UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly report ended June 30, 2000
or
( ) 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 000-28697
VOIP TELECOM, INC.
(Exact name of small business issuer as registrant as specified in charter)
Nevada 86-0880742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460-1301 Dove Street, Newport Beach, CA 92660
(Address of principal executive office)
Registrants telephone no., including area code (702) 866-5834
Check 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), Yes [X] No [ ] and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the last practicable date.
Class Outstanding as of June 30, 2000
Common Stock, $.0001 19,939,402
TABLE OF CONTENTS
Heading Page
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets June 30, 2000
And June 30, 1999 4
Consolidated Statements of Operations three months
Ended June 30, 2000 and 1999 5
Consolidated Statements of Stockholders Equity 6-7
Consolidated Statements of Cash Flows three
Ended June 30, 2000 and 1999 8-9
Notes to Consolidated Financial Statements 10-11
Item 2. Managements Discussion and Analysis and
Result of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Security 14
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matter to a Vote of
Securities Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports of Form 8-K 16
Signatures 17
PART 1
Item 1. Financial Statement
The following unaudited Financial Statements for the period ended March 31,
2000 have been prepared by the Company.
VOIP Telecom, Inc.
FKA Presidents Telecom, Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, December 31,
2000 1999
(Unaudited)
CURRENT ASSETS
Cash $ 144,315 $ 8,339
Accounts receivable -- 4,894
Total Current Assets 144,315 13,233
FIXED ASSETS, NET 1,598,100 254,306
OTHER ASSETS
Goodwill, net 6,914,754 --
Notes receivable - related party -- --
Deposits -- 34,968
Total Other Assets 6,914,754 34,968
TOTAL ASSETS $ 8,657,169 $ 302,507
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 61,462 $ --
Accrued expenses 18,202 --
Notes payable 1,117,212 --
Notes payable - related party 135,202 131,599
Total Current Liabilities 1,332,078 131,599
STOCKHOLDERS EQUITY
Common stock: 100,000,000 shares authorized of
$0.0001 par value 19,939,402 and 21,095,002
shares issued and outstanding 1,994 2,110
Additional paid-in capital 9,619,441 785,619
Subscription receivable -- (150,000)
Deficit accumulated during the development
stage (2,296,344) (466,821)
Total Stockholders Equity 7,325,091 170,908
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,657,169 $ 302,507
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
For the
Six months ended
June 30,
2000 1999
REVENUES $ 57,760 $ -
EXPENSES
Depreciation expense 158,381 -
General and administrative 684,771 -
Loss on investment 15,000 -
Bad debt expense 1,344,042 -
Total Expenses 2,202,194 -
LOSS FROM OPERATIONS (2,144,434) -
OTHER INCOME (EXPENSE)
Interest expense (18,202) -
Interest income 65 -
Gain on disposition of
assets 333,048 -
Total Other Income
(Expense) 314,911 -
NET LOSS $ (1,829,523) $ -
BASIC LOSS PER SHARE $ (0.10) $ (0.00)
For the
Three Months Ended
June 30,
2000 1999
REVENUES $ - $ -
EXPENSES
Depreciation expense 151,706 -
General and administrative 162,317 -
Loss on investment - -
Bad debt expense 267,510 -
Total Expenses 581,533 -
LOSS FROM OPERATIONS (581,533) -
OTHER INCOME (EXPENSE)
Interest expense (18,202) -
Interest income 65 -
Gain on disposition of
assets 333,048 -
Total Other Income
(Expense) 314,911 -
NET LOSS $ (266,622) $ -
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
From
Inception on
May 4
1987 through
June 30
2000
REVENUES $ 93,877
EXPENSES
Depreciation expense 175,155
General and administrative 804,453
Loss on investment 15,000
Bad debt expense 1,710,524
Total Expenses 2,705,132
LOSS FROM OPERATIONS (2,611,255)
OTHER INCOME (EXPENSE)
Interest expense (18,202)
Interest income 65
Gain on disposition of
assets 333,048
Total Other Income
(Expense) 314,911
NET LOSS $ (2,296,344)
BASIC LOSS PER SHARE
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders Equity
Common Stock
Shares Amount
Inception, May 4, 1987 - $ -
Common stock issued for cash 10,000,000 1,000
Net loss from inception on May 4,
1997 through December 31, 1997 - -
Balance, December 31, 1997 10,000,000 1,000
Net loss for the year ended
December 31, 1998 - -
Balance, December 31, 1998 10,000,000 1,000
Common stock issued for cash
at $0.15 per share 1,000,000 100
Common stock issued for
purchase of Global E-Com
at $0.054 per share 10,000,000 1,000
Contributed capital - -
Stock issued for cash at $1.00
per share 90,002 9
Stock issued for services at $1.00
per share 5,000 1
Net loss for the year ended
