<PAGE>2
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
September 20, 2000
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VOIP TELECOM, INC.
(Exact name of registrant as specified in its charter)
NEVADA 94-3342064
(State of (Primary standard industrial (I.R.S. employer
Incorporation) classification code number) identification number)
1116-1030 West Georgia Street
Vancouver BC, V6E 2Y3
(604) 648-2833
(Address and telephone number of Registrant's
principal executive offices)
Sandy Anderson
1116-1030 West Georgia Street
Vancouver BC, V6E 2Y3
(604) 648-2833
(Name, address, and telephone number of Agent for Service of Process)
Copies To:
Jody M. Walker, Esq.
7841 South Garfield Way
Littleton, CO 80122
(303) 850-7637
(303) 220-9902 - facsimile
Approximate Date of Commencement of Proposed Sale to the Public:
Effective date of this Registration Statement
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1993, check the following box
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Amount of
Securities to be Shares to be Valuation Aggregate Registration
Registered Registered Per Share Valuation Fee
<S> <C> <C> <C> <C>
Common Shares(1) 3,379,002 $1.062 $3,588,500 $997.60
</TABLE>
(1) Represents common stock being registered on behalf of
Selling Security Holders
__________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>3
VoIP TELECOM, INC.
3,379,002 Common Shares
being registered on behalf of
selling shareholders
VoIP, through its subsidiaries, specializes in applying Voice Over the
Internet Protocol technology in the international long distance
market.
Nasdaq OTC Bulletin Board VOPT
Last reported sale price -
July 31, 2000 $1.062
We will not receive any cash or other proceeds in connection with the
subsequent sale by selling security holders.
Each selling security holder may be deemed to be an underwriter under
the Securities Act of 1933.
Consider carefully the risk factors beginning on page 8 in the
prospectus.
_________________________
Neither the Securities and Exchange Commission, nor any state
securities commission has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
_________________________
Date: September 20, 2000
<PAGE>4
TABLE OF CONTENTS
Summary of the Offering 5
Risk Factors 6
Limited Operating History
Need Additional Financing
Dependent on Third party vendors
No Active Trading Market
Selling Security Holders may be deemed Underwriters
We have made forward-looking statements
We may never meet NASDAQ requirements
VoIP 7
Use of Proceeds 12
Dilution 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Plan of Distribution 13
Management 13
Principal Shareholders 18
Market for Registrant's Common Stock
Description of Company Securities 19
Legal Matters 20
Reports 20
Financial Statements 20
<PAGE>5
SUMMARY OF THE OFFERING
Corporate History VoIP was incorporated May 4, 1987, under the laws
of the State of Nevada as Energy Realty Corporation. On July 31, 1993
VoIP's name changed to Balcor International and on December 18, 1998
the name was again changed to Dimension House, Inc. As of December
31, 1998 VoIP had no operation and was considered a development stage
company. On October 28, 1999 VoIP changed its name to Presidents
Telecom, Inc. Pursuant to an acquisition agreement and plan of
merger dated March 15, 2000, Central America Fuel Technology, Inc. was
merged into VoIP with VoIP as the successor corporation. Central was
a reporting company under the Securities Exchange Act of 1934 and VoIP
has continued to file all necessary reports.
On April 17, the name was changed from Presidents' Telecom, Inc. to
VoIP Telecom, Inc.
VoIP's executive office is located at 1116-1030 West Georgia Street,
Vancouver BC Canada V6E 2Y3. The telephone number is (604) 648-2833.
Outstanding
Securities There are presently outstanding 22,804,402 common
shares.
Operations VoIP offers Voice Over the Internet Protocol
technology in the international long distance market.
Sales by Selling
Security Holders We are registering common shares on behalf of selling
security holders in this prospectus. We are not
selling any common shares on behalf of selling
security holders and have no control or affect on
these selling security holders.
Use of Proceeds We will not receive any proceeds from the sale of
common shares by selling shareholders
Market for our
common stock There is a limited market for our common stock Our
common stock is quoted on the OTC Bulletin Board
under the symbol VOPT.
Transfer Agent Alexis Stock Transfer located acts as our transfer
agent.
RISK FACTORS
1. We have a limited operating history and have no certainty of
future operating results.
To date, our activities have been principally devoted to positioning
ourselves to achieve our business objectives. We have had no
significant operating revenue to date and expect to incur losses and
administrative expenses until we increase sales of our products or we
receive revenues from any of our proposed operations. To date, we
have an operating loss of approximately $2,715,010 for the period from
inception to June 30, 2000.
