of $440,000. These costs are
being phased out with the transition of corporate headquarters to the Naperville
location and have been predominately eliminated by the end of this quarter. In
preparation for the transition of corporate headquarters subsequent to the
merger, salaries in Naperville increased $185,000 for the three months ended
September 30, 2002 compared to the same period of the prior fiscal year. Legal
and accounting expenses for the three months ended September 30, 2001 were a
negative $104,000 as a result of an entry to capitalize these costs as merger
related. These costs were subsequently reclassified to the income statement the
following quarter. However, due to this entry in the prior year, legal and
accounting expenses for the three months ended September 30, 2002 of $110,000
are unfavorable to the same period of the prior year by $214,000.
General and administrative expenses for the six month period ended September 30,
2002 were $2,276,000 compared to $1,321,000 for the six month period ended
September 30, 2001. The $955,000 increase is comprised of the same components as
noted in the discussion of the three month period above. This includes the
redundant expenses related to the Denver location of $600,000, an increase in
Naperville salaries of $238,000 and an increase in legal and accounting expenses
of $50,000.
Interest expense for the quarter ended September 30, 2002 of $1,253,000
increased by $1,227,000 over the same period of the prior year. Of this
increase, $947,000 can be attributed to the amortization of imputed interest
relating to the issuance of convertible debt and related warrants. For the six
month period ended September 30, 2002 interest expense of $2,559,000 reflects an
increase of $2,502,000 over interest expense of $57,000 for the six month period
ended September 30, 2001. For this period the increase includes $1,942,000
relating to the amortization of imputed interest. The factoring arrangement
entered into by Mobility as of December 31, 2001 and the promissory note with a
major supplier account for $282,000 of this increase.
During the six months ended September 30, 2002, $1,452,000 of cash was used by
the Company's operations, which compares to $507,000 used in the six months
ended September 30, 2001. However, as previously indicated the Company had a
loss of $4,500,000 during the six months ended September 30, 2002 as compared to
a loss of $782,000 for the six months ended September 30, 2001. The major
difference between cash used in operations and the net loss during 2002 was the
amortization of debt discounts and debt issuance costs of $1,942,000. Cash flows
from financing activities in 2002 of $1,495,000 represent additional borrowings
of $1,589,000, offset by $231,000 of repayments on notes.
Lack of Working Capital; Need for Additional Financing
The Company's financial statements for the six months ended September 30, 2002
have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company's working capital deficit increased by $1,914,000 from
$9,455,000 as of March 31, 2002 to $11,369,000 as of September 30, 2002. The
increase in the working capital deficit was principally caused by the increase
in the issuance of new notes payable of $1,589,000 and the decrease in accounts
receivable and inventory of $1,135,000. The increase related to the issuance of
new notes payable was partially offset by the restructuring of current payables
into a long-term note.
11
The Company's operations have historically been adversely affected by a lack of
working capital. The Company uses lines of credit from a finance company, which
are limited to the extent of available collateral. The Company's lines of credit
are fully utilized to the extent of available collateral at September 30, 2002.
Additionally, the Company is currently in default under the payment terms of a
note with a telecommunications vendor associated with the Company's discontinued
operations.
In order to obtain additional cash the Company engaged in the following finance
activities during the period:
The Company borrowed $250,000 secured by the personal residence of the
Company's President. Principal and interest on the note is due
November 14, 2002. Additionally, the Company issued 300,000 shares of
stock to the note holder as compensation for services rendered.
During the period ended September 30, 2002 the Company received net
proceeds of $850,000 from advances provided by an investor. Subsequent
to September 30, 2002 the investor converted these advances into a
Convertible Promissory Note with a maximum borrowing cap of
$3,000,000. As of November 12, 2002 the Company has drawn $1,500,000
in advances against this note. This Note is convertible into Common
Stock at $.25 per share. Principal and interest on the note is due
November 2005.
Due to advances related to this convertible note, the Company recorded an
additional $706,000 in deferred financing charges during the period. These
charges relate to the beneficial conversion and associated warrants and will be
amortized over the life of the note.
In April 2002, the Company negotiated a restructuring of existing amounts
payable to its major supplier into a promissory note. During the quarter ended
September 30, 2002 the supplier has agreed with the Company's request to modify
the payment terms on the Company's note. The new agreement is comprised of a
minimum monthly payment and additional payments based on purchasing incentives.
At September 30, 2002 the balance due was $2,032,000.
