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U.S. Securities & Exchange CommissionWashington, D.C. 20549

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FORM 10-QSB

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2000

|/ / | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------

Commission file number 0-25764

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OneLink Communications, Inc.(Exact name of small business issuer as specified in its charter)

|Minnesota(State or other jurisdiction
of incorporation or organization) |  | 41-1675041(IRS Employer
Identification No.)
|----------------------------------------------------------------------- |  | -------------------------------------------

10340 Viking Drive, Suite 150
Eden Prairie, MN 55344(Address of principal executive offices)

612-996-9000(Issuer's telephone number)

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Check
whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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 / /

APPLICABLE TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 9,693,404 shares of common stock
outstanding as of May 5, 2000 par value $.01 per share.

Transitional
Small Business Disclosure Format (check one); YES / /  NO /x/

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## 

OneLink Communications, Inc. Form 10-QSB Quarter Ended March 31, 2000

Table of Contents

|              |  |                                                                             |  | Page No.
|------------- |  | --------------------------------------------------------------------------- |  | --------
|PART I        |  | Financial Information                                                       |  | 3       
|Item 1.       |  | Financial Statements (Unaudited)                                            |  |         
|              |  | Balance Sheets at March 31, 2000 and December 31, 1999                      |  | 3       
|              |  | Statements of Operations for the three months ended March 31, 2000 and 1999 |  | 4       
|              |  | Statements of Cash Flows for the three months ended March 31, 2000 and 1999 |  | 5       
|              |  | Notes to Financial Statements                                               |  | 6       
|Item 2.       |  | Management's Discussion and Analysis or Plan of Operations                  |  | 7       
|PART II       |  | Other Information                                                           |  | 10      
|Item 1.       |  | Legal Proceedings                                                           |  | 10      
|Item 6.       |  | Exhibits and Reports on Form 8-K                                            |  | 10      
|SIGNATURES    |  | 11                                                                         
|Exhibit Index |  | 12                                                                         

2



## 

PART IFinancial Information

Item 1.  Financial Statements

OneLink Communications, Inc.   Balance Sheets

|                                                                                                                                                         |  | March 31,
2000 |             | December 31,
1999 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | -
|
|Assets                                                                                                                                                   | 
|Current assets:                                                                                                                                          |  |                |             |                   |  
|Cash and cash equivalents                                                                                                                                |  | $              | 3,205,704   |                   | $
|Trade accounts receivable, net of allowance for doubtful accounts of $10,276 in 2000 and 1999, respectively                                              |  |                | 237,932     |                   |  
|Computer parts and supplies, net of reserve for obsolescence of $2,374 in 2000 and 1999, respectively                                                    |  |                | 6,555       |                   |  
|Prepaid expenses                                                                                                                                         |  |                | 87,635      |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Total current assets                                                                                                                                     |  |                | 3,537,826   |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Property and equipment:                                                                                                                                  |  |                |             |                   |  
|Furniture and equipment                                                                                                                                  |  |                | 599,033     |                   |  
|TeleSmart equipment                                                                                                                                      |  |                | 350,161     |                   |  
|Product equipment                                                                                                                                        |  |                | 214,505     |                   |  
|Web based software                                                                                                                                       |  |                | 745,940     |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Total property and equipment                                                                                                                             |  |                | 1,909,639   |                   |  
|Accumulated depreciation and amortization                                                                                                                |  |                | (900,662    | )                 |  
|                                                                                                                                                         |  |                |             |                   |  
|                                                                                                                                                         |  |                | 1,008,977   |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Other assets:                                                                                                                                            |  |                |             |                   |  
|Long-term prepaid expenses                                                                                                                               |  |                | 817,806     |                   |  
|Deposits                                                                                                                                                 |  |                | 11,465      |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|                                                                                                                                                         |  |                | 829,271     |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Total assets                                                                                                                                             |  | $              | 5,376,074   |                   | $
|                                                                                                                                                         |  |                |             |                   |  
|Liabilities and Shareholders' Equity                                                                                                                     | 
|Current liabilities:                                                                                                                                     |  |                |             |                   |  
|Accounts payable                                                                                                                                         |  | $              | 272,743     |                   | $
|Accrued payroll and related taxes                                                                                                                        |  |                | 146,799     |                   |  
|Accrued expenses                                                                                                                                         |  |                | 168,366     |                   |  
|Deferred revenue                                                                                                                                         |  |                | 229,220     |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Total current liabilities                                                                                                                                |  |                | 817,128     |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Shareholders' equity:                                                                                                                                    |  |                |             |                   |  
|Common stock, par value $.01 per share, Authorized shares50,000,000; Issued and outstanding shares: 2000 and 19999,693,404 and 9,254,018, respectively |  |                | 96,934      |                   |  
|Additional paid-in capital                                                                                                                               |  |                | 15,261,828  |                   |  
|Stock subscription receivable                                                                                                                            |  |                | (226,852    | )                 |  
|Accumulated deficit                                                                                                                                      |  |                | (10,572,964 | )                 |  
|                                                                                                                                                         |  |                |             |                   |  
|Total shareholders' equity                                                                                                                               |  |                | 4,558,946   |                   |  
|                                                                                                                                                         |  |                |             |                   |  
|Total liabilities and shareholders' equity                                                                                                               |  | $              | 5,376,074   |                   | $
|                                                                                                                                                         |  |                |             |                   |  