2. If we do not receive additional financing, we may not be able to
develop our business and you could lose your entire investment.
We require a significant amount of capital to continue planned
operations. Our ability to continue as a going concern is dependent
on our ability to secure an adequate amount of capital to finance
anticipated losses and planned principal operations.
3. We are dependent on third party vendors and may not be able to
obtain the necessary services in a cost effective manner.
We must contract with third party vendors for our operations. We
cannot assure you that we will be able to develop the necessary
strategic alliances on a cost competitive basis.
<PAGE>6
4. If our securities have no active trading market, you may not be
able to sell your common shares easily.
We do not have an active public market for our securities, nor can we
assure you that an active public market will ever develop.
Consequently, you may not be able to liquidate your investment in the
event of an emergency or for any other reason.
5. The selling security holders may have liability because of their
status as underwriters.
Under the Securities Act of 1933, the selling security holders will be
considered to be underwriters of the offering. The selling security
holders may have civil liability under Section 11 and 12 of the
Securities Act for any omissions or misstatements in the registration
statement because of their status as underwriters.
6. We have made forward-looking statements that may not prove to be
correct.
The statements contained in this prospectus that are not historical
fact are forward-looking statements, as the term is defined in the
Reform Act, which can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve
risks and uncertainties. The safe harbor provisions provided in
Section 27A of the Securities Act and Section 21E of the Exchange Act
do not apply to forward-looking statements made in connection with
this initial public offering. We have made the forward-looking
statements with Management's best estimates prepared in good faith.
Because of the number and range of the assumptions underlying our
projections and forward-looking statements, many of which are subject
to significant uncertainties and contingencies that are beyond our
reasonable control, some of the assumptions inevitably will not
materialize and unanticipated events and circumstances may occur
subsequent to the date of this prospectus.
These forward-looking statements are based on current expectations,
and we will not update this information other than required by law.
Therefore, the actual experience of VoIP, and results achieved during
the period covered by any particular projections and other forward-
looking statements, should not be regarded as a representation by
VoIP, or any other person, that we will realize these estimates and
projections, and actual results may vary materially. We cannot assure
you that any of these expectations will be realized or that any of the
forward-looking statements contained herein will prove to be accurate.
7. We may never meet the requirements to be quoted on NASDAQ. You
may not be able to sell your common shares easily.
If the trading price of our common stock is less than $5.00 per share,
trading in the common stock would also be subject to the requirements
of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers
who recommend low-priced securities to persons other than established
customers and accredited investors must satisfy special sales practice
requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the
purchaser's written consent prior to the transaction.
SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock", including the delivery, prior to
any penny stock transaction, of a disclosure schedule explaining the
penny stock market and its associated risks. Such requirements
severely limit the liquidity of the common stock in the secondary
market because few broker or dealers are likely to undertake such
compliance activities. Generally, the term penny stock refers to a
stock with a market price of less than $5.00 per share. A market in
our stock may never develop due to these restrictions.
<PAGE>7
--------------------------------------
SELLING SECURITY HOLDERS
--------------------------------------
VoIP shall register pursuant to this prospectus 3,379,002 common
shares currently outstanding for the account of the following
individuals or entities. The percentage owned prior to and after the
offering reflects all of the then outstanding common shares. The
amount and percentage owned after the offering assumes the sale of
all of the common shares being registered on behalf of the selling
security holders.
