OLKT .90x1.01?Unreal.Zero revenues,huge losses,Cap about $19 million.FIND .18,with revenues and Profits.Cap for FIND on 21,011,438 shares of common stock,=$3,8 million.
So OLTK trades higher 5 times than FIND.What justifies
OLKT $1.01 at current levels?
How come?
We have no revenues or profits for the period since inception as we are a development stage company. Our operating expenses, including $2,261,244 for the cost of warrants issued and the fair value of shares issued, were $6,509,863 during the year ended December 31, 2003 compared to $3,819,483 during the comparative period for 2002. A summary of the operating costs for the year ended December 31, 2003 and the comparative period is as follows:
Year ended Year ended
December 31, 2003 December 31,
2002
$ $
Loss from operations (6,509,863) (3,819,483)
Loss on extinguishment of debt (351,083) -
Gain on extinguishment of debt 42,800 -
Interest expense (359,630) (374,923)
------------------ -----------------
Loss before income taxes (7,177,776) (4,194,406)
Provision for income taxes - -
------------------ -----------------
Net loss attributable to shareholders (7,177,776) (4,194,406)
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During the year ended December 31, 2003, shares were issued to settle outstanding loans (see Note 12 to the financial statements included within this filing). An amount of $335,002 being the excess of the fair value of the shares over the value of the loans is included as a loss on extinguishment of debt. In addition, shares were issued to settle accounts payable. This gave rise to a loss on extinguishments of debt on certain accounts of $16,081 and a gain on other accounts of $42,800.
Interest expense of $359,630 for the year ended December 31, 2003 includes $68,434 interest incurred on convertible loan notes together with amortization of debt discount of $259,077 (see Note 5 to the financial statements included within this filing). Interest of $32,119 has been incurred on overdue accounts payable. Interest for the corresponding period in 2002 of $374,923 relates to $46,157 of interest incurred on convertible loan notes and $328,766 for a beneficial conversion feature (see Note 5 to the financial statements included within this filing).
The net loss attributable to common stockholders was $7,177,776 for the year ended December 31, 2003. We do not consider this indicative of any trend as we are still in the development stage.
Preferred shares
Our board of directors is authorized, without further stockholder approval, to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of these shares, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, and to fix the number of shares constituting any series and the designations of these series. These shares have rights senior to our common stock. The issuance of preferred stock may have the effect of delaying or preventing a change of control of the Company. The issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of common stock or could adversely affect the rights and powers, including voting rights, of the holders of our common stock. At present, we have no plans to issue any shares of our preferred stock.
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Dividends
We have not paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the near future. The determination of whether to pay dividends in the future will depend on many factors, including potential restrictions in credit or other agreements, results of operations, working capital needs and growth plans. Investors who need immediate dividend income should refrain from investing in our common stock.
Recent sales of unregistered securities
During the three months ended December 31, 2003, we sold 66,850 shares of our Common Stock to 13 persons who are non-U.S. investors and received net proceeds of $75,000. These sales were made pursuant to Regulation S and were exempt from registration. We engaged Morgan Watts & Associates Ltd. to identify the investors in the Regulation S offering, and that firm received the balance of the proceeds from the sale of the shares to the non-U.S. investors of $112,500.
We issued a further 400 shares to 1 person in connection with conversions of accounts payable. We sold an aggregate of 200,000 shares to 3 U.S. investors for $200,000 in cash. We issued an aggregate of 880,000 shares to 13 persons for services rendered of $412,500. We relied on Section 4(2) of the Securities Act in connection with these transactions. All of the investors are sophisticated, able to bear the risk of loss of their investment, and are knowledgeable about our business and financial condition and risk factors related to our securities.
We also issued shares during the third quarter of the fiscal year ended December 31, 2003 as reported in the Report on Form 10-QSB for the quarter ended September 30, 2003.
Holders
As of March 19, 2004 there were approximately 248 holders of record of our common stock.
Stock option plans
The following table summarizes information about stock options outstanding as of December 31, 2003.
Plan category Number of securities to Weighted average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance
warrants and rights warrants and rights
Equity compensation plans approved - - -
by security holders
Equity compensation plans not 817,000 $0.83 -
approved by security holders
See also warrants and options within Note 13 Share Capital to the financial statements included within this filing.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion regarding our financial statements should be read in conjunction with the financial statements (including the notes to the Consolidated Financial Statements) included herewith.
Forward-Looking Statements
The statements in this report relating to our expectations about our launching, testing and roll out of the Onelink4travel service, when we may become profitable or our capital needs, the nature of the securities we may issue and our success in fundraising, are some of the forward-looking statements in this Report within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Additionally, words such as "expects", "anticipates", "intends", "believes", "will" and similar words are used to identify forward-looking statements within the meaning of the Act.
The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include problems in attracting capital or industry partners, unanticipated software development problems, market acceptance, and future market and economic conditions.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see other disclosures in this Report, including the Risk Factors section in Item 1, as well as our other filings with the U.S. Securities and Exchange Commission.