See accompanying notes.

3



OneLink Communications, Inc.   Statements of Operations   (unaudited)

|                                                                  |  | Three months ended
March 31, |          
|----------------------------------------------------------------- |  | ---------------------------- | ---------
|
|Revenues                                                          |  | $                            | 520,470  
|Cost of revenues                                                  |  |                              | 300,055  
|                                                                  |  |                              |          
|Gross profit                                                      |  |                              | 220,415  
|                                                                  |  |                              |          
|Operating expenses:                                               |  |                              |          
|Selling                                                           |  |                              | 123,570  
|General and administrative                                        |  |                              | 477,906  
|Research and product development                                  |  |                              | 526,405  
|                                                                  |  |                              |          
|Total operating expenses                                          |  |                              | 1,127,881
|                                                                  |  |                              |          
|Operating loss                                                    |  |                              | (907,466 
|Interest income                                                   |  |                              | 46,806   
|Interest expense                                                  |  |                              | 0        
|Other income                                                      |  |                              | 50       
|                                                                  |  |                              |          
|Net loss                                                          |  | $                            | (860,610 
|                                                                  |  |                              |          
|Net loss per common share:                                        |  |                              |          
|Basic and Diluted                                                 |  | $                            | (0.09    
|                                                                  |  |                              |          
|Weighted average number of shares outstanding (Basic and Diluted) |  |                              | 9,516,027
|                                                                  |  |                              |          

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## 

OneLink Communications, Inc.   Statements of Cash Flows   (unaudited)

|                                                                            |  | Three months ended
March 31, |          
|--------------------------------------------------------------------------- |  | ---------------------------- | ---------
|
|Operating activities:                                                       |  |                              |          
|Net loss                                                                    |  | $                            | (860,610 
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                              |          
|Depreciation and amortization                                               |  |                              | 212,065  
|Warrants issued for services                                                |  |                              | 10,260   
|Net gain on sale of property and equipment                                  |  |                              | (50      
|Changes in operating assets and liabilities:                                |  |                              |          
|Accounts receivable, net                                                    |  |                              | 133,548  
|Computer parts and supplies, net                                            |  |                              | 549      
|Prepaid expenses and deposits                                               |  |                              | 17,115   
|Accounts payable and accrued expenses                                       |  |                              | (436,980 
|Deferred revenue                                                            |  |                              | 186,538  
|                                                                            |  |                              |          
|Net cash used in operating activities                                       |  |                              | (737,565 
|                                                                            |  |                              |          
|Investing activities:                                                       |  |                              |          
|Proceeds from sale of asset                                                 |  |                              | 50       
|Purchases of property and equipment                                         |  |                              | (105,865 
|                                                                            |  |                              |          
|Net cash used in investing activities                                       |  |                              | (105,815 
|                                                                            |  |                              |          
|Financing activities:                                                       |  |                              |          
|Proceeds from issuance of stock options                                     |  |                              | 2,030    
|Payments on contingent notes payable                                        |  |                              | (2,030   
|Proceeds from payment on stock subscription receivable                      |  |                              | 989      
|Proceeds from warrants excercised                                           |  |                              | 318,125  
|Payments on short-term and long-term notes payable                          |  |                              | 0        
|                                                                            |  |                              |          
|Net cash (used) provided by financing activities                            |  |                              | 319,114  
|                                                                            |  |                              |          
|Increase (decrease) in cash and cash equivalents                            |  |                              | (524,266 
|Cash and cash equivalents at beginning of period                            |  |                              | 3,729,970
|                                                                            |  |                              |          
|Cash and cash equivalents at end of period                                  |  | $                            | 3,205,704
|                                                                            |  |                              |          
|Supplemental Disclosures of Cash Flow Information:                          |  |                              |          
|Cash paid during the period for interest                                    |  | $                            | 0        
|Cash paid during the period for taxes                                       |  | $                            | 0        
|Noncash financing activities:                                               |  |                              |          
|Increase in accounts receivable for warrants exercised                      |  | $                            | 0        
|Common stock issued in exchange for long-term prepaid expense               |  | $                            | 860,848  

See accompanying notes.

