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 March 31, 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
PRESIDENTS 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.)
460-1301Dove Street, Newport Beach, CA 92660
(Address of principal executive office)
Registrant's 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 [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the last practicable date.
Class Outstanding as of March 31, 2000
Common Stock, $.0001 22,809,400
TABLE OF CONTENTS
Heading Page
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets - March 31, 2000
And March 31, 1999 4
Consolidated Statements of Operations - three months
Ended March 31, 2000 and 1999 5
Consolidated Statements of Stockholders' Equity 6-7
Consolidated Statements of Cash Flows - three
Ended March 31, 2000 and 1999 8-9
Notes to Consolidated Financial Statements 10-14
Item 2. Management's Discussion and Analysis and
Result of Operations 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Security 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matter to a Vote of
Securities Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports of Form 8-K 17
Signatures 18
PART 1
Item 1. Financial Statement
The following unaudited Financial Statements for the
period ended March 31, 2000 have been prepared by the Company.
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 2000 and December 31, 1999
PRESIDENTS TELECOM, INC
(A Development Stage Company)
Balance Sheets
ASSETS
March 31, December 31,
2000 1999
(Unaudited)
CURRENT ASSETS
Cash $ 55,312 $ 8,339
Accounts receivable - 4,894
Total Current Assets 55,312 13,233
FIXED ASSETS (Note 3) 647,631 254,306
OTHER ASSETS
Notes receivable (Note 7) - -
Notes receivable -
related party (Note 4) - -
Deposits 34,968 34,968
Total Other Assets 34,968 34,968
TOTAL ASSETS $ 737,911 $ 302,507
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable -
related party (Note 2) $ 431,199 $ 131,599
Total Current Liabilities 431,199 131,599
STOCKHOLDERS' EQUITY
Common stock: 100,000,000
shares authorized of
$0.0001 par value 22,804,402
and 21,095,002 shares
issued and outstanding 2,280 2,110
Additional paid-in capital 2,484,154 785,619
Subscription receivable (150,000) (150,000)
Deficit accumulated during
the development stage (2,029,722) (466,821)
Total Stockholders' Equity 306,712 170,908
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 737,911 $ 302,507
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
May 4, 1987
For the Three Months Ended Through
March 31, March 31,
2000 1999 2000
REVENUES $ 57,760 $ - $ 93,877
EXPENSES
Depreciation expense 6,675 - 23,449
General and administrative 522,454 - 642,136
Loss on investment 15,000 - 15,000
Bad debt expense 1,076,532 - 1,443,014
Total Expense 1,620,661 - 2,123,599
NET LOSS $ (1,562,901) $ - $ (2,029,722)
BASIC LOSS PER SHARE $ (0.07) $ (0.00)
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Accumulated
Additional During the
Common Stock Paid-in Subscription Development
Shares Amount Capital Receivable Stage
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 - - - - (1,000)
Balance, December
31, 1997 10,000,000 1,000 - - (1,000)
Net loss for
the year ended
December 31, 1998 - - - - (1,450)
Balance, December
31, 1998 10,000,000 1,000 - - (2,450)
Common stock
issued for cash
at $0.15
per share 1,000,000 100 149,900 (150,000) -
Common stock issued for
purchase of Global E-Com
at $0.054
per share 10,000,000 1,000 540,662 - -
Contributed
capital - - 67 - -
Stock issued for
cash at $1.00
per share 90,002 9 89,991 - -
Stock issued
services at $1.00
per share 5,000 1 4,999 - -
Net loss for
year ended December
31, 1999 - - - - (464,371)
Balance, December
31, 1999 21,095,002 $ 2,110 $ 785,619 $ (150,000) $(466,821)
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Subscription Development
Shares Amount Capital Receivable Stage
Balance, December
31, 1999 21,095,002 $ 2,110 $ 785,619 $ (150,000) $ (466,821)
Common stock issued
for cash at $1.00 per
share (unaudited) 1,654,400 165 1,654,235 - -
Stock offering costs - - (120,695) - -
Common stock issued
for services at $3.00
per share (unaudited) 50,000 5 149,995 - -
Common stock issued
to acquire 100% of
Central America Fuel
