ONELINK CORP (OLNK) - Description of business

Company Description
Introduction ------------ OneLink Corporation. ("we," "our" and the "Company") is a business-to-business marketing and transaction processing company serving the global travel industry. We introduced, to our current hotel and North America based travel agency customers, the first integrated booking and financial settlement service for the non-airline travel sectors in December 2005 with our key suppliers, Sabre Travel Network, Amadeus, Hotels.com and PayPal, Inc. Initially targeting a growing $100 billion independent traveler market sector booked by travel agents, we expect to see distribution channel adoption due to the benefits of improved cash flow and reduced costs gained by all parties in the transaction. Our revenue will be earned from transaction fees paid by travel suppliers.The Company ----------- We were organized in Delaware on September 7, 2001 and operated as BSP ONElink, Inc. from September 10, 2002. We changed our name to One Link 4 Travel, Inc. in January 2004 and to OneLink Corporation in March 2006. On September 12, 2002, we acquired FS2 Limited, a company registered in the United Kingdom, which is now named Onelink4travel Limited and operates as our wholly owned subsidiary.During early 2004 we integrated into our system a proprietary system for small hotel and independent accommodation providers, integrated our system with the Sabre Global Distribution System and performed a successful proof of concept where we performed live hotel bookings. Subsequently, on July 19, 2004, we signed an agreement with the European arm of Sabre Travel Network ("Sabre"), a business unit of Sabre Holdings, to provide us with access to their worldwide audience of travel suppliers including thousands of hotel and rental car companies.On August 18, 2004, we signed an agreement with eBay, Inc. subsidiary, PayPal, Inc. ("PayPal"), a global financial services provider for consumers and businesses selling products and services over the Internet. PayPal will provide the payment mechanism in 45 countries for our integrated booking and settlement service for transactions booked between travel agents and travel suppliers. Additionally, on March 10, 2005, we signed processing, product integration and referral agreements with PayPal. The agreements, among other provisions, authorize us to offer PayPal as a payment option to travel agencies and travel industry providers located in the U.S. and Canada. With these new agreements, we expanded our commitment to PayPal as our primary payment mechanism for roll-out of our services, adding the U.S. and Canadian markets to the UK and Ireland.On April 8, 2005 we acquired The Call Center LLC ("TCC"), a marketing services company that provided telemarketing, customer service, payment collection and marketing survey services for major US corporate clients. We believe that the call center can provide us with a substantial sales and marketing capability to reach travel buyers, (consumers and travel agencies), and travel suppliers on a global scale.On May 5, 2005 we acquired Reservation Center, Inc. ("RCI") a 13 year old travel agency consortia (buying group) and 30 year old 24/7 reservation center service, with 13,000 hotel and 22,000 travel agent clients, in order to leverage existing contracts with RCI's travel agents, hotels and a number of travel industry relationships for the launch of our transaction processing service. RCI provides reservation center services on behalf of travel agency clients handling problems that its travelers may have, and handling after hours and overflow calls for travel arrangements. RCI also provides structured marketing programs for hotels that are targeted specifically to the travel agency channel. Revenues are generated from fees paid by hotel companies for participation in their annual hotel marketing program, which includes a CD and web site based hotel directory and various advertising and promotional programs, and from transaction fees for bookings through the RCI hotel portal. Additionally, RCI receives services revenue paid by travel agencies for its 24/7 call center services.During 2005, we completed sales of convertible debt and warrants in the aggregate principal amount of $8.4 million and received $0.8 million from the exercise of warrants. We used the proceeds to provide funding for the TCC and RCI acquisition costs, for roll-out of our transaction process service and for working capital.We have raised $0.6 million in 2006 from the exercise of warrants, the sale of equity and a note payable to provide funding for roll-out of our transaction process service, for the ongoing obligations related to the acquisitions and for working capital.Our corporate headquarters office is located at One Market Plaza, San Francisco, California, and our operations are located in Agoura Hills, California, Reno, Nevada, San Diego, California and Reading, United Kingdom. Our web site is located at www.onelinkcorp.com.The OneLink Service ------------------- Our OneLink service is designed to provide travel suppliers with a direct connection and integrated payment mechanism to enable business with travel agents worldwide. Through our technical, commercial and contractual design we have created a unique opportunity for suppliers of all sizes to sell their products on a pre-paid