Overview
For accounting purposes, the transaction between One Link 4 Travel, Inc and Onelink4travel Limited has been treated as a reverse acquisition with One Link 4 Travel, Inc. treated as the acquired company and with Onelink4travel Limited as the acquirer, and the reverse acquisition transaction is considered a capital transaction rather than a business combination. (See note 2 to the financial statements included within this filing). The operations of One Link 4 Travel, Inc. have been included with those of Onelink4travel, Ltd. from the acquisition date of September 12, 2002.
Critical accounting policies
A "critical accounting policy" is one which is both important to the portrayal of the Company's financial condition and results of operations and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of trends in the industry and information available from other outside sources, as appropriate. We believe that our following accounting policies fit this definition.
Going concern
These financial statements are prepared assuming that we will continue as a going concern.
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We have incurred losses from operations of $11,372,182 and have net current liabilities of $883,063 as of December 31, 2003. Our net working capital deficiency may not allow it to meet its financial commitments as presently structured.
We require further funding to ensure the continued development of our products and services. Our Management is confident of raising additional funds. We have engaged investment bankers and other appropriate financial advisers and institutions to support this process and are actively seeking private financing of several million dollars. However, there can be no assurance that subsequent fund raising will be successful. These factors raise substantial doubt about our ability to continue as a going concern.
In early October 2003, as disclosed in Form 8-K filed on October 23, 2003, IATA disputed our compliance with the Operating Agreement and contended that the agreement was terminated. We disputed IATA's termination and are attempting to resolve the matter so that we can use the IATA services. However, the contractual dispute resulted in a re-evaluation of settlement service providers by our Management during late 2003. We are confident that, if required, these alternatives could be obtained and would be effective but this change would likely delay the planned launch schedule of the Onelink4travel service in 2004. As with the IATA system, there can be no assurances that these alternatives would be successful.
As a result of the dispute with IATA and the re-evaluation of our settlement service providers, our Management has assessed the possible impact of this change on the software development work carried out to date. Our Management has concluded that $350,000 of costs incurred in relation to part of the development of the portal is impaired as we intend to re-write the software code with a different software tool set to improve the Onelink4travel system. In addition, a provision of $272,000 has been made against costs incurred in relation to software links between our system and a third-party's proprietary software as it is now uncertain that these will utilized.
Notwithstanding these uncertainties, our Management has concluded that it is appropriate to prepare the financial statements on a going concern basis. Consequently, the financial statements do not include any adjustments that might result from the outcome of these uncertainties and the carrying value of assets and liabilities do not purport to represent realizable or settlement values.
Software development costs
Software development designed to interface and link the systems in our service have been capitalized as the software is being developed for internal use. In assessing the future operational use of the product, management have made estimations with respect to future revenues and costs and the ongoing viability of the business. Our management has determined that the product will reach the operational stage. If the product does not reach the operational stage then the costs will have to be written off to the statement of operations. The capitalized costs will be amortized over the life of the product once the software has become operational and ready for use. As noted above, our Management has also reviewed software development costs for any impairment.
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Fair value of equity instruments issued
In assessing the fair value of equity instruments, our Management has used the market price of our shares at the commitment date to determine the fair value. With regard to the fair value of warrants issued to our professional advisers, we value them using the Black-Scholes model and used the market price of our shares and other relevant data required by the model at the commitment date.
Results of operations for the year ended December 31, 2003 compared to the year ended December 2002
We have no revenues or profits for the period since inception as we are a development stage company. Our operating expenses, including $2,261,244 for the cost of warrants issued and the fair value of shares issued, were $6,509,863 during the year ended December 31, 2003 compared to $3,819,483 during the comparative period for 2002. A summary of the operating costs for the year ended December 31, 2003 and the comparative period is as follows:
Year ended Year ended
December 31, 2003 December 31, 2002
$ $
Sales and marketing:
Compensation and payments to consultants 467,478 462,546
Marketing 196,779 77,556
Travel (8,687) 55,577
------------------ ------------------
Total sales and marketing 655,570 595,679
------------------ ------------------
General and administrative expenses:
Compensation and payments to consultants 1,431,699 391,580
Professional fees 2,664,194 1,252,515
Advisory costs for corporate financiers 535,914 1,388,073
Travel 114,923 105,513
Impairment of software development costs 622,000 -
Other costs 473,049 72,361
------------------ ------------------
Total general and administrative expenses 5,841,779 3,210,042
------------------ ------------------
Depreciation and amortization 12,514 13,762
------------------ ------------------
Total operating expenses 6,509,863 3,819,483
------------------ ------------------
Compensation and payments to consultants within general and administrative expenses amounted to $1,431,699 in the year ended December 31, 2003, including $525,000 for the cost of shares granted for services, compared to $391,580 in 2002. The significant component of costs within sales and marketing is for compensation and payments to sales consultants, being $467,478 in the year to December 31, 2003 compared with $462,546 in the comparative period in 2002. The number of consultants within general and administrative activities has risen since the reverse takeover in September 2002 as our management has been strengthened to meet the Company's needs (see Note 2 to the financial statements included within this filing). One consultant who assisted with sales and marketing in 2002 became Operations Director in 2003 and his costs are now included within general and administrative expenses. The overall number of consultants retained in the year to December 31, 2002 was lower than during the same period in 2003 as we had only just completed the reverse takeover in September 2002.