5



OneLink Communications, Inc.   Notes to Financial Statements   March 31, 2000   (unaudited)

Note 1. Summary of Significant Accounting Policies.

Interim Financial Information

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and pursuant to the rules and
regulations of the U. S. Securities and Exchange Commission for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. Operating results for the three months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The accompanying financial statements and related notes should be read in conjunction with
the audited financial statements of the Company, and notes thereto, for the fiscal year ended December 31, 1999, included in the Company's Form 10-KSB for the year ended
December 31, 1999 and the Company's 1999 Annual Report to Shareholders.

The
financial information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results
of the interim periods presented.

Reclassifications

Certain prior year items have been reclassified to conform with the 2000 presentation. The reclassifications had no effect on net loss or shareholders' equity.

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Item 2.  Management's Discussion and Analysis or Plan of Operations

The accompanying management's discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited financial statements of the Company, and notes thereto, for the fiscal year ended
December 31, 1999, included in the Company's Form 10-KSB for the year ended December 31, 1999 and the Company's 1999 Annual Report to Shareholders.

Results of Operations

The following table sets forth certain Statements of Operations data as a percentage of revenues.

|                               |  | First
Quarter
2000 |   | First
Quarter
1999 |  
|------------------------------ |  | ------------------ | - | ------------------ | -
|Revenues                       |  | 100.0              | % | 100.0              | %
|Cost of revenues               |  | 57.7               |   | 59.6               |  
|Gross profit                   |  | 42.3               |   | 40.4               |  
|Operating expenses:            |  |                    |   |                    |  
|Selling                        |  | 23.8               |   | 21.4               |  
|General & administrative       |  | 91.8               |   | 66.1               |  
|Research & product development |  | 101.1              |   | 6.7                |  
|Total operating expenses       |  | 216.7              |   | 94.2               |  
|Other income                   |  | 9.0                |   | 0.9                |  
|Net loss                       |  | (165.4)            | % | (52.9)             | %

Change in Business Model

In the fourth quarter of 1999, the Company changed its business model to an application service provider (ASP) model as a result of the launch of its new
product, TeleSmart Web. In that quarter, the Company began to expense costs related to the TeleSmart Web product and related research and development. In the fourth quarter of 1999, the Company also
began to depreciate its investment in the TeleSmart Web product, which was developed during 1999. The change in the business model also has resulted in some other depreciation being recognized as
general and administrative expense rather than cost of revenues.

Revenues

The Company's revenues of $520,470 increased $42,926 or 9% for the three months ended March 31, 2000 compared to $477,544 for the three months ended
March 31, 1999. The increase in revenue is attributed to increased volumes in the Company's TeleSmart Data Services and increased product sales from the Company's new product, TeleSmart Web. In
the first quarter of 2000, the Company's TeleSmart Data Services service bureau revenues increased by approximately $43,000 compared to the first quarter of 1999. Product revenues increased by
approximately $21,500. Consulting revenues decreased approximately $22,000 for the three months ended March 31, 2000 compared to the same period in 1999. However, the Company signed two
additional consulting contracts in the first quarter of 2000.

Cost of Revenues

The Company's cost of revenues of $300,055 increased $15,210 or 5% for the three months ended March 31, 2000 compared to $284,845 for the three months
ended March 31, 1999. The increase in cost of revenues was primarily due to increased expenses in support of the product, which were partially

7



offset
by a decrease in the cost of revenues associated with the support of our consulting business. The increase in cost of revenues for TeleSmart Data Services was a result of increased operating
costs of approximately $37,000, mainly related to personnel and external consulting costs, partially offset by approximately $15,000 in depreciation that was included in cost of revenues in 1999 but
is no longer included in cost of revenues due to the change in business model. The product cost of revenues also increased by approximately $24,000 due to the recognition of a long-term
prepaid expense, which was partially offset by decreased personnel and external consulting costs in support of our products. Our cost of revenues for our consulting business decreased by approximately
$46,000 due to less cost for personnel and external consultants, related to billable projects.

The
Company's gross profit margin increased to 42.3% for the three months ended March 31, 2000 from 40.4% for the three months ended March 31, 1999.

Selling Expenses

The Company's selling expenses of $123,570 increased $21,506 or 21% for the three months ended March 31, 2000 compared to $102,064 for the three months
ended March 31, 1999. This increase was largely due to an increased number of personnel to support new product development, partially offset by a decrease in marketing expenses.