<TABLE>
<CAPTION>
Name Total Number Amount % Owned Number of % Owned
Owned Being Before Shares Owned After
Currently registered offering After offering offering
<S> <C> <C> <C> <C> <C>
R. Stuart Angus 20,000 20,000 .10% 0 0%
Joann Augsback 25,000 25,000 .12% 0 0%
Tammy Augsback 25,000 25,000 .12% 0 0%
Jack Augsback 27,000 27,000 .13% 0 0%
Shawn Balaghi 10,000 10,000 .05% 0 0%
Raymond Bauch 200,000 200,000 .97% 0 0%
Gerald Bergonzi 10,000 10,000 .05% 0 0%
Craig Bernstein 10,000 10,000 .05% 0 0%
Andrea Blau 5,000 5,000 .025% 0 0%
Theresa Boatman 15,000 15,000 .075% 0 0%
Betty Lou Brinkman 20,000 20,000 .10% 0 0%
Rita & Anthony Centore 10,000 10,000 .05% 0 0%
Isaac Chan-Kai 2,000 2,000 .01% 0 0%
Patricia Chan-Kai 24,000 24,000 .12% 0 0%
Peter Chen 30,000 30,000 .15% 0 0%
David Cohn 25,000 25,000 .125% 0 0%
Gary Doo 82,250 82,250 .40% 0 0%
Chrinter J. Ericsson 10,000 10,000 .05% 0 0%
Lonnie Franz 10,000 10,000 .05% 0 0%
Peter Gee 5,000 5,000 .025% 0 0%
Brent Brent K. Geistweidt 10,000 10,000 .05% 0 0%
Georgia and Robert
Gerren 10,000 10,000 .05% 0 0%
Beth Grando
And Laura Miller 8,500 8,500 .04% 0 0%
Tony Hamilton 30,000 30,000 .15% 0 0%
Flora Harris 10,000 10,000 .05% 0 0%
Paul Hughes 10,000 10,000 .05% 0 0%
William Ingate 5,000 5,000 .025% 0 0%
Tan Ching Khoon 300,000 300,000 1.45% 0 0%
Michael Laabs 10,000 10,000 .05% 0 0%
Beverley Lewis 10,000 10,000 .05% 0 0%
Phil Lewis 8,000 8,000 .04% 0 0%
Norman Lim 1,500 1,500 .01% 0 0%
Ricky Lui 1,500 1,500 .01% 0 0%
Marilyn Marlatt 15,000 15,000 .07% 0 0%
Peter Marlatt 10,000 10,000 .05% 0 0%
Stephen Mazer 10,000 10,000 .05% 0 0%
Terri Messner 500 500 .002% 0 0%
Roland Mueller 75,000 75,000 .36% 0 0%
Robert & Ellen Mulcahy 10,000 10,000 .05% 0 0%
Ong Kim Kait 550,000 550,000 2.66% 0 0%
Barbara Pantejo 20,000 20,000 .10% 0 0%
Daniel Phi 2,500 2,500 .01% 0 0%
Fred Purin 25,000 25,000 .12% 0 0%
Fred & Juanita Purin 15,000 15,000 .07% 0 0%
Paul Purin 550 550 .003% 0 0%
Jorge Rodriguez 7,000 7,000 .03% 0 0%
Murray & Dianne Rubin 10,000 10,000 .05% 0 0%
Bobby Sangiovanni 10,000 10,000 .05% 0 0%
Michael Sato 1,500 1,500 .01% 0 0%
Tony Seo 58,252 58,252 .28% 0 0%
Cheri Simon 2,000 2,000 .01% 0 0%
Kevin Steele 50,000 50,000 .24% 0 0%
Carolyn SStys 2,500 2,500 .01% 0 0%
Mark Stys 9,000 9,000 .04% 0 0%
Anh-Toan Tran 2,500 2,500 .01% 0 0%
Jon W. Urchistin 10,000 10,000 .05% 0 0%
Joanna Urchistin 10,000 10,000 .05% 0 0%
Wilma J. Urchisin, Trustee 10,000 10,000 .05% 0 0%
<PAGE>8
Douglas & Carol Watson 50,000 50,000 .24% 0 0%
Wayne Stefan 14,000 14,000 .07% 0 0%
Frances Weisberg 10,000 10,000 .05% 0 0%
Mike Wong 25,000 25,000 .12% 0 0%
Ricky Yeune 5,000 5,000 .02% 0 0%
Warren Zee 50,000 50,000 .24% 0 0%
James & Donita Zeller 7,000 7,000 .03% 0 0%
Chelverton Fund Ltd 200,000 200,000 .97% 0 0%
Lamm Industries 55,000 55,000 .27% 0 0%
Lee Tee Mui & Lee Tee Meng 50,000 50,000 .24% 0 0%
Pearl Jewel Ltd. 800,000 800,000 3.87% 0 0%
574080 BC LTD. 25,000 25,000 .12% 0 0%
OTC Live, Inc. 62,500 62,500 .30% 0 0%
The above table assumes the sale of all of the common shares being
registered on behalf of selling security holders.