December 31, 1999 - -
Balance, December 31, 1999 21,095,002 $ 2,110
Additional
Paid - in Subscription
Capital Receivable
Inception, May 4, 1987 $ - $ -
Common stock issued for cash - -
Net loss from inception on May 4,
1997 through December 31, 1997 - -
Balance, December 31, 1997 - -
Net loss for the year ended
December 31, 1998 - -
Balance, December 31, 1998 - -
Common stock issued for cash
at $0.15 per share 149,900 (150,000)
Common stock issued for
purchase of Global E-Com
at $0.054 per share 540,662 -
Contributed capital 67 -
Stock issued for cash at $1.00
per share 89,991 -
Stock issued for services at $1.00
per share 4,999 -
Net loss for the year ended
December 31, 1999 - -
Balance, December 31, 1999 $ 785,619 $ (150,000)
Deficit
Accumulated
During the
Development
Stage
Inception, May 4, 1987 $ -
Common stock issued for cash -
Net loss from inception on May 4,
1997 through December 31, 1997 (1,000)
Balance, December 31, 1997 (1,000)
Net loss for the year ended
December 31, 1998 (1,450)
Balance, December 31, 1998 (2,450)
Common stock issued for cash
at $0.15 per share -
Common stock issued for
purchase of Global E-Com
at $0.054 per share -
Contributed capital -
Stock issued for cash at $1.00
per share -
Stock issued for services at $1.00
per share -
Net loss for the year ended
December 31, 1999 (464,371)
Balance, December 31, 1999 $ (466,821)
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders Equity (Continued)
(Unaudited)
Common Stock
Shares Amount
Balance, December 31, 1999 21,095,002 $ 2,110
Common stock issued for cash
at $1.00 per share 2,284,400 228
Stock offering costs - -
Common stock issued for services
at $3.00 per share 50,000 5
Common stock issued to acquire
100% of Central America Fuel
Technology, Inc. on March 15, 2000 5,000 -
Common stock issued for services
at $1.00 per share 5,000 1
Sale of Global E-Com (10,000,000) (1,000)
Common stock issued for
Access at $1.00 per share 4,000,000 400
Common stock issued for ICE
at $1.00 per share 2,500,000 250
Receipt of subscription receivable - -
Net loss for the six months
June 30, 2000 (unaudited) - -
Balance,
June 30, 2000 (unaudited) 19,939,402 $ 1,994
Additional
Paid In Subscription
Capital Receivable
Balance, December 31, 1999 $ 785,619 $ (150,000)
Common stock issued for cash
at $1.00 per share 2,284,172 -
Stock offering costs (120,695) -
Common stock issued for services
at $3.00 per share 149,995 -
Common stock issued to acquire
100% of Central America Fuel
Technology, Inc. on March 15, 2000 15,000 -
Common stock issued for services
at $1.00 per share 5,000 -
Sale of Global E-Com 1,000 -
Common stock issued for
Access at $1.00 per share 3,999,600 -
Common stock issued for ICE
at $1.00 per share 2,499,750 -
Receipt of subscription receivable - 150,000
Net loss for the six months
June 30, 2000 (unaudited) - -
Balance,
June 30, 2000 (unaudited) $ 9,619,441 $ -
Deficit
Accumulated
During the
Developement
Stage
Balance, December 31, 1999 $ (466,821)
Common stock issued for cash
at $1.00 per share -
Stock offering costs -
Common stock issued for services
at $3.00 per share -
Common stock issued to acquire
100% of Central America Fuel
Technology, Inc. on March 15, 2000 -
Common stock issued for services
at $1.00 per share -
Sale of Global E-Com -
Common stock issued for
Access at $1.00 per share -
Common stock issued for ICE
at $1.00 per share -
Receipt of subscription receivable -
Net loss for the six months
June 30, 2000 (unaudited) (1,829,523)
Balance,
June 30, 2000 (unaudited) $ (2,296,344)
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
For the
Six Months Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (1,829,523) $ -
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 158,381 -
Bad debt expense 1,344,042 -
Loss on investment 15,000 -
Common stock issued for services 155,000 -
Gain on disposition of assets (333,048) -
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable 4,894 -
(Increase) decrease in notes
receivable (1,729,400) -
(Increase) decrease in deposits 34,968 -
Increase (decrease) in accounts
payable and accrued expenses 79,664 -
Net Cash Provided (Used) by
Operating Activities (2,100,022) -
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (400,000) -
Net Cash Provided (Used) by
Investing Activities (400,000) -
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from note payable 318,690 -
Cash purchased in acquisition - -
Common stock issued for subscription
receivable 150,000 -
Payment on note payable (339,377) -
Proceeds from note payable -
related party 342,980 -
Common stock issued for cash 2,163,705 -
Net Cash Provided (Used) by
Financing Activities $ 2,635,998 $ -
For the
Three Months Ended
June 30
2000 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (266,622) $ -