The lack of available funding impedes the Company's ability to fund additional
product purchases and to expand its business operations. The Company has
$4,489,000 of trade accounts payable which are currently due and payable;
$897,000 of revolving lines of credit that are due and payable as the Company
collects its accounts receivables; $5,451,000 of notes payable, of which
$3,355,000 are due between September 30 and October 31, 2002 and are convertible
into the Company's Common Stock at a price of $.25 per share; and $2,242,000 of
other liabilities that will be due and payable within one year. The Company is
currently seeking additional capital, but there can be no assurance that the
Company will be able to fulfill its capital needs in the future. Moreover, due
to Company's poor liquidity and operating results and the absence of a Nasdaq
listing for its common stock, the cost of obtaining additional capital is
expected to be significant.
12
Management cannot provide assurance that the Company will ultimately achieve
profitable operations or be cash flow positive, or raise additional debt and/or
equity capital. However, the Company has demonstrated its ability to raise
capital. Management believes that if the Company can obtain additional funding,
the Company will have adequate capital resources to continue operating and
maintain its business strategy during fiscal 2003. If the Company is unable to
raise additional capital in the near future, due to the Company's liquidity
problems, management expects that the Company will need to curtail operations,
liquidate assets, seek additional capital on less favorable terms and/or pursue
other remedial measures. The Company's financial statements in this Report do
not include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Critical Accounting Policies and Estimates
Significant accounting policies and estimates used in the preparation of these
consolidated condensed financial statements were previously disclosed in the
Company's report on Form 10-KSB filed at March 31, 2002. The Company follows the
same accounting policies in preparation of interim reports. Additionally, there
were estimates made related to litigation claims. The Company has made its best
estimate as to what is appropriate, though these estimates may change in the
future.
ITEM 3. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The management of the Company, including the Chief Executive Officer and the
Chief Financial Officer, has conducted an evaluation of the effectiveness of the
Company's disclosure controls and procedures pursuant to Rule 13a-14 under the
Securities Exchange Act of 1934 as of a date (the "Evaluation Date") within 90
days prior to the filing date of this report. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that, as of
the Evaluation Date, the Company's disclosure controls and procedures were
effective in ensuring that all material information relating to the Company
required to be filed in the quarterly report has been made known to them in a
timely manner.
(b) CHANGES IN INTERNAL CONTROLS
There have been no significant changes made in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to the Evaluation Date.
13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to several legal proceedings and claims that have arisen
in the ordinary course of its business. Some seek payment of past due amounts
owed by the Company while some of the actions seek damages and the Company is
unable to estimate the magnitude of its exposure at this time. The Company is
currently past due on a note to a former supplier, Toshiba, to the discontinued
operation of the Company. The former supplier filed suit in Orange County,
California against the Company on September 23, 2002, for an alleged breach of
the Settlement Agreement and Promissory Note and is seeking $760,000 as amounts
due under this note plus 25% of net proceeds from any sale of business units
sold by the Company. Management is attempting to negotiate a settlement of this
action. No other claim in any pending action exceeds 10% of the Company's
current assets.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) REPORTS ON FORM 8-K
Form 8-K filed on September 27, 2002 reporting, under item 5, that Mobility
Concepts reached agreement in principle with a private investor regarding
convertible debt financing to the Company, which is expected to range between
$2,000,000 to $3,000,000. The Company also announced that its largest supplier,
Fujitsu PC Corporation, has agreed with the Company's request to modify the
payment terms on the Company's note.
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.
ACTIVE LINK COMMUNICATIONS, INC.
------------------------------------
(Registrant)
Date: November 14, 2002 /s/ Timothy A. Ells
-------------------- ------------------------------------
Timothy A. Ells, President and Chief
Executive Officer
Date: November 14, 2002 /s/ William D. Kelly
--------------------- ------------------------------------
William D. Kelly, Vice President and
Chief Financial Officer
14
CERTIFICATION
Each of the undersigned certifies that:
1. I have reviewed this quarterly report on Form 10-QSB of Active Link
Communications, Inc. (the "Company");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of circumstances under which such statements were
made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this quarterly report.
4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit committee of
Company's board of directors (or persons performing the equivalent functions);
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record, process,
summarize and report financial data and have identified for the Company's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal controls;
and
15
CERTIFICATION (CONTINUED)
6. The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 By: /s/ Timothy A. Ells
----------------------------------
Timothy A. Ells
President and Chief Executive Officer
16
CERTIFICATION
Each of the undersigned certifies that:
1. I have reviewed this quarterly report on Form 10-QSB of Active Link
Communications, Inc. (the "Company");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of circumstances under which such statements were
made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this quarterly report.
4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit committee of
Company's board of directors (or persons performing the equivalent functions);
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record, process,
summarize and report financial data and have identified for the Company's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal controls;
and
17
CERTIFICATION (CONTINUED)
6. The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 By: /s/ William D. Kelly
-----------------------------------
William D. Kelly
Chief Financial Officer
18