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Marketing costs, including public and investor relations, were $196,779 in the year to December 31, 2003 whereas only $77,556 was incurred in the comparative period in 2002 due to the stage of the Company's development.
Total travel costs were $106,236 in the year ended December 31, 2003 compared with $161,090 in the same period in 2002 due to the stage of the Company's development. In 2002 when our development activities commenced, it was necessary for us to meet frequently to define the project and software requirements whereas in 2003 much of the travelling related to fund-raising activities. The cost reduction within sales and marketing of $8,687 in the year ended December 31, 2003 arose as a result of actual costs being less than provided for as of December 31, 2002.
Professional fees were $2,664,194 in the year ended December 31, 2003, including $1,277,944 for the cost of warrants issued to advisers, compared with $1,252,515 in the same period in 2002. $727,507 of the costs in the year to December 31, 2003 is for services from investment bankers and other advisers in support of fund raising. There were no similar costs in 2002. Other professional fees are for legal and financial services in relation to SEC filings and the ongoing support of the business. In the comparative period in 2002, the costs related to legal advice in connection with agreements with software suppliers and service providers as the Company was starting-up and in completing the reverse takeover (see Note 2 to the financial statements included within this filing).
Advisory fees for corporate financiers were $535,914 in the year to December 31, 2003, including $366,800 for the fair value of shares issued to advisers, compared with $1,388,073 in the same period in 2002 when the costs were related to the reverse acquisition (see Note 2 to the financial statements included within this filing).
We have expended $1,895,694 on software development costs since our development activities commenced, of which $132,205 was incurred in the year ended December 31, 2003. $1,763,489 was incurred through December 31, 2002. These costs, which include the external technical development time costs specific to this development, have been capitalized. We have reviewed development costs for any impairment and have concluded that $350,000 of costs incurred in relation to part of the development of the portal as we intend to re-write the software code to improve the Onlink4travel system. In addition, a provision of $272,000 has been made against costs incurred in relation to software links between our system and a third-party's proprietary software as it is now uncertain that these will utilized. These have been included as costs within general and administrative expenses. We expect to commence amortizing the remaining costs when the software is operational and ready for use.
Other costs of $473,049 for the year ended December 31, 2003 include $76,000 for the fair value of shares of common stock issued in connection with the conversion of accounts payable to convertible loans, $118,826 for insurance and $229,493 in relation to losses on exchange due to the movement of the US dollar against the British pound which has moved from an average rate of 0.63 $:(pound) when the costs were incurred to 0.56 $:(pound) for liabilities still outstanding as of December 31, 2003. Apart from negligible losses on exchange, there were no similar costs in the year ended December 31, 2002.
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Depreciation and amortization was $12,514 in the year ended December 31, 2003 and $13,762 in the comparative period in 2002 and related to computer equipment the majority of which was purchased in the quarter ended June 30, 2002. $2,916 was incurred on computer equipment during the year ended December 31, 2003.
Year ended Year ended
December 31, 2003 December 31,
2002
$ $
Loss from operations (6,509,863) (3,819,483)
Loss on extinguishment of debt (351,083) -
Gain on extinguishment of debt 42,800 -
Interest expense (359,630) (374,923)
------------------ -----------------
Loss before income taxes (7,177,776) (4,194,406)
Provision for income taxes - -
------------------ -----------------
Net loss attributable to shareholders (7,177,776) (4,194,406)
------------------ -----------------
During the year ended December 31, 2003, shares were issued to settle outstanding loans (see Note 12 to the financial statements included within this filing). An amount of $335,002 being the excess of the fair value of the shares over the value of the loans is included as a loss on extinguishment of debt. In addition, shares were issued to settle accounts payable. This gave rise to a loss on extinguishments of debt on certain accounts of $16,081 and a gain on other accounts of $42,800.
Interest expense of $359,630 for the year ended December 31, 2003 includes $68,434 interest incurred on convertible loan notes together with amortization of debt discount of $259,077 (see Note 5 to the financial statements included within this filing). Interest of $32,119 has been incurred on overdue accounts payable. Interest for the corresponding period in 2002 of $374,923 relates to $46,157 of interest incurred on convertible loan notes and $328,766 for a beneficial conversion feature (see Note 5 to the financial statements included within this filing).
The net loss attributable to common stockholders was $7,177,776 for the year ended December 31, 2003. We do not consider this indicative of any trend as we are still in the development stage. |
