Quick Review of Last 10Q....
From Sept '98 10Q QTRLY Rept. - with rounding errors.
Revenue: (in $millions)
Telco Svcs + $6.8 to $13.9.....from $7.1 in '97
Mkt Svcs + $2.0 to $ 3.6.....from $1.6 in '97
Tech Lic/Devel + $.85 to $ .99......from $.14 in '97
TOTAL + $9.65 $18.4.....from $8.84 in '97
Expenses:
Telco Svcs + $4.0 to $14.6.....from $10.5 in '97
Mktg Svcs + $2.8 to $4.5..... from $ 1.7 in '97
Selling & Admin + $1.1 to $7.5......from $ 6.4 in '97
Doubtful Accts + $1.5 to $2.3......from $ .79 in '97
Interest Exp + $6.1 to $7.9......from $ 1.8 in '97
TOTAL + $15.5 to $36.8....from $ 21.3 in '97
Adjusted TOT + $9.4 to $27.4....from $21.3 in '97 (see note)
Note: The $6.1 increase in interest expense...(from the 10Q) "is primarily due to $7,274,000 (non-cash) in amortization of debt discount related to certain warrants granted in connection with $7,768,000 in loans to the Company in the first nine months of 1998.
Short Conclusion:
On a cash flow basis, with revenue Increasing $9.65 - close to 110%- and adjusted expenses increasing just $9.4 - 52% - my conclusion is that cash flow is working positively and should accelerate in I-Link's direction as their nationwide buildout continues.
Based on 3rd party reports from the field my guess is that I-Link's operating cash flow - ie. revenue is still increasing faster than their adjusted expenses - is improving (just what you need to convince investors to invest cash through debt or equity offerings.
Keep in mind, these numbers reflect from an extremely limited framework that does not do any justice to the potential power behind the postive $ leverage that I-Link's business model can achieve very quickly.
Also, keep in mind that any company in the early development to capture a massively strategic opportunity such as I-Link has in the telecommunications sector will have to undergo ongoing investments.
I expect I-Link's momentum will really start to pick up very rapidly as their nationwide buildout gathers steam. Back under $3, I view I-Link as a unique longterm strategic investment in an early and very well prepared entrant to a massive new market opportunity in a powerfully positioned market for IP-based Unified messaging and Voice Over IP - both of which are poised to really take off over the next few years.
I-Link is at the "leading edge" - as opposed to "bleeding edge" of this trend. Others that enter this "space" will have to bleed more than I-Link because, for the established carriers to enter this market means they will be eating their young. Also, non of the other companies have a fully integrated package like I-Link that's also backed by a company that is focused on building and owning their own network.
The broadband guys and other competitors will also have to face the power of Network Marketing that's built within I-Link's model. In just 2-3 yrs, Excel went from $30mm to close to $2 billion - and they were only a network marketing reseller that paid out %10 max. I-Link compensation plan is much more aggressive - from 3 to 46%. I-Link's also has an incredible range of services that Excel and many others can't touch and at a LD rate that's very attractive - 4.9 to 6.9 cents.
The key is positioning. When the average "joe" client begins to understand that for just $4.95/mo he can send and receive faxes - anytime/anywhere - AND send and receive voicemail - anytime/anywhere - AND access those messages via the Internet for FREE - anytime/anywhere - AND resend those fax and voice messages to anyone on the Internet - all across the world...anytime/anywhere - for FREE....all for just $4.95.
Call me crazy, but this story has legs.
I try to invest in companies that have products and services which have documented word-of-mouth marketing power. Nextel is an example of this - 80% of their sales come from word-of-mouth referrals. We are moving into an "new" Internet-based virtual information economy that will be driven more and more by the collective word-of-mouth power of individuals who pass and gift-out good information about services that actually can change peoples lives.
I-Link has such a product. Unified messaging WILL change people's lives - making them more productive and related underlying businesses more profitable. Service improves. Information gets out there faster. Best of all, like Nextel, when you use the product in a public setting with clients and colleagues on the other end AND people observing what you are doing.....the world will ask about the product. Tell them about is and it WILL sell. And, better yet, you will have a new relationship that will be part of an ongoing residual income that has the potential to expand very rapidly over time in one of the BIGGEST industries on the planet - telecommunications.
My bet is soundly on I-Link and any stock price in the current range - from under and below $3 on up - I view as a great investment.
Good Luck!
I own shares in a similar massive play that's still in the making, but just recently turned positive on an operating cash flow basis late in '97: Nextel. The models are similar. Buildouts HAVE to be weathered and the antics of the shorts. doubters and other bears have to be tolerated. |