</TABLE>
VoIP
VoIP was incorporated May 4, 1987, under the laws of the state of
Nevada, as Energy Realty Corporation. On July 31, 1993 VoIP's name
changed to Balcor International and on December 18, 1998 the name was
again changed to Dimension House, Inc. As of December 31, 1998 VoIP
had no operation and in accordance with SFAS #7 was considered a
development stage company. As of December 31, 1998 VoIP was
authorized 100,000,000 shares $.0001 par value of which 10,000,000
shares were outstanding.
On October 28, 1999 VoIP changed its name to Presidents Telecom, Inc.
Pursuant to an acquisition agreement and plan of merger dated as of
March 15, 2000 between VoIP then known as Presidents Telecom, Inc. and
Central America Fuel Technology, Inc., a Nevada corporation, all the
outstanding common shares of CAFT were exchanged for 5,000 restricted
common shares of VoIP.
Through subsidiaries, we deliver international long distance services
via flexible, server-based networks consisting of re-sale arrangements
with other long distance providers, various foreign termination
relationships, VoIP's own international servers and leased/owned
transmission facilities. Employing digital switching and
transmission technologies supported by comprehensive monitoring and
technical support personnel, we provide services in foreign countries
Subsidiaries.
On June 5, 2000, VoIP acquired 100% of the issued and outstanding
shares of International Communications and Equipment, Inc. in exchange
for 2,500,000 shares of VoIP's common stock. ICE is establishing an
international telecommunications network using the Voice Over Internet
Protocol. ICE has recently received approval for a Russian joint
venture, which will be serviced through a wholly-owned German
subsidiary using the latest in Clarent technology and equipment.
ICE was founded in 1996. Under a joint venture agreement negotiated
with the Crosna Group, a banking-satellite-telecom conglomerate, of
Moscow, a new company is being established for operations in Russia.
ICE shall own 50% of Crosna and shall be the managing venture partner.
The joint venture company will provide VoIP long distance carrier
serves for the 89 regional carriers serving the Russion Feeration over
a landline and satellite network. The initial VoIP equipment
configuration, already installed, will offer telephony long distance
calling services to people in Moscow, St. Petersburg, Yaroslavl,
Volgograd and outbound to other countries.
ICE also has commenced the establishement of a wholly owned subsidiary
in Germany, as an initial step in preparing for centralizing European
operations. The new company, ICE GmbH, headquartered in Potsdam is
to become the center of operations for European VoIP telephony
services for VoIP. ICE GmbH will be responsible for marketing,
operations and command center control of the VoIP Telecom networks
involving exchange carriers both within and between European
countries.
<PAGE>9
Through previous applications, ICE has received preliminary acceptance
for investment grants funded through Investions Bank des Landes
Brandenburg in the Federal Republic of Germany. The ILB will provide
government grant funding ranging between 30% and 100% of capital
invested and VoIP equipment installed by ICE into the
telecommunications market in Germany. These grants, expected to
average 43% will greatly assist in the rapid growth of operations in
Germany and throughout Europe.
ICE has commenced negotiations with several exchange carriers in
Germany to transport traffic to Russia, and has identified initial
contracts for approximately three million minutes per month outbound.
Once the network in Russia is in place, ICE will be able to carry this
traffic to fill the network capacity. Likewise, to facilitate smooth
operational flow termination arrangements for approximately five
million minutes monthly inbound traffic from Russia are being
established. Subject to equipment installation, over the next three
years ICE estimates achieving at least 500 million voice minutes per
year in Russia alone. ICE also has projects and /or alliances
pending in Malta, Thailand, Malaysia, Ukraine, Poland, The Lebanon,
Turkey, Cyprus, Syria, Jordan, Libya, Iran, Iraq, Egypt, Italy,
Greece, France, Norway, Azerbaijan and Georgia.
On June 5, 2000, VoIP acquired 100% of the issued and outstanding
shares of Access Network Limited in exchange for 4,000,000 shares of
VoIP's common stock. ANL is a telecommunications company formed in
early 1999 to establish a Voice Over Internet Protocol network in
various markets throughout Asia. VoIP has also committed itself to
funding ANL with $3,000,000 during 2000.
Access was developed in Singapore during 1999 for the purpose of
providing VoIP services in the Asia-Pacific Region. Over a short
period of time Access has forged strategic contacts with many telecom
companies, and even some Telcos. Through such connections, Accesss
has been operating VoIP servers for terminations in both Beijing,
China and Singapore using different types of platforms. Access is in
thhe process of installing more servers in China (Guangzhou) and in
several other South Asian centers. Access' expansion plan includes
India, Bangladesh, Viet Nam, Cambodia, Malaysia and Indonesia.