General and Administrative Expenses

The Company's general and administrative expenses of $477,906 increased $162,101 or 51% for the three months ended March 31, 2000 compared to $315,805
for the three months ended March 31, 1999. The increase resulted in part from increased professional fees of approximately $70,000 for legal fees associated with additional contracts and SEC
filings and increased consulting fees. There was also an increase in the depreciation expense by approximately $40,000. This was due in part to the new business model adopted in the fourth quarter of
1999, under which approximately $36,000 of the depreciation for operations was recognized as part of general and administrative expenses.

Research and Product Development Expenses

Research and development expenses of $526,405 increased $494,355 or 1542% for the three months ended March 31, 2000 compared to $32,050 for the three
months ended March 31, 1999. The increase was principally due to the expensing of costs relating to the TeleSmart Web product and related research projects due to the change in business model,
principally personnel and consulting expense. The change in the business model also resulted in the inclusion of approximately $153,000 of depreciation, mainly due to the depreciation of the TeleSmart
Web product, in research and product development expense in the first quarter of 2000, compared to only $3,000 in depreciation included in research and product development in the 1999 period.

Other Income and Expense

Interest income of $46,806 increased $42,547 or 100% for the three months ended March 31, 2000 compared $4,259 for the three months ended
March 31, 1999. The increase is a result of additional cash and cash equivalents held by the Company during the three-month period ended March 31, 2000.

The
Company had no interest expense for the three months ended March 31, 2000 compared to $21 for the same period in 1999. The Company paid in full outstanding bridge loans in
the first quarter of 1999.

8



Net Loss

The Company incurred a net loss of $860,610 for the three months ended March 31, 2000 compared to a net loss of $252,983 for the three months ended
March 31, 1999, an increase of $607,627 or 240%. The increase in the Company's net loss was attributed to increased research and product development for the current systems and future products.

Liquidity and Capital Resources

The Company had cash of $3,205,704 and working capital of $2,720,698 as of March 31, 2000. Cash used in operating activities during the three-month
period ended March 31, 2000 was $737,565. Cash used in investing activities was $105,865 for the purchase of property and equipment. In addition, in the first quarter of 2000, the Company
received approximately $318,000 from the exercise of outstanding warrants.

Management
believes that current cash levels with additional revenues to be generated from operations will be sufficient to support the Company's operating capital needs for the next
12 months, assuming the Company is able to generate sufficient revenues and control expenses during the next 12 months. Management's projections with respect to the Company's ability to
meet its working capital
requirements during the next 12 months are based upon: (i) generating sales that exceed the Company's fiscal 1999 sales; and (ii) avoiding any significant increase in expenses.
Failure to meet either of these objectives could have a material adverse effect on the Company's business.

Although
the Company believes it can increase its revenues and improve its cash flow, there are no assurances that it will be successful in doing so. In the event the Company decides
to seek additional financing, there is no assurance that additional capital will be available to the Company on acceptable terms if at all. In order to obtain additional capital, the Company may issue
equity securities at a price that would result in dilution to existing shareholders.

Forward Looking Statements

This Form 10-QSB contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934. All statements included herein that address activities, events or developments that the Company expects, believes or anticipates
will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive
strengths, goals, expansion and other such matters are forward-looking statements. Actual events may differ materially from those anticipated in the forward-looking statements. Important factors that
may cause such a difference include general economic conditions, changes in interest rates, increased competition in the Company's market area, acceptance by telecommunications customers and increased
regulation of the telecommunications industry in general. For additional information regarding these and other factors, see the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999 and other recent filings with the Securities and Exchange Commission.

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## 

PART II  Other Information

Item 1.  Legal Proceedings

The Company is not a party to any material legal proceedings.

Items 2. through 5.Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

|(a) |  | Exhibits                                     
|--- |  | ---------------------------------------------
|    |  | 11.  Computation of Earnings Per Common Share
|    |  | 27.  Financial Data Schedule                 
|(b) |  | Reports on Form 8-K                          
|    |  | None.                                        

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## 

OneLink Communications, Inc.

SIGNATURES

Pursuant to the registration requirements 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.

|                   |  | ONELINK COMMUNICATIONS, INC.
(REGISTRANT)
|------------------ |  | -----------------------------------------
|DATE: MAY 10, 2000 |  | By:                                      
|                   |  | By:                                      

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Exhibit Index

OneLink Communications, Inc.
Form 10-QSB

|Exhibit Number |  | Description                                              
|-------------- |  | ---------------------------------------------------------
|11             |  | Computation of Earnings Per Common Share                 
|27             |  | Financial Data Schedule (filed only in electronic format)

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