Item 1. FINANCIAL STATEMENTS.
RAPID
LINK, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(unaudited)
|
January
31,
|
October
31,
|
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|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 258,393 | $ | 496,306 | ||||
|
Accounts
receivable, net of allowance of $57,565 and
$53,584, respectively
|
932,467 | 1,090,954 | ||||||
|
Prepaid
expenses
|
36,703 | 36,537 | ||||||
|
Other
current assets
|
154,745 | 200,809 | ||||||
|
Total
current assets
|
1,382,308 | 1,824,606 | ||||||
|
Property
and equipment, net
|
304,915 | 273,390 | ||||||
|
Customer
lists, net
|
2,350,600 | 2,536,400 | ||||||
|
Goodwill
|
3,107,062 | 3,107,062 | ||||||
|
Other
assets
|
95,388 | 98,032 | ||||||
|
Total
assets
|
$ | 7,240,273 | $ | 7,839,490 | ||||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 1,804,244 | $ | 2,319,099 | ||||
|
Accrued
interest (including $64,800 and $0, respectively, to related
parties)
|
325,158 | 227,037 | ||||||
|
Other
accrued liabilities
|
345,282 | 617,454 | ||||||
|
Deferred
revenue
|
245,684 | 66,113 | ||||||
|
Deposits
and other payables
|
62,565 | 77,106 | ||||||
|
Capital
lease obligations, current portion
|
9,140 | - | ||||||
|
Convertible
notes, current portion, net of debt discount of $37,879 and $151,515,
respectively
|
1,804,621 | 1,690,985 | ||||||
|
Convertible
notes payable to related parties, current
|
1,000,000 | 1,000,000 | ||||||
|
Related
party notes, current
|
50,000 | 50,000 | ||||||
|
Net
current liabilities from discontinued operations
|
1,162,000 | 1,162,000 | ||||||
|
Total
current liabilities
|
6,808,694 | 7,209,794 | ||||||
|
Capital
lease obligations, net of current portion
|
40,497 | |||||||
|
Convertible
notes, long-term
|
1,201,277 | 1,201,277 | ||||||
|
Convertible
notes payable to related parties, long term
|
2,240,000 | 2,240,000 | ||||||
|
Total
liabilities
|
10,290,468 | 10,651,071 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Shareholders'
deficit:
|
||||||||
|
Preferred
stock, $.001 par value; 10,000,000 shares authorized; none issued and
outstanding
|
- | - | ||||||
|
Common
stock, $.001 par value; 175,000,000 shares authorized; 65,161,544 shares
issued
|
65,162 | 65,162 | ||||||
|
Additional
paid-in capital
|
48,990,576 | 48,976,402 | ||||||
|
Accumulated
deficit
|
(52,051,063 | ) | (51,798,275 | ) | ||||
|
Treasury
stock, at cost; 12,022 shares
|
(54,870 | ) | (54,870 | ) | ||||
|
Total
shareholders' deficit
|
(3,050,195 | ) | (2,811,581 | ) | ||||
|
Total
liabilities and shareholders' deficit
|
$ | 7,240,273 | $ | 7,839,490 | ||||
RAPID
LINK, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
Three
Months Ended January 31,
|
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|
|
|
|||||||
|
Revenues
|
$ | 4,013,479 | $ | 4,452,977 | ||||
|
Costs
and expenses:
|
||||||||
|
Costs
of revenues
|
2,715,771 | 3,388,768 | ||||||
|
Sales
and marketing
|
232,887 | 312,525 | ||||||
|
General
and administrative
|
817,701 | 1,005,578 | ||||||
|
Depreciation
and amortization
|
218,289 | 242,524 | ||||||
|
Loss
on disposal of property and equipment
|
- | 10,040 | ||||||
| 3,984,648 | 4,959,435 | |||||||
|
Operating
income (loss)
|
28,831 | (506,458 | ) | |||||
|
Other
income (expense):
|
||||||||
|
Noncash
financing expense
|
(154,189 | ) | (367,885 | ) | ||||
|
Related
party noncash interest expense
|
- | (8,272 | ) | |||||
|
Interest
expense
|
(64,485 | ) | (71,224 | ) | ||||
|
Related
party interest expense
|
(65,269 | ) | (82,357 | ) | ||||
|
Foreign
currency exchange gain
|
2,324 | 1,508 | ||||||
|
Other
|
- | 2,103 | ||||||
| (281,619 | ) | (526,127 | ) | |||||
|
Net
loss
|
$ | (252,788 | ) | $ | (1,032,585 | ) | ||
|
Loss
per share:
|
||||||||
|
Basic
and diluted weighted average shares outstanding
|
65,149,522 | 51,169,972 | ||||||
|
Basic
and diluted loss per share
|
$ | (.00 | ) | $ | (.02 | ) | ||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
|
Three
Months Ended January 31,
|
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|
|
|
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|
Cash
flows from operating activities:
|
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