Under a joint-venture with Singapore entity, Tri-Cel T & T, Accesss
recently obtained a services-based operator license permitting the
company to operate VoIP services as well as international calling card
and resale business in Singapore. Also through Tri-Cel, Access is
seeking a permit to operate an Internet-based voice and data service
providing International Calling Card services in Singapore.
On April 24, 2000, VoIP entered into a letter of intent to purchase a
49% interest in Nex Telecom Co. Ltd. a company which has established
an Internet Protocol network servicing various markets throughout
southeast Asia for $2,000,000 in cash and 2,900,000 shares of VoIP's
common stock.
With headquarters in Seoul, NEX was formed in 1998 by Jaeil
Engineering Co., Ltd., a publicly traded South Korean industrial
enterprise, to provide a full complement of Internet voice and data
services. Nex is the first international VoIP telecommunications
company in Korea having its own network and service supporting
facilities. NEX currently supplies voice, data facsimile and
Internet-related VoIP telephone services over its own network, as well
as more enhanced Internet multimedia services via a wide range of
transmission media, including its own leased fiber optic cable,
satellite and wireless networks.
In January of 1999, NEX established the Pacific Asia Telecom Group and
is acting as a PATG hub. PATGH networks have been connected to NEX
partners in the United States, Cosmobridge and iBasis; Japan, China,
Hong Kong, the Philippines, Australia and New Qealand.
Rescinded Transactions.
On September 28, 1999 a Letter of Intent was entered into for VoIP to
acquire Global E-COMM, S.A., a Costa Rican telecommunication start-up
corporation in exchange for common stock. On October 15, 1999 the
shareholders approved a purchase agreement dated October 2, 1999
whereby VoIP acquired all of the outstanding common stock of Global E-
COMM, S.A. from E-Vegas.COM, Inc., a Nevada corporation for 10,000,000
shares of $.0001 par value common stock. Shortly thereafter, VoIP
<PAGE10>
sold 1,000,000 shares of common stock to a private party for
$150,000.00 in cash bringing the total shares outstanding to
21,000,000.
This transaction was rescinded as of May 15, 2000. Pursuant to the
rescission agreement
- VoIP returned 100% of the issued and outstanding shares of
common stock of Global E-COMM, SA to E-VEGAS.COM
- E-VEGAS returned 10,000,000 common shares of VoIP
- E-VEGAS provided remuneration to VoIP representing the
operating loss and all funds advanced to Global E-COMM, S.A. from
October 2, 1999, the date of acquisition.
On February 23, 2000, VoIP was acquired through a share exchange with
HIV-VAC, Inc., a Nevada company, on a 1:1 basis. On March 7, 2000,
VoIP executed a rescission agreement with HIV-VAC, Inc. to rescind the
transaction. On February 23, 2000, Debra Nicholson resigned as
president, secretary, treasurer and director and Anthony N. DeMint
became sole director, president, secretary, treasurer and the only
stockholder of record.
Voice over the Internet Protocol
We have established a relationship with Clarent Corporation of Redwood
City, California. Clarent is the manufacturer of VoIP switches and
servers. The Clarent system consists of an integrated hardware and
software product called the gateway that converts voice, fax and data
into packets that can be sent over Internet protocol networks, then
transmits these packets over the network. Network management and
back-office functions are processed by a centralized client/server
software package known as the command center. It includes
- the routing and pricing of calls
- user management
- gateway monitoring, and
- billing.
The Clarent system also requires the installation of a third party
relational database that stores operation support system data for a
network of Clarent gateways.
Circuit switching technology uses traditional telephone networks
inefficiently when it opens and maintains a dedicated line for every
call, regardless of the density of the information being transmitted.
The result is wasted bandwidth, as the end-to-end connection remains
in place even during those moments when no actual information is being
transmitted. Newer IP packet technology breaks the information down
into pieces, places them into electronic packets and then fills the
pipe with these packets of information. The packets not only fill
the pipe, but are also directed along the way by routers that read the
address information. They direct each packet along the fastest route
to the destination, where all of the pieces of information are
reassembled, ready for receipt by fax, computer or listener. All of
this takes place in only a fraction of a second.
Packet vs. Circuit switching.
To understand the difference between circuit switching and packet
switching, you have to visualize a highway between two cities.