basis through travel agents worldwide, and to receive payment, often in advance of providing the product, in their own currency. Our service removes the need for suppliers to negotiate individual commercial agreements with individual travel agents, and removes the tracking and administration of commission payments to agents in a multiplicity of currencies. Our service offers access to a wide range of on-line bookable non-air travel products, all of which will be pre-paid. The travel agent will take payment up front from their customer in their currency, retaining their commission for the sale, and pay the balance to the supplier through our OneLink system.Our OneLink service connects the host reservation systems of travel suppliers with travel agencies via the Internet and proprietary networks around the world. We will use available transaction processing and financial systems to collect monies from travel agents in their local currencies and to effect payments to suppliers and in suppliers' local currencies. In short, OneLink is designed to streamline the financial settlement process and allow both travel suppliers and local travel agencies to gain access to a wider market.We will generate revenue through processing fees from the transaction of sales and payment for travel products across our network. We recruit travel suppliers directly and we have developed relationships with global distribution companies with existing technical interfaces to major global travel suppliers, as well as through appointed local in-country distributors, and in partnership with local travel and tourism organizations.OneLink is designed to enable an increase in the number and quality of on-line bookings made through global retail travel channels while improving cash flow and reducing distribution costs, ultimately resulting in lower prices for the consumer.The Opportunity --------------- Our OneLink service is designed to solve a significant (and presently un-addressed) problem in the enormous global travel and tourism industry, by facilitating the distribution and financial settlement of pre-paid non-air products through travel agents. We are targeting the non-airline travel segments and simulate the existing proven systems used by the airlines, which processed payment for approximately 500 million tickets in 2003, representing $220 billion in transactional value.Critical to the day-to-day operations of the global travel and tourism market is the ability to effectively execute booking and settlement transactions between travel suppliers and travel agencies. The world's airlines today have the only two successful and cost effective global financial settlement systems. Airline Reporting Corporation ("ARC") provides a service in the USA, and Billing and Settlement Plan ("BSP"), which is operated by the International Air Transport Association ("IATA"), operates in a 147 countries outside the USA. To date, no such system or service has been available on a similar global basis for the suppliers of non-air travel services such as car rental, rail travel, hotel accommodation, cruise travel, ferries, events, attractions and tour operators.There are many systems that provide only travel distribution and inventory management on behalf of non-air travel suppliers selling with and through travel agents, and some travel systems are capable of issuing tickets and vouchers. A few services provide funds collection and settlement between travel suppliers and agents or pay travel agents commissions on behalf of travel vendors. However, there are very few services that can provide travel vendors and agents a system that integrates both distribution and settlement in one seamless service. Furthermore, no single company currently provides a completely integrated service on a global scale.The Market ---------- According to the World Tourism Organization, the value of the global travel and tourism market in 2001 was $1.9 trillion, down slightly compared to 2000. However, even taking into account recent global socio-economic events, the industry's long-term growth rate is still estimated to be over 4% per annum. The U.S. tops the list of large international tourism spending countries with a market share of 12.7%, the rest of the world representing the remaining 87.3%. Of the top 15 international tourism spending countries in 2001, nine are in Europe with Germany and the UK ranked two and three behind the U.S.The OneLink service is designed to facilitate the distribution and financial settlement of pre-paid non-air products through the retail channel. We have targeted specific non-air travel sectors booked by travel agents. We estimate this market to be approximately $100 billion in 2007. The service connects travel suppliers, many of whom may never have been offered an affordable and integrated distribution and settlement service, with the world's premier travel agents that book and issue scheduled air tickets as well as the tens of thousands of additional travel agents whose primary focus is on the leisure sector.Our target agency market potentially comprises the 26,000 ARC agencies in the USA that are accredited to sell airline tickets, 11,000 agencies in the USA that focus on leisure sales, 55,000 IATA accredited agencies that operate in 147 countries outside the USA, and a further 45,000 leisure focused agencies outside