SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
- - ----------------- ----------------------
March 31, 2003 000-33031
THE LINK GROUP, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1263981
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(State of incorporation) (I.R.S. Employer
Identification No.)
Suite 950 - 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 689-4407
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 the filing
requirements for at least the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
62,051,301 as of March 31, 2003
THE LINK GROUP, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)
(Stated in US Dollars)
THE LINK GROUP, INC.
INTERIM BALANCE SHEETS
March 31, 2003 and December 31, 2002
(Unaudited)
(Stated in US Dollars)
(Unaudited) (Audited)
March 31, December 31,
ASSETS 2003 2002
------ ---- ----
Current
Cash $ 11,429 $ 11,717
Receivables - trade 86,537 26,405
- other - 51,280
Inventory 236,215 227,240
Deposits and prepayment 21,195 22,868
Loan receivable - Note 4 128,200 -
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483,576 339,510
Deferred investment costs 480,000 480,000
Property and equipment 284,091 338,613
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$1,247,667 $1,158,123
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LIABILITIES
Current
Accounts payable and accrued liabilities $ 37,184 $ 94,911
Due to a director 69,205 42,284
Deferred revenue 8,725 10,512
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115,114 147,707
Due to related parties - 980,000
Deferred tax 86,250 86,250
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201,364 1,213,957
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STOCKHOLDER'S EQUITY (DEFICIENCY)
Common stock,
Authorized:
200,000,000, $0.0001 par value
Issued:
62,051,301 shares (December 31, 2002: 45,051,301) 6,205 4,505
Paid-in capital 2,496,279 1,317,979
Deficit (1,456,181) (1,378,318)
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1,046,303 ( 55,834)
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$1,247,667 $1,158,123
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SEE ACCOMPANYING NOTES
THE LINK GROUP, INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 2003 and 2002
(Unaudited)
(Stated in US Dollars)
2003 2002
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Sales $ 102,812 $ 563,686
Cost of sales 37,714 222,829
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Gross income 65,098 340,857
Other income 51 30,103
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65,149 370,960
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Expenses
Amortization 54,906 57,642
Selling, general and administrative expenses 88,106 212,281
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143,012 269,923
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Income (loss) from operations before income taxes ( 77,863) 101,037
Provision for future income taxes - 16,511
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Net income (loss) for the period $ ( 77,863) $ 84,526
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Basic earnings (loss) per share $ ( 0.00) $ 0.00
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Weighted average number of common shares outstanding 56,384,634 42,319,356
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SEE ACCOMPANYING NOTES
THE LINK GROUP, INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 2003 and 2002
(Unaudited)
(Stated in US Dollars)
2003 2002
---- ----
Operating Activities
Net income (loss) for the period $( 77,863) $ 84,526
Adjustment for non-cash items
Amortization 54,906 57,642
Provision for deferred income taxes - 16,511
Change in working capital items
Advances receivable - ( 12,284)
Accounts receivable ( 8,852) ( 504,119)
Inventory ( 8,975) ( 47,548)
Deposits and prepayment 1,673 ( 3,012)
Accounts payable and accrued liabilities ( 57,727) ( 384)
Deferred revenue ( 1,787) ( 35,276)
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Cash used in operating activities ( 98,625) ( 443,944)
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Investing Activities
Loan receivable ( 128,200) -
Purchase of property and equipment ( 384) -
Acquisition of subsidiary - 2,572
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Cash provided by (used) in operating activities ( 128,584) 2,572
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Financing Activities
Increase (decrease) in due to a director 26,921 ( 280,624)
Proceeds from issuance of common stock 200,000 600,300
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Cash provided by financing activities 226,921 319,676
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Net decrease in cash during the period ( 288) ( 121,696)
Cash, beginning of the period 11,717 247,813
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Cash, end of the period $ 11,429 $ 126,771
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Supplementary disclosure of cash flow information Cash paid for:
Interest $ - $ -
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Income taxes $ - $ -
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Non-cash Transaction - Note 6
SEE ACCOMPANYING NOTES
THE LINK GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY for the
period from December 31, 2002 to March 31, 2003
(Unaudited)
(Stated in US Dollars)
Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit) Totals
------ ------ ------- --------- ------
Balance, December 31, 2002 45,051,301 $ 4,505 $ 1,317,979 $ ( 1,378,318) $( 55,834)
Issuance of common stock for cash
- at $0.07 3,000,000 300 209,700 - 210,000
Less: commission - - ( 10,000) - ( 10,000)
Issuance of common stock pursuant
to agreements to settle debt
- at $0.07 14,000,000 1,400 978,600 - 980,000
Net loss for the period - - - ( 77,863) ( 77,863)
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Balance, March 31, 2003 62,051,301 $ 6,205 $ 2,496,279 $ ( 1,456,181) $ 1,046,303
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SEE ACCOMPANYING NOTES
THE LINK GROUP, INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)
(Stated in US Dollars)
Note 1 Interim Reporting
The accompanying unaudited interim financial statements have been
prepared by The Link Group, Inc. (the "Company") pursuant to the
rules and regulations of the United States Securities and Exchange
Commission. Certain information and disclosures normally included
in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments and
disclosures necessary for a fair presentation of these financial
statements have been included. Such adjustments consist of normal
recurring adjustments. These interim financial statements should
be read in conjunction with the annual audited financial
statements for the Company for the fiscal year ended December 31,
2002, as filed with the United States Securities and Exchange
Commission.