Traditional telephone technology would dedicate or commit an entire
lane of the highway to one car for the duration of its trip. Packet
switching technologies, like the IP technology, fills all of the lanes
with traffic, with lines of cars in each lane. IP simply makes much
more efficient use of the transmission path.
There are only two fundamental ways to switch traffic in a network:
connection-oriented and connectionless. Connection oriented
technologies, of which circuit-switched public telephone network is
the best example, have a setup process at the beginning of a session
to determine the best way to handle the session. Once the session is
established, connection information is maintained for the duration of
the call. Users may or may not be directly involved in call setup,
and the session may be as ephemeral as a flow. However, maintaining
state information is common to all connection oriented systems.
In contrast, the Internet exemplifies connectionless technologies,
Both the endpoints and the network nodes send self-contained packets
of data called data grams by the most efficient route available at the
time they are processed. There is no notion of session, call or
<PAGE>11
flow. No state information is kept from data gram to data gram.
Since connectionless data transfer is simpler, it relies on end
stations to perform many necessary functions.
A customer phone call or fax is placed from an office or residence
which then is routed through a central office switch located normally
in a neighborhood within one to five miles from the caller. This
call then travels to the Public Switched Telephone Network where it is
processed onward to a Clarent gateway. A gateway converts the voice
or fax call to Internet language then sends it on its way. From
there it is processed through the world wide Internet system back to
another central office switch which then rings the other phone or fax
machine.
We will employ advanced information systems, including call data
collection and call data storage, linked to a proprietary reporting
system. We also will maintain comprehensive billing systems for
rapid and accurate customer billing. VoIP server facilities will be
linked to database reporting systems, which provide reports on a real-
time basis to determine the most cost-effective alternatives for
customer usage while managing gross margins by route.
We intend to provide international long distance service to as many s
150 foreign countries through a flexible network comprised of
- various foreign termination relationships
- international servers
- leased and owned transmission facilities, and
- resale arrangements with long distance providers.
International Switched Long Distance Service
We provide international switched long distance services through
switching and transmission facilities that automatically route calls
to circuits based on a predetermined set of routing criteria. Each
call typically originates on a local exchange carrier's network, and
is transported to the caller's domestic long distance provider, which
in turn carries the call to an international VoIP switch. An
international long distance provider picks up the call and sends it
directly or through one or more other long distance providers to one
of our corresponding switches operated in the country of destination.
Once the traffic reaches the country of destination, it is then routed
to the party being called through that country's domestic telephone
network.
International long distance companies typically can be categorized by
their use of switches and transmission facilities. The largest
global carriers, such as British Telecom, Deutsche Telecom, AT&T,
MCI/WorldCom and Sprint, primarily utilize owned transmission
facilities and generally use other long distance providers to carry
their overflow traffic. Since only very large carriers have
transmission facilities that cover the 200 plus countries to which
major long distance providers typically offer service, a significantly
larger group of long distance providers own and operate their own
switches. However, they rely solely on resale agreements with other
long distance carriers to terminate their traffic, or use a
combination of resale agreements and owned facilities to terminate
traffic.
We intend to enter into alliances, partnerships and joint ventures
with telecom facilities based firms and carriers on several
continents, and where viable to acquire telecom reseller operations.
We intend to offer leadership models, marketing support services and
financial support to our acquired telecom resellers and, to service
our allied facilities-based operating firms and carriers.
Marketing.
Together with our strategic partners, we market our services to large
global carriers and corporations seeking lower rates and overflow
capacity. In addition, we market our services to small and medium
sized long distance companies that do not have the critical mass to
invest in their own international transmission facilities or to obtain
volume discounts from the larger facilities-based carriers. We are
focusing on building customer bases in many countries through
acquisitions and partnerships, particularly in Europe and Asia.
VoIP's subsidiaries have entered into various joint venture agreements
and/or alliances with telecommunications entities in Europe, Asia, the
Middle East, Africa and Latin America. They will utilize hardware
<PAGE>12
(gateways, digital signal processors and routers) coupled with
existing fiber optic and satellite networks via both originating and
terminating facilities.