the USA, making a total of 137,000 travel agencies worldwide.Background ---------- IATA and other providers, such as ARC, have for 30 years provided recognized financial settlement services to airline members and accredited travel agents in the travel industry. Agents can search for and book air tickets through the various Global Distribution Systems ("GDS") such as Sabre, Galileo, Amadeus and Worldspan. Agents issue the passenger tickets and take payment in full. Subsequently the airline financial settlement systems effect the settlement between the agent and the airline on which the booking was made. Although such systems have been extended to cover non-air products on an ad hoc and limited basis, the technical and commercial infrastructure of the organizations providing these services has meant that they have not been widely extended to the non-air travel sector. However, we believe that the demand for a similar service for non-air products to that enjoyed by the airlines is widespread.Today, most non-air travel products are sold through travel agents on a "referral" basis. The agent makes the booking on the customer's behalf some time in advance, expecting to be paid a commission by the supplier at some point after the booking has been fulfilled. The customer makes payment to the supplier on completion of the booking. This creates problems for both supplier and agent. The booking is not guaranteed as the customer may change the reservation, or may cut short his stay. The supplier has to track agent bookings and calculate commission based on actual stay as opposed to booked stay, thus causing a discrepancy between what the agent expects and what is finally received. The supplier has to physically pay commission to the agent with all of the administrative costs that generates often a small amount in a foreign currency. The agent finally receives payment (if at all) long after he did the work of making the booking. The result is that many agents will only make referral bookings on behalf of regular customers, or where the reservation results in other forms of booking income. Thus agents and suppliers are losing out on potentially large revenue opportunities. With the consumer trend towards customized vacations growing, these lost opportunities are likely to increase. The OneLink service is designed to provide agents and suppliers with the solution to these problems.We began our company as a result of marketing studies conducted by IATA which we believe showed considerable potential for an offering that provided the travel and tourism industry with a full "surf, look, book" service directly connected to industry fulfillment services. We entered into an operating agreement in June 2002 with IATA and received a license to use the intellectual property in their automated financial solution in return for license and royalty fees. During 2002 and 2003 over $6 million in capital and $4 million in services were invested in developing the OneLink proprietary technology, systems, operations and business processes, and in developing key industry distribution and marketing partners. In early October 2003, as disclosed in a Form 8-K that we filed with the SEC, IATA disputed our compliance with the agreement and contended that the agreement was terminated. We disputed IATA's termination, and, as a result, we re-evaluated our settlement service providers during late 2003 and 2004. We did not concur with IATA's claim on its termination of the agreement. Over the past two years we developed relationships and secured contracts with global distribution (Sabre Travel Network) and global payment (PayPal, Inc.) suppliers to enable delivery of our service. We completed development and commenced remaining systems integration and testing in December 2005 and are rolling out the service now.The OneLink System ------------------ Our system is a proprietary transaction processing system comprised of four basic features: 1) A computer portal that agents can access either over the Internet or through third party proprietary IP communications networks, which provides a central user interface and booking engine to search for and book a wide array of non-air travel products. 2) On-line interfaces to the reservation systems of non-air travel suppliers and distributors, and banks and other financial settlement systems providers. These are XML interfaces adopting OTA (industry) standards. 3) A central hub system that captures and reports details of every booking made by travel agents on suppliers. It creates the financial settlement instructions for monies to be collected from agents and paid to suppliers and generates the reports that enable suppliers and agents to track bookings and the status of payments. 