UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 2
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-13725
ILINC COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0545043
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA 85018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 952-1200
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated file (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|
The number of shares outstanding of each of the registrant's classes of
Common Stock, as of October 12, 2004 was approximately 24,145,938, net of shares
held in treasury.
EXPLANATORY NOTE
Form 10-Q/A (this "2nd Amendment") amends the Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2004, filed on November 18, 2004
(the "Original Filing"). iLinc Communications, Inc. ("the Company" or "iLinc")
has filed this Amendment to revise Item 4 which revisions iLinc deems necessary
to clarify language used in Item 4 of the Original Filing. Pursuant to Rule
12b-15 under the Securities Exchange Act of 1934, as amended, the complete text
of Item 4 as amended is set forth below. The remainder of the Original Filing is
unchanged and is not reproduced in this Amendment. This Amendment speaks as of
the filing date of the Original Filing and reflects only the changes discussed
above. No other information included in the Original Filing, including the
Company's financial statements and the footnotes thereto, has been modified or
updated in any way. This Amendment should be read together with other documents
that iLinc has filed with the Securities and Exchange Commission subsequent to
the filing of the Original Filing.
ITEM 4. CONTROLS AND PROCEDURES
We evaluated the design and operation of our disclosure controls and
procedures as of September 30, 2004 to determine whether they are effective in
ensuring that we disclose the required information in a timely manner and in
accordance with the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and the rules and forms of the Securities and Exchange Commission.
Management, including our principal executive officer and principal financial
officer, supervised and participated in the evaluation. The principal executive
officer and principal financial officer concluded, based on their review, that
our disclosure controls and procedures, as defined by Exchange Act Rules
13a-14(c) and 15d-14(c), are effective and ensure that (i) we disclose the
required information in reports that we file under the Exchange Act and that the
filings are recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms despite the
material weakness identified by our independent registered public accountants
identified below and (ii) information required to be disclosed in reports that
we file under the Exchange Act is accumulated and communicated to the Company's
management, including our principal executive officer and principal financial
officer to allow timely decisions regarding required disclosure. The principal
executive officer and principal financial officer reached this conclusion after
giving consideration to the communications received from the Company's
independent registered public accountants on November 12, 2004, further
described below, because the existing internal disclosure controls and
procedures were effective in the manner described above. The Company's principal
executive officer and principal financial officer considered the following
factors in their determination that the internal controls and procedures were
effective in the manner described above despite the identified material
weakness:
o The small number of sales transactions processed by the Company during
period;
o The direct and individual oversight and review by accounting staff and
senior management, including the CEO and CFO, of almost all of the
transactions regardless of the transaction size;
o The integral involvement of all senior staff in each sales transaction
and the sign-off procedures that had been in place before the
identification of the weakness;
o The nature of the identified material weakness and the fact that it
related to a unique and isolated set of factors that were not likely
to arise again; and
o The changes to the accounting and reporting staff that had occurred
and been implemented during the prior quarter.
Additionally, the Company notes that changes in the sales order
documentation, approval and storage processes were implemented and changes were
made to further segregate the duties associated with the sales order process and
the corresponding revenue recognition process related to those sales orders.
Our internal controls were modified during the quarter ended September 30,
2004, as outlined below following the previously reported August 11, 2004
notification to the Company's Audit Committee of significant deficiencies in
accounting controls related to management oversight and proper segregation of
duties in the accounting department:
o The Company hired a new CFO and a new controller replacing the
interim-CFO and replacing the VP of Finance;
o The Company hired a new A/P clerk and added a dedicated A/R clerk to
supplement the accounting staff, further segregating functions to the
extent possible in a small organization;
o The Company restructured the roles of the new controller in
combination with a change in the reporting procedures for the A/P
clerk and A/R clerk to strengthen the reporting structures and
internal control procedures;
o The Company implemented new sign-off procedures for sales agreements
to require multiple party sign-off from both the sales and finance
departments; and
o The Company added to its CRM software the ability to gain access to
view sales contracts and recorded purchase information in that system
as well as the accounting systems.
Except as outlined above, no significant changes were made during the
quarter ended September 30, 2004 to our internal controls over financial
reporting that materially affected or were reasonably likely to materially
affect these controls subsequent to the date of their evaluation.
The Company's disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objectives, and the Company's principal
executive officer and principal financial officer have concluded that the
Company's disclosure controls and procedures provide reasonable assurance of
achieving their objectives. However, because of the inherent limitations in all
control systems no evaluation of controls can provide absolute assurance that
all control issues if any, within a company have been detected.
On November 12, 2004, the Company's independent registered public
accountants orally notified the Company's Audit Committee that they had
identified a material weakness regarding the Company's internal controls. The
material weakness noted was the lack of sufficient control over the sales order
and revenue recognition process. Management of the Company has informed the
Audit Committee that it is in the process of changing procedures to correct this
weakness. The Company is implementing a new procedure which requires a
documented secondary review of all sales orders to assure proper revenue
recognition and completeness of customer sales files.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: May 12, 2005 iLINC COMMUNICATIONS, INC.
By: /s/ James M. Powers, Jr.
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James M. Powers, Jr., Chairman of the Board of
Directors, Chief Executive Officer and President
By: /s/ David J. Iannini
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David J. Iannini, Senior Vice President and
Chief Financial Officer