Technology, Inc. on
March 15, 2000 5,000 - 15,000 - -
Net loss for the
three months ended March
31, 2000 (unaudited) - - - - (1,562,901)
Balance,
March 31,
2000 (unaudited) 22,804,402 $ 2,280 $ 2,484,15 $(150,00 ) $ (2,029,722)
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
May 4, 1987
For the Three Months Ended Through
March 31, December 31,
2000 1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,562,901) $ - $ (2,029,722)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 6,675 - 23,449
Bad debt expense 1,076,532 - 1,443,015
Loss on investment 15,000 - 15,000
Common stock issued for
services - - 6,067
Changes in operating assets
and liabilities:
(Increase) decrease in
accounts receivable 4,894 - -
(Increase) decrease in
notes receivable (1,076,532) - (1,030,137)
(Increase) decrease in
deposits - - (750)
Net Cash Provided (Used) by
Operating Activities (1,536,332) - (1,573,078)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (400,000) - (443,290)
Net Cash Provided (Used)
by Investing
Activities (400,000) - (443,290)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - - -
Cash purchased in acquisition - - 6,776
Common stock issued for
subscription receivable - - (150,000)
Payment on note payable - - (8,881)
Proceeds from note payable -
related party 299,600 - 300,080
Common stock issued for
cash 1,683,705 - 1,923,705
Net Cash Provided
(Used) by Financing
Activities 1,983,305 - 2,071,680
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 46,973 - 55,312
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 8,339 - -
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 55,312 $ - $ 55,312
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
May 4, 1987
For the Three Months Ended Through
March 31, December 31,
2000 1999 2000
CASH PAID FOR:
Interest $ - $ - $ -
Taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $ 15,000 $ - $ 557,662
The accompanying notes are an integral part of these financial statements
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial statements
March 31, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Presidents
Telecom, Inc. is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, which is responsible
for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
a. Organization and Business Activities
The Company was organized May 4, 1987, under the laws of the
State of Nevada, as Energy Realty Corp. On July 31, 1992, the
name changed to Balcor International. On December 18, 1998, the
Company's name changed to Dimension House, Inc. On October 28,
1999, the corporate name was changed to Presidents Telecom, Inc.
The Company has obtained to sales of long distance services in Costa
Rica. The Company currently has minimal operations and, in accordance
with SFAS #7, is considered a development stage company
b. Common Stock
On May 5, 1987, the Company issued 2,500 shares of its no par
value common stock for $1,000 cash.
On September 2, 1998, the State of Nevada approved the Company's
restated Articles of Incorporation, which increased its capitalization
from 2,500 common shares of no par value stock to 25,000,000 common
shares of $0.0001 par value.
On September 2, 1998, the Company forward split it's common stock 500:1,
thus increasing the number of outstanding common shares from 2,500 shares
to 1,250,000 shares.
On December 18, 1998, the State of Nevada approved the Company's
restated Articles of Incorporation, which increased its capitalization
from 25,000,000 common shares to 100,000,000 common shares. The par
value remained unchanged at $0.0001.
Effective January 1, 1999, the Company forward split its common
stock of an 8:1 basis bringing the outstanding shares to 10,000,000 shares.
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Statement of stockholders' equity is presented retroactively considering
both the 500:1 and 8:1 forward common stock splits.
On October 2, 1999, the Company entered into a purchase agreement
to acquire 100% of equity interest of Global E-COM, S.A. (Global), a
Costa Rican telecommunications company from E-Vegas.COM. Inc., a Nevada
corporation, for 10,000,000 shares of authorized and unissued common stock.
The acquisition of Global was accounted for as a purchase per APB No. 16.