4) A proprietary allocation and inventory system that enables us to locally host travel products on behalf of suppliers, such as hotels and guest houses that do not have their own on-line reservation systems. This is particularly relevant for smaller travel service providers who offer a unique local product but historically have been unable to distribute it through travel agents due to a lack of affordable technology.The Benefits to the Industry ---------------------------- We believe the benefits to travel suppliers and travel agents from use of our service will be substantial. Travel suppliers should receive the benefits of: o Improved cash flow through electronic payment o Reduced costs by receiving payment in local currency o Greater customer satisfaction through improved quality of transaction handling o Increased sales through a value added connection to travel agents worldwide o New methods to sell existing products o Reduced costs of completed bookings.Travel agents should receive the benefits of: o Improved cash flow through electronic payment o Improved profits through commission payments in local currency o Access to a supply of higher margin travel products o Reduced administration and back office costs o Increased supply and type of travel product to sell o Greater staff productivity and lower transaction costs through electronic booking.Competition ----------- On a global basis, there is no current competition for OneLink. The entry cost and time to launch for another venture to come into the market and compete globally would be extremely high. However, in certain market segments and geographical areas there are service providers who can provide one or more elements of the OneLink service. Part of our strategy will be to seek to work with these organizations on a complementary basis, leveraging their existing systems as part of the OneLink offering, and thus fulfilling our need for co-operative partner relationships as well as expanding each partner's revenue opportunities.Mission ------- Our mission is to provide the travel and tourism industry with a new channel of distribution that offers an end-to-end service from product display and inventory to financial settlement and fulfillment for non-airline travel vendors and travel agents.Strategic Overview ------------------ Our objective is to become the global provider of distribution and automated financial settlement services for non-air products to the leisure and business travel industries. Thousands of travel suppliers such as car rental, rail, tour operators, ferry and cruise, small to medium hotel and resort companies, event and attraction operators, will for the first time have the opportunity to sell and be paid electronically through a potential network of 137,000 travel agencies around the world. Our underlying business strategy is to establish a presence in every major non-air travel and tourism market. The OneLink Corporation business strategy is focused on driving early market advantage into a long term, sustainable market share by leveraging technology and network partners to accelerate access to suppliers and travel agents. The focus will be on a product offering that integrates the requirements of travel product distribution with those of financial settlement.The development and implementation strategy focuses on three key elements: o Bringing together a group of already successful enterprises that provide systems and services to the travel and tourism industry o Integrating existing systems and services that are operating to form a complete end to end distribution and settlement service o Utilizing proven e-commerce technologySystem Roll-out --------------- On December 1, 2005, we initiated live testing of our technology infrastructure which will support our service offering. The software testing was designed to ensure smooth performance of the various aspects of our sophisticated booking and settlement infrastructure. As part of the evaluation, we verified operational and data transfer links with many of our key suppliers including the Sabre Travel Network, Amedeus Global Travel Distribution and Hotels.com as well as PayPal, our online payment facilitator.After successful completion of the evaluation, we began introducing the service to US based travel agents who are members of the Company's CCRA International hotel marketing program. This live, fully-functional, but careful, introduction precedes full-scale launch to our 100,000 travel agent members, most of whom are based in North America. Suppliers who offer their products through us will receive settlement coverage in most major currencies that address travel destinations in Europe, North America, Australia, Asia and Japan. On March 9, 2006, we announced that IT Group, one of the largest combinations of affiliated agencies in the travel services industry, had adopted our booking and settlement portal, CCRAOneLink, for use by its 1,200 members and would roll out use of the portal during March 2006. On March 14, 2006, we announced that Outside Sales Support Network (OSSN), the No. 1 travel industry trade association representing home-based travel sellers, independent contractors and outside sales agents, will offer our CCRAOneLink.com portal to its 7,000-plus members within the next few weeks. On March 21, 2006, we announced that Vacation.com, North America's largest vacation selling network of travel agencies, will make our service available to their 6,000 members.Employees --------- As of December 31, 2005, we had 88 employees. We had 3 employees located in the United Kingdom, 5 in San Francisco, 13 in Reno, Nevada and 67 based in Agoura Hills, California. Certain other personnel have been contracted to us under consultancy agreements. None of our employees are covered by a collective bargaining agreement, nor have we experienced any work stoppages. We believe that our relations with our employees are good.Risk FactorsThe following represent some of the factors that create risk and uncertainty for our business and us. Our business will also be subject to the risks that affect many other companies, such as technological obsolescence, general economic conditions, geopolitical changes and international operations. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and our liquidity.The report of our independent auditors on our financial statements contains an explanatory paragraph on our ability to continue as a going concern.The report of our independent auditors contains an explanatory paragraph raising substantial doubt about our ability to continue as a going concern because of our operating losses and our dependence upon financing our operations through a series of private offerings of debt and equity securities. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.We are a development stage company with a limited operating history and a history of operating losses.Our limited operating history makes predicting future operating results difficult. We experienced a net loss of $6.1 million for 2004 and a net loss of $8.1 million for 2005. We have incurred significant quarterly and annual operating losses since our inception, and we may continue to incur quarterly and annual operating losses in the future. Although we have tested our system, we have not provided integrated distribution and automated financial settlement services to date. Companies without material revenues are subject to a substantially greater number of risks than companies that have demonstrated an ability to market their products or services and generate material sales from these products or services. In addition, our prospects must be considered in light of the risks and uncertainties encountered by companies in the early stages of development in new and rapidly evolving markets. There is no assurance that we will ever be profitable. Our ability to achieve profitability will depend on a number of factors, including, but not limited to, whether we: o Access additional capital for working capital, product development and sales and marketing efforts; o Conclude arrangements with third parties to provide global settlement services; o Acquire and retain travel suppliers; o Interest travel agents in our services; o Extend existing and develop new strategic partner relationships; o Attract and retain key personnel.; o Control our operating expenses; and, o Withstand competition in our marketplace.Our business strategy may not be successful and we may not successfully address these and other risks and uncertainties related to our limited operating history.We need additional financing to implement our business planWe will need to raise additional capital to implement our business plan. However, no assurance can be given that our fundraising efforts will be successful. If we are unable to obtaining additional financing, we will likely not be able to continue in business.Our product may fail to deliver the benefits that we believe will make it specialWe believe a special benefit of OneLink is its integrated financial settlement capability. However, there are many other channels for travel suppliers and travel agents to use. We may find our product has a lack of substantial market acceptance. The proposed marketing of our product has inherent risks as it is a new and untried product. We cannot accurately predict the acceptance of the product or the time frame in which any sales will be made. We have surveyed the market to get an indication of the potential, but actual results are unpredictable.We may fail to sign up sufficient travel supplier content to attract travel agents to use the systemWe believe our service will be successful when there is sufficient content on the system to attract agents to use OneLink on a regular basis. If we are not successful in signing up travel supplier content, then it may be more difficult to attract travel agents to use the system on a regular basis.The travel and tourism industry is highly competitiveOur operations will be conducted in a highly competitive industry and we will be a new entrant in an industry with many established companies. Accordingly, we could be considered to be at a competitive disadvantage. Although, we are not aware of any other companies that currently offer distribution and settlement services on a global basis, there are many established service providers in various geographical areas and different industry segments that offer travel-related services.If we are successful in obtaining additional equity financing, we will need to issue a substantial number of shares of common stock which will result in substantial dilution to existing stockholdersWe will need to raise substantial funding in the near future to carry out our business strategy. The price at which we will offer our common stock will depend on many factors, including the trading price of our common stock on the Over the Counter Bulletin Board, whether any delays are encountered in finalizing development of our system, initial market acceptance of our system, general economic and market conditions and many other factors that may be beyond our control. In any event, it may be expected that we will need to issue a substantial number of shares of our common stock in connection with any financing, the effect of which may result in a substantial dilution