The results of operations for the period ended March 31, 2003 are
not indicative of the results that may be expected for the full
year.
Note 2 Nature of Operations
The Company is engaged in the business of developing and marketing
computer hardware and web-based surveillance monitoring and
control systems. The Company's product is based on proprietary
software, the use of which is subject to a license agreement. All
operations are carried on outside of the United States.
Note 3 Summary of Significant Accounting Policies
The financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates, which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Consolidation
These interim consolidated financial statement include the
accounts of the Company and its wholly-owned subsidiary,
ProtectServe Pacific Limited ("PSP"), a Hong Kong company. All
inter-company transactions and balances have been eliminated.
Note 4 Loan Receivable
The loan receivable is due March 11, 2004 and bears interest at 3%
per annum.
Note 5 Commitments
The Company has entered into operating leases for its premises
which expire on November 30, 2004. The minimum annual lease
payments (excluding share of operating costs) required are as
follows:
2003 $ 38,493 HK$ 300,256
2004 32,027 HK 249,821
$ 70,520 HK$ 550,077
The Company has entered into a licensing agreement for exclusive
use in Pacific Asia of certain proprietary software related to its
products. A license fee of $100 per copy is payable, with a
minimum commitment to purchase 5000 copies over three years ending
December 31, 2003. The Company can obtain unlimited use of the
software by purchasing more than 5000 units before the three-year
period or by paying $500,000 less license fees paid to date. Upon
the purchase of 5,000 units, the Company will own the proprietary
software. As at March 31, 2003, the Company has purchased 2,700
units.
On March 21, 2003, the Company entered into an agreement to
acquire an interest in Wise Media Investments Ltd., ("Wise Media")
a company incorporated in Samoa, for consideration consisting of
$1,000,000 and 37,000,000 common shares, subject to various
conditions precedent. Wise Media, is engaged in the design and
printing work in the publication business. As at March 31, 2003,
none of the consideration had been paid in respect of this
acquisition.
Note 6 Non-cash Transaction
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the cash flow
statement. During the three months ended March 31, 2003, the
Company issued 14,000,000 common shares at $0.07 per share to
settle $980,000 owing to related parties as at December 31, 2002.
This transaction has been excluded from the statement of cash
flow.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2003 COMPARED
TO THE SAME PERIOD IN 2002.
We (referred in this report as the Link Group Inc. and/or its subsidiaries) have
presented our quarterly consolidated financial statements and you should read
them in conjunction with our consolidated financial statements and related notes
in our 10KSB annual report for 2002. We completed the acquisition of
Protectserve Pacific, Ltd. in the first quarter of 2002. For the first three
months in 2003, sales of the company's products wre $102,812 compared to
$563,686 in the same three months in 2002. Revenue was generated from clients
based both out of Hong Kong and mainland China. . Cost of sales were $37,714 in
the first three months in 2003. In the same period in 2002, cost of sales were
$222,829. The selling, general and administrative expenses for the company were
$86,106 in the first three months in 2003 compared to $212,781 in 2002.
Amortization was $54,906 in the period in 2003 cmpared to $57,642 in 2002. The
net loss from the period in 2003 was ($77,863) and for 2002 the net income was
$101,037
The net loss per share was nominal in the period in 2003 compared to a nominal
profit per share in 2002 in the period. We believe that the trend of operating
losses may continue in the forseeable future, until the company is able to
generate revenues sufficient to cover operation expenses.
..
LIQUIDITY AND CAPITAL RESOURCES
The Company had $11,429 cash on hand at March 31, 2003 and $86,534 in
receivables with total current assets of $483,576 and payables of $115,114 due
within one year These amounts are deemed sufficient by us for continued
operations at the current level this year.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following reports on Form 8-K were made for the period for which this
report is filed.
8-K filed March 7, 2003
THE LINK GROUP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LINK GROUP, INC.
Date: May 19, 2003 /s/ Thomsen Lee
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Thomsen Lee, President
CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES OXLEY ACT
I, Thomsen Lee, certify that:
1. I have reviewed this quarterly report on Form 10-KSB of The Link Group,
Inc.;
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 the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
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
registrant as of, and for, the periods presented in this annual report;
4. The registrant'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 registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, 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 registrant'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 registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant'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 registrant's ability to record, process,
summarize and report financial data and have identified for the registrant'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 registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether 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: May 19, 2003
/s/Thomsen Lee
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Thomsen Lee, President
CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES OXLEY ACT
I, Ernest Cheung, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of The Link Group,
Inc.;
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 the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
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
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant'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 registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, 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 registrant'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 registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant'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 registrant's ability to record, process,
summarize and report financial data and have identified for the registrant'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 registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether 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: May 19, 2003
/s/Ernest Cheung
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Ernest Cheung, CFO