We will expand our network and services by deploying internet protocol
servers, initially to launch VoIP in many countries. The VoIP
network will provide our customer base and strategic partners with a
cost competitive service. Internet bandwidth will be procured and
VoIP equipment will be installed immediately in several countries
where existing Telecom traffic can be added to the VoIP Telecom
network. The VoIP Telecom network is expected to start in Germany,
Russia and China during the 3rd and 4th quarter of 2000 and soon
thereafter in Malta, Italy, The Lebanon, Poland, South and Southeast
Asia, where bilateral agreements and traffic commitments have been
established. We will deploy a standard model for our VoIP network in
a few countries first, then duplicate the service in other countries.
We will provide many services, including:
- Calling cards for ethnic populations
- High speed wireless and standard ISP service/diverse broadband
services
- Video conferencing via Internet and off-Net services
- Wholesale International Long Distance services
- 800 number access to international voice or data gateways for
IP products
- Enhanced services such as voice mail, voice conference, follow
me
- Internet E-commerce
Internet-specific features such as Unified Messaging can add
significantly to our revenue base. This includes voice mail, fax
mail, e-mail and paging, all of which can all be combined to provide
easy and efficient services to customers on both traditional wire line
devices as well as wireless devices:
- voice-mail can be transferred between nodes for customers who
travel
- mass faxing can also be conducted through the Internet with
very low cost. Recent developments make this a viable revenue source
of VoIP Telecom
- E-mail to voice conversion - using text to speech - allows non-
computer users to access electronic mail. Newer wireless devices
including GSM wireless phones and Personal Digital Assistants such as
the new Palm Pilot VII allow reception anywhere service has been set
up.
- Networked traffic routes via VoIP can be set up and generating
revenues in 60 to 90 days.
Management has developed strategic relationships with government
telecommunications agencies overseas which provide VoIP with the
ability to facilitate the negotiation, importation and deployment of
equipment. The introduction of new services can be made with each
step of expansion. VoIP intends to provide technical assistance via
remote access, in-country equipment vendor consultants and by trained
on-staff professionals.
We plan to be customer driven, by offering additional services to the
clients of our acquisitions and partnerships. These services
include:
- latest technology and quality products
- cost competitive rates
- solid accounting and billing.
Employees
VoIP at present has a staff of four full time employees. VoIP's
subsidiaries have an additional ten full time employees. We do not
anticipate we will hire additional full time employees. We may employ
part time employees.
<PAGE>13
Facilities. VoIP's executive office is located at 1116-1030 West
Georgia Street, Vancouver BC Canada V6E 2Y3. The telephone number is
(604) 648-2833. These premises are 650 square feet and are leased on
a monthly basis for a monthly lease payment of $1,496.49.
DILUTION
Further Dilution. We may issue additional restricted common and
preferred shares pursuant to private business transactions. Any sales
under Rule 144 after the applicable holding period may have a
depressive effect upon the market price of our securities and
investors in this offering.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
You should read this discussion together with the financial statements
and other financial information included in this prospectus.
Overview
For the six months ended June 30, 2000, VoIP purchased fixed assets of
$400,000 resulting in net cash used in investing activities of
$400,000.
For the six months ended June 30, 1999, VoIP had no investing
activities.
For the year ended December 31, 1999, VoIP purchased fixed assets of
$43,290 resulting in net cash used by investing activities of $43,290.
For the six months ended June 30, 2000, VoIP received proceeds of
$342,980 from a note-payable-related party and proceeds from a note
payable of $318,690. Additionally, VoIP received $2,163,705 from the
issuance of common stock pursuant to a private placement offering.
VoIP issued common stock issued for subscription receivable of
$150,000. As a result, VoIP had net cash provided by financing
activities of $2,635,998 for the six months ended June 30, 2000/
For the six months ended June 30, 1999, VoIP had no financing
activities.
For the year ended December 3, 1999, VoIP purchased cash in its
acquisition of $6,776, had common stock issued for subscription
receivable of $150,000 and made payment on note payable of $8,881.
Additionally, VoIP received $480 proceeds from note payable - related
party and received $240,000 from the sale of common stock. As a
result, VoIP had net cash provided by financing activities of $88,375
for the year ended December 31, 1999.
Results of Operations.
For the six months ended June 30, 2000, VoIP had a net loss of
$3,029,921 and VoIP generated revenues of $57,760 from its telecom
operation in Costa Rica. For the six months ended June 30, 2000, VoIP
issued stock for services valued at $881,888, had depreciation expense
of $158,381, loss on investment of $15,000 and bad debt expense of
$1,344,042 due to payments to subsidiaries. General and
administrative expenses were $1,570,258 and consisted of accounting of
$27,047, bank charges of $373, commissions of $108,978, consulting of
$82,067, legal of $334,500, management fees of $80,500, office expense
of $2,424, organization expense of $10,000, rent of $2,272, stock
transfer fees of $7,305 and underwriting fees of $29,305.