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 151,706 --
Bad debt expense 267,510 --
Loss on investment -- --
Common stock issued for services 5,000 --
Gain on disposition of assets (333,048) --
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable -- --
(Increase) decrease in notes
receivable (652,868) --
(Increase) decrease in deposits 34,968 --
Increase (decrease) in accounts
payable and accrued expenses 79,664 --
Net Cash Provided (Used) by
Operating Activities (713,690) --
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets -- --
Net Cash Provided (Used) by
Investing Activities -- --
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from note payable 318,690 --
Cash purchased in acquisition -- --
Common stock issued for subscription
receivable 150,000 --
Payment on note payable (339,377) --
Proceeds from note payable -
related party 43,380 --
Common stock issued for cash 630,000 --
Net Cash Provided (Used) by
Financing Activities $ 802,693 $ --
From
Inception on
May 4
1987 through
June 30
2000
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $(2,296,344)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 175,155
Bad debt expense 1,710,525
Loss on investment 15,000
Common stock issued for services 11,067
Gain on disposition of assets (333,048)
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable --
(Increase) decrease in notes
receivable (1,683,005)
(Increase) decrease in deposits 34,218
Increase (decrease) in accounts
payable and accrued expenses 79,664
Net Cash Provided (Used) by
Operating Activities (2,286,768)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (443,290)
Net Cash Provided (Used) by
Investing Activities (443,290)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from note payable 318,690
Cash purchased in acquisition 6,776
Common stock issued for subscription
receivable --
Payment on note payable (348,258)
Proceeds from note payable -
related party 343,460
Common stock issued for cash 2,553,705
Net Cash Provided (Used) by
Financing Activities $ 2,874,373
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Six Months Ended
June 30
2000 1999
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 135,976 $ -
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,339 -
CASH AND CASH EQUIVALENTS AT
ENDOF PERIOD $ 144,315 $ -
CASH PAID FOR:
Interest $ - $ -
Taxes $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $ 6,515,000 $ -
For the
Three Months Ended
June 30
2000 1999
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 89,003 $ --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 55,312 --
CASH AND CASH EQUIVALENTS AT
ENDOF PERIOD $ 144,315 $ --
CASH PAID FOR:
Interest $ -- $ --
Taxes $ -- $ --
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $6,500,000 $ --
From
Inception on
May 4
1987 through
June 30
2000
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 144,315
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD --
CASH AND CASH EQUIVALENTS AT
ENDOF PERIOD $ 144,315
CASH PAID FOR:
Interest $ --
Taxes $ --
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $7,057,662
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial statements
June 30, 2000 and December 31, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 2000 and
1999 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Companys December 31,
1999 audited consolidated financial statements. The results of operations for
periods ended June 30, 2000 and 1999 are not necessarily indicative of the
operating results for the full years.
NOTE 2 - MATERIAL EVENTS
On May 15, 2000, the Company entered into a recission agreement with
E-Vegas, whereby the Company was returned its 10,000,000 shares of stock
previously issued to E-Vegas for Global-E-Com, resulting in a gain on
disposition of assets of $333,048.
On May 31, 2000, the Company issued 4,000,000 shares of common stock,
valued at $1.00 per share, in exchange for 100% ownership of Access Network
Limited. Goodwill of $4,065,167 was recorded as a result of the acquisition.
On June 5, 2000, the Company issued 2,500,000 shares of common stock,
valued at $1.00 per share, in exchange for 100% ownership of International
Communications and Equipment Corporation. Goodwill of $2,966,786 was recorded as
a result of the acquisition.
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
The following information should be read in conjunction with financial
statements and notes thereto appearing elsewhere in this Form 10-QSB.
Overview
The Company generated revenues of $57,760 in the first quarter of 2000 from
its telecom operation in Costa Rica.
The Companys current capital was provided by the sale of common stock in
the first quarter of 2000.