On March 15, 2000, the Company entered into a purchase agreement to
acquire 100% of Central America Fuel Technology, Inc. (Central) by
issuing 5,000 shares of its outstanding common stock. The acquisition
has been accounted for as a purchase.
c. Revenue Recognition Policy
The Company recognizes revenue upon delivery of the services by the
customer.
d. Basic Loss Per Share
The computations of basic loss per share of common stock are based
on the weighted average number of shares outstanding during the period
of the financial statements.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
f. Income Taxes
No provision for income taxes has been accrued because the Company
has net operation losses from inception. The net operating loss
carryforwards of approximately $100,000 at March 31, 2000 expire in
2019. No tax benefit has been reported in the financial statements
because the Company is uncertain if the carryforwards will expire unused.
accordingly, the potential tax benefits are offset by a valuation account
of the same amount.
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 2 - SHAREHOLDER LOAN
In October 1999, a shareholder and an officer advanced $40,480 and
$91,119, respectively, to the Company. The loans accrue no interest
and are unsecured. The loans are due December 31, 2000. In March of
2000, additional advances totaling $299,600 were made to the Company
to allow the Company to put money down on future acquisitions. This
amount is non-interest bearing, unsecured and due on demand.
NOTE 3 - FIXED ASSETS
Fixed assets at March 31, 2000 and December 31, 1999 consisted of the
following:
March 31, December 31,
2000 1999
(Unaudited)
Telecommunications equipment $ 671,080 $ 271,080
Less accumulated depreciation (23,449) (16,774)
$ 647,631 $ 254,306
Equipment was purchased in the acquisition of Global E-COM,
transferring equipment in October 1999. Telecommunications
equipment was depreciated over an 8 year life using the
straight-line method of depreciation. Office equipment
and furniture is depreciated over 5 years.
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 4 - NOTES RECEIVABLE - RELATED PARTY
The Company has related party accounts receivable consisting
of the following at March 31, 2000 and December 31, 1999:
March 31, December 31,
2000 1999
(Unaudited)
Presidents Group Corporation $ 328,200 $ -
E-Vegas.COM, Inc. 219,927 96,417
Allied Telecom 270,066 270,066
Less: allowance for bad debt (818,193) (366,483)
Total $ - $ -
The above companies are start-up companies and have minimal
cash flow, therefore, an allowance for bad debt was made for
the entire balances.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant operations to date, nor does it have an established source
of revenues sufficient to allow it to continue as a going concern. It
is the intent of the Company to expand the sales of its telephone long
distance services.
NOTE 6 - FOREIGN OPERATIONS
Business operations and services supplied by the Company are located
in Costa Rica S.A. and are subjected to all Costarican laws and regulations.
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 7 - NOTES RECEIVABLE
The Company has related party accounts receivable consisting
of the following at March 31, 2000 and December 31, 1999:
March 31, December 31,
2000 1999
(Unaudited)
Torres Mercedes $ 150,066 $ -
Telecom, Inc. 29,756 -
Access Network 200,000 -
International Computer
and Equipment Corp. 245,000 -
Less: allowance for bad debt (624,822)
Total $ - $ -
The above companies are start-up companies and have
minimal cash flow, therefore, an allowance for bad debt
was made for the entire balances.
Item 2. Management's 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 Company's 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.
Results of Operations the First Three Months of 2000
For the first quarter and the three months ended March 31,
2000 the Company had total operating expenses of $ 1,620,661
3for general and administrative expenses. There were no operations
in the first quarter of 1999. Management expects expenses to increase
significantly once the Company begins marketing its product.
Net Operating Loss
The Company has accumulated approximately 2,029,722 of net
operating loss carryforwards as of March 31, 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 three month period ended March 31, 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 Company's periodic report filings with the
Securities and Exchange Commission.
Part II
Item 1. Legal Proceedings
There are presently no other material pending legal proceedings to
which the Company or any of ots subsidiaries os 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.
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.
CENTRAL AMERICA FUEL TECHNOLOGIES, INC.
Dated: May 15, 2000
By:_____________________
Alexander Anderson, President
By:_____________________________
Robert Hogarth, Vice President
By_____________________________
Antal Markus, Secretary
3
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