Item 1. FINANCIAL STATEMENTS.
RAPID
LINK, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(unaudited)
|
April
30,
|
October
31,
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 505,559 | $ | 496,306 | ||||
|
Accounts
receivable, net of allowance of $47,555 and
$53,584, respectively
|
1,101,789 | 1,090,954 | ||||||
|
Prepaid
expenses
|
16,623 | 36,537 | ||||||
|
Other
current assets
|
152,573 | 200,809 | ||||||
|
Total
current assets
|
1,776,544 | 1,824,606 | ||||||
|
Property
and equipment, net
|
897,370 | 273,390 | ||||||
|
Customer
lists, net
|
2,179,751 | 2,536,400 | ||||||
|
Goodwill
|
3,517,740 | 3,107,062 | ||||||
|
Other
assets
|
161,986 | 98,032 | ||||||
|
Deferred
financing fees, net
|
365,339 | - | ||||||
|
Total
assets
|
$ | 8,898,730 | $ | 7,839,490 | ||||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 1,561,682 | $ | 2,319,099 | ||||
|
Accrued
interest
|
278,208 | 227,037 | ||||||
|
Other
accrued liabilities
|
568,903 | 617,454 | ||||||
|
Deferred
revenue
|
199,033 | 66,113 | ||||||
|
Deposits
and other payables
|
77,896 | 77,106 | ||||||
|
Capital
lease obligations, current portion
|
291,793 | - | ||||||
|
Convertible
notes payable, current portion, net of debt discount of $0 and $151,515,
respectively
|
42,500 | 1,690,985 | ||||||
|
Convertible
notes payable to related parties, current portion
|
- | 1,000,000 | ||||||
|
Related
party notes payable, current portion
|
- | 50,000 | ||||||
|
Notes
payable, current portion
|
129,588 | - | ||||||
|
Net
current liabilities from discontinued operations
|
- | 1,162,000 | ||||||
|
Total
current liabilities
|
3,149,603 | 7,209,794 | ||||||
|
Capital
lease obligations, net of current portion
|
146,450 | - | ||||||
|
Convertible
notes payable, net of current portion
|
2,401,277 | 1,201,277 | ||||||
|
Convertible
notes payable to related parties, net of current portion
|
3,240,000 | 2,240,000 | ||||||
|
Notes
payable, net of current portion, net of debt discount of $344,944 and $0,
respectively
|
1,758,548 | - | ||||||
|
Total
liabilities
|
10,695,878 | 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; 69,847,444 and
65,161,544 shares issued and 69,835,422 and 65,149,522 shares outstanding
at April 30, 2008 and October 31, 2007,
respectively
|
69,848 | 65,162 | ||||||
|
Additional
paid-in capital
|
49,796,773 | 48,976,402 | ||||||
|
Accumulated
deficit
|
(51,608,899 | ) | (51,798,275 | ) | ||||
|
Treasury
stock, at cost; 12,022 shares
|
(54,870 | ) | (54,870 | ) | ||||
|
Total
shareholders' deficit
|
(1,797,148 | ) | (2,811,581 | ) | ||||
|
Total
liabilities and shareholders' deficit
|
$ | 8,898,730 | $ | 7,839,490 | ||||
See
accompanying notes to unaudited consolidated financial statements
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
Three
Months
Ended
April 30,
|
Six
Months
Ended
April 30,
|
|||||||||||||||
|
|
|
|
|
|||||||||||||
|
Revenues
|
$ | 3,450,350 | $ | 3,720,098 | $ | 7,463,829 | $ | 8,173,075 | ||||||||
|
Costs
and expenses:
|
||||||||||||||||
|
Costs
of revenues
|
2,323,353 | 2,561,496 | 5,039,124 | 5,950,264 | ||||||||||||
|
Sales
and marketing
|
193,406 | 307,391 | 426,293 | 619,916 | ||||||||||||
|
General
and administrative
|
1,063,053 | 841,698 | 1,880,754 | 1,857,316 | ||||||||||||
|
Depreciation
and amortization
|
268,432 | 235,619 | 486,721 | 478,143 | ||||||||||||
| 3,848,244 | 3,946,204 | 7,832,892 | 8,905,639 | |||||||||||||
|
Operating
loss
|
(397,894 | ) | (226,106 | ) | (369,063 | ) | (732,564 | ) | ||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Noncash
financing expense
|
(79,928 | ) | (284,473 | ) | (234,117 | ) | ||||||||||