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 VoIP to successfully meet its cash and
<PAGE>14
working capital needs, the ability of VoIP to successfully market its
product, and other risks detailed in VoIP's periodic report filings
with the Securities and Exchange Commission.
The predecessor company, Energy Realty Corp., Balcor International,
and Dimension House, Inc., were largely dormant until the transaction
acquisition of Global E-COMM, S.A., in early October of 1999. Since
that time VoIP has acquired the net assets of Global E-COMM, S.A.,
totaling $696,799 and raised $150,000.00 through the sale of stock.
This transaction has been rescinded and VoIP had acquired three other
entities.
Additional outside capital funding of approximately $500,000 is
anticipated. VoIP is investigating the possibility of interim
financing, either debt or equity, or a combination thereof to, provide
expansion and market research. Although, management has not made any
firm arrangement or definitive agreements, it would consider private
funding or the placement of securities and/or a public offering.
Since VoIP is considered a development stage, concerns with minimal
existing revenues were it to experience substantial development in
putting its revenues sources in stream and is unable to secure public
financing from the sale of securities or from private lenders, VoIP
would have to secure some type of sale-leaseback financing on
equipment to be used in contracted building installations.
Net Operating Loss
VoIP has accumulated approximately $3,181,831 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 2019. In the
event of certain changes in control of VoIP, 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.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share" and
Statement of Financial Accounting Standards No. 129 "Disclosures of
Information about an Entity's Capital Structure." SFAS No. 128
provides a different method of calculating earnings per share than is
currently used in accordance with Accounting Principles Board Opinion
No. 15, "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted average number
of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution of securities that could share in
the earnings of an entity, similar to fully diluted earnings per
share. SFAS No. 129 establishes standards for disclosing information
about an entity's capital structure. SFAS No. 128 and SFAS No. 129
are effective for financial statements issued for periods ending after
December 15, 1997. Their implementation is not expected to have a
material effect on the financial statements.
`The Financial Accounting Standards Board has also issued SFAS No.
131, No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 130 establishes standards for reporting and display of
comprehensive income, its component and accumulated balances. Owners
and distributors to owners define comprehensive income to include all
changes in equity except those resulting from investments. Among other
disclosures, SFAS No. 130 requires that all items that are required to
be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that
displays with the same prominence as other financial statements. SFAS
No. 131 supersedes SFAS No. 14 "Financial Reporting for Segments of a
Business Enterprise." SFAS No. 131 establishes Standards on the way
that public companies report financial information about operating
segments in annual financial statements and requires reporting of
<PAGE>15
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and major
customer. SFAS No. 131 defines operating segments as components of a
company about which separate financial information is available that
is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Because of the recent issuance of
the standard, management has been unable to fully evaluate the impact,
if any the standard may have on future financial statement
disclosures. Results of operations and financial position, however,
will be unaffected by implementation of the standard.
Inflation
In the opinion of management, inflation will not have a material
effect on the operations of VoIP.
PLAN OF DISTRIBUTION
The selling security holders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by
the broker-dealer for our account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling security holders to
sell a specified number of such shares at a stipulated
price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling security holders may also sell shares under Rule 144
promulgated under the Securities Act, if available, rather than
under this prospectus.
The selling security holders may also engage in short sales
against the box, puts and calls and other transactions in our
securities or derivatives of our securities and may sell or
deliver shares in connection with these trades.
The selling security holders may pledge their shares to their
brokers under the margin provisions of customer agreements. If
a selling security holder defaults on a margin loan, the broker
may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the selling security holder may arrange
for other broker-dealers to participate in sales. Broker-
dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be
negotiated.
The selling security holders and any broker-dealers or agents that
are involved in selling the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares. In some circumstances, we have agreed to
indemnify the selling security holders against certain losses and
liabilities, including liabilities under the Securities Act.
<PAGE>16
MANAGEMENT
Executive Officers and Directors
Our executive officers, directors, and key employees and their
business experience follows:
<TABLE>
<S> <C> <C>
Name Position Term
Alexander Anderson President/Director September 5, 1998
To present
Tan Sek Toh Director March