of the percentage ownership of our common stock by existing stockholders.We will be subject to certain risks associated with international operationsSome of our operations will occur outside of the United States. We face the risks inherent in international operations, including political unrest, terrorist actions, war or other hostilities, conflicting and changing laws and regulations, currency fluctuations, taxation, withholding requirements, the imposition of tariffs, and exchange controls or other restrictions. If we do not effectively manage these risks associated with our foreign operations, our business may suffer.There may be political and economic threats to the global travel and tourism marketThe global travel and tourism market is influenced to some degree by both political and economic events. If there continues to be global political unrest and the world's economies are not robust, then demand for OneLink services will likely suffer.Computer viruses may cause our system to incur delays or interruptionsOnce we implement the service, computer viruses may cause our systems to incur delays or other service interruptions and could damage our reputation and have a material adverse effect on our business, financial condition and operating results. The inadvertent transmission of computer viruses could expose us to a material risk of loss or litigation and possible liability. Moreover, if a computer virus affecting our system is highly publicized, our reputation could be materially damaged and our visitor traffic may decrease.Our charter documents and Delaware law may inhibit a takeover or change of control that stockholders may consider beneficialProvisions in our Certificate of Incorporation may have the effect of delaying or preventing a merger with or acquisition of us, or making a merger or acquisition less desirable to a potential acquirer, even where the stockholders may consider the acquisition or merger favourable. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include authorizing the issuance of "blank check" preferred stock. Our board of directors may issue, without a vote of our stockholders, one or more series of preferred stock with preferences and other rights, including potentially more than one vote per share, as determined by the Board.We are also subject to Section 203 of the Delaware General Corporation law, which, subject to exceptions, prohibits a Delaware corporation from engaging in any business combination with an interested stockholder for a period of three years following the date that the stockholder became an interested stockholder. The provisions of our Certificate of Incorporation, as well as Section 203 of the Delaware General Corporation Law, could discourage potential acquisition proposals, delay or prevent a change of control and prevent changes in our management.Future sales by existing stockholders could depress the market price of our common stockSales of a substantial number of shares of our common stock in the public market by our stockholders could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. As of December 31, 2005, we had 33,060,346 shares of common stock outstanding. Many of these share were originally issued as "restricted securities" under the Securities Act of 1933 and may only be publicly sold upon the earlier of 12 months following the sale (subject to the limitations contained in Rule 144 such as volume and timing) and the registration of such shares. The 12 month restriction on many of these shares has been satisfied, so these shares may be sold subject to the other restrictions that may still apply.Investors are not likely to receive dividends in the near futureWe 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.Our common stock may be classified as a "penny stock" under SEC rules and the market price of our common stock may be highly unstable.A developing public trading market exists on the Over the Counter Bulletin Board for our common stock which commenced in February 2003. Due to our limited history and operating losses, it would be extremely difficult to predict the market price of our common stock, and whether any stockholder would be able to sell their shares quickly or at an acceptable price particularly if trading in our stock is not active. Because our stock is not traded on the Nasdaq National Market or the Nasdaq Small Cap Market, if the market price of our common stock is less than $5 per share, the common stock is classified as a "penny stock." The price of our common stock is currently substantially below $5 per share. SEC Rule 15g-9 under the Securities Exchange Act of 1934 imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an "established customer" or an "accredited investor." This includes the requirement that a broker-dealer must make a determination that investments in penny stocks are suitable for the customer and must make special disclosures to the customers concerning the risks of penny stock. Many broker-dealers decline to participate in penny stock transactions because of the extra requirements imposed on penny stock transactions. Application of the penny stock rules to our common stock could adversely affect the market liquidity of the shares, which in turn may affect the ability of holders of our common stock to resell the shares at prices at or above the prices they paid.