UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
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 DECEMBER 31, 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 January 31, 2005 was approximately 24,145,938, net of shares
held in treasury.
--------------------------------------------------------------------------------
EXPLANATORY NOTE
Form 10-Q/A (this "Second Amendment") amends the Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 2004, filed on February
17, 2005 (the "Original Filing"). iLinc Communications, Inc. ("the Company" or
"iLinc") has filed this Second 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 Second Amendment.
This Second 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 Second 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 December 31, 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-15(e) and 15d-15(e), 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 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 disclosure. Our internal controls were modified during the
quarter ended December 31, 2004 as further discussed below in response to
notification of a material weakness.
The Company's disclosure and control systems 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
identified material weakness noted was a lack of sufficient control over the
sales order and revenue recognition process related to failure to communicate
changes on standard forms of customer contracts. In response to this
notification, during the period between November 12, 2004 and December 31, 2004,
the Company implemented steps to prevent failure to communicate changes in
standard forms of customer contracts in the future and strengthen the Company's
internal controls related to contract management and its impact on revenue
recognition. The Company has put procedures into place to prevent modification
of its standard form of software license agreements without due and proper
notice to all parties, including the Company's accounting group. Those steps to
correct and prevent this in the future include:
o New controls over the modification of electronic contracts
adding limited password protection;
o The electronic receipt of contracts from customers directly to
both the sales and accounting groups simultaneously;
o The numbering of contracts and order forms to provide a
stronger audit trail;
o The electronic storage of all customers' contracts providing
real-time access;
o The notification of the accounting department by the sales or
legal departments should modification occur; and
o Remedial training of the sales group on the impact of changes
to the software license agreement.
o A further segregation of duties was also implemented to better
control contract workflow as follows:
o A supervisor from the sales team must approve all sales orders
before they are accepted by the sales department, and a
supervisor from the accounting group must approve all orders
that exceed $10,000 in amount before they are accepted as a
valid sale of the company.
o An order processing clerk verifies that the appropriate
Customer and Company authorizations have been obtained;
o The approved sales order is transmitted to the customer
service department for order fulfillment;
o Notification of fulfillment of the order is sent to both the
sales and accounting departments; and
o Before revenue is recognized on any sales order, the
controller verifies that the sales order was properly approved
by the customer and the Company, verifies that changes, if
any, to the standard license agreement have been properly
documented in writing and in the customer's electronic file
and thereafter records revenue based upon the approved and
verified documentation.
The implementation of the foregoing steps and changes constitute
modifications to the Company's internal controls over financial reporting that
occurred during the quarter ended December 31, 2004. Except for the
implementation of these steps and changes, no changes were made during the
quarter ended December 31, 2004 to our internal controls over financial
reporting that materially affected or were reasonably likely to materially
affect these internal controls over financial reporting controls.
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: June 24, 2005 ILINC COMMUNICATIONS, INC.
By: /s/ JAMES M. POWERS, JR.
----------------------------
James M. Powers, Jr.,
Chairman of the Board of Directors,
Chief Executive Officer and President
By: /s/ DAVID J. IANNINI
------------------------
David J. Iannini, Chief Financial
Officer
CERTIFICATION
I, James M. Powers, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of iLinc
Communications, Inc., as amended;
2. Based on my knowledge, this quarterly report, as amended, does
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report, as amended;
3. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
material information relating to the registrant,
including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this report
is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the
end of the period covered by this report based on
such evaluation; and
c. Disclosed in this report, as amended, any change in
the registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting; and
4. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting
By: /s/ JAMES M. POWERS, JR.
----------------------------
James M. Powers, Jr.
Chairman of the Board, President and
Chief Executive Officer
June 24, 2005
CERTIFICATION
I, David J. Iannini, certify that:
1. I have reviewed this quarterly report on Form 10-Q of iLinc
Communications, Inc., as amended;
2. Based on my knowledge, this quarterly report, as amended, does
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report, as amended;
3. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
material information relating to the registrant,
including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this report
is being prepared;
b. Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the
end of the period covered by this report based on
such evaluation; and
c. Disclosed in this report, as amended, any change in
the registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting; and
4. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting
By: /s/ DAVID J. IANNINI
------------------------
David J. Iannini
Chief Financial Officer
June 24, 2005