On March 1, 2000 the Company entered into an agreement to acquire Access
Network, Ltd., on a share exchange. The transaction is scheduled to close in the
second quarter.
On March 15, 2000 the Company completed a merger with Central American Fuel
Technologies, Inc., a Nevada corporation, whereby Presidents Telecom, Inc. was
the surviving corporation.
On May 15, 2000 the Company entered into a recission agreement with
E-Vegas, whereby the Company was returned its 10,000,000 shares of stock
previously issued to E-Vegas for Global E-Com, resulting in a gain on
disposition of assets of $333,048.
On May 31, 2000, the Company issued 4,000,000 shares of common stock,
valued at $1.00 per share, in exchange for 100% ownership of Access Network
Limited. Goodwill of $4,065,167 was recorded as a result of the acquisition.
On June 5, 2000 the Company issued 2,500,000 shares of common stock, valued
at $1.00 per share, in exchange for 100% ownership of International
Communication and Equipment Corporation. Goodwill of $2,966,786 was recorded as
a result of the acquisition.
Results of Operations the First Three Months of 2000
For the second quarter and the six months ended June 30, 2000 the Company
had total operating expenses of $ 581,533 for general and administrative
expenses. There were no operations in the second quarter of 1999. Management
expects expenses to increase significantly once the Company begins marketing its
product.
Net Operating Loss
The Company has accumulated approximately 2,296,344 of net operating loss
carryforwards as of June 30, 2000, which may be offset against taxable income
and income taxes in future years. The use of these losses to reduce future
income taxes will depend on the generation of sufficient taxable income prior to
the expiration of the net operating loss carryforwards. The carryforwards expire
in the year 2015. In the event of certain changes in control of the Company,
there will be an annual limitation on the amount of net operating loss
carryforwards, which can be used. No tax benefit has been reported in the
financial statements for the year ended December 31, 1999 or in the six month
period ended June 30, 2000 because there is a 50% or greater potential tax
chance that the carryforward will not be used. Accordingly, the potential tax
benefit of the loss carryforward is offset by a valuation allowance of the same
amount.
Inflation
In the opinion of management, inflation has not had a material effect on
the operations of the Company.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wishes to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those expressed on or implied by the statements, including, but not limited to,
the following: the ability of the Company to successfully meet its cash and
working capital needs, the ability of the Company to successfully market its
product, and other risks detailed in the Companys periodic report filings with
the Securities and Exchange Commission.
Part II
Item 1. Legal Proceedings
There are presently no pending legal proceedings to which the Company or
any of its subsidiaries or a party or to which any of its property is subject
and, to the best of its knowledge, no such actions against the Company are
contemplated or threatened.
Item 2. Changes in Securities
The Company completed a private placement pursuant to Regulation D, Rule
505/506 of the Securities Act of 1933, on March 24, 2000 selling 1,654,400
shares of common stock for $1,654,400 or $1.00 per shares to thirty-six
individuals. Shares were restricted.
On March 24, 2000 the Company issued 50,000 shares for underwriting
services at a value of $150,000 pursuant to 4(2) and 4(6) of the Securities Act
of 1933 on a restricted class.
On March 15, 2000 the Company issued 5,000 shares at a value of $3.00 per
chase ($15,000) to acquire 100% of Central American Fuel Technology, Inc. Shares
were issued pursuant to 4(2) and 4(6) of the Securities Act.
In April 2000 the Company issued 5,000 shares of common stock at $1.00 for
services.
May 15, 2000 the Company acquired Access Communications for 4,000,000
shares of common stock for $1.00 per share.
On June 5, 2000 the Company acquired International Communications and
Equipment for 2,500,000 shares of common stock for $1.00 per share.
All of the securities were issued as restricted shares for investment
purpose and not with a view to distribute or resale.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to be a Vote of Security Holders
None.
Item 5. Other Information
This item is not applicable to the Company.
Item 6. Exhibits and Reports on 8-K
a. Exhibit 27 Financial Data Schedule
b. * 8KA Filed February 28, 2000, Period Ending February 23, 2000
* 8K Filed March 8, 2000, Period Ending March 2, 2000
* 8K Filed March 21, 2000 Period Ending March 21, 2000
* 8KA Filed March 24, 2000, Period Ending March 24, 2000
* 8K Filed April 21, 2000, Period Ending March 31, 2000
* Previously filed.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
VOIP TELECOM, INC.
Dated: August 18, 2000
By:/S/ Alexander Anderson
Alexander Anderson, President
By:/S/ Robert Hogarth
Robert Hogarth, Vice President
By: /S/ Antal Markus
Antal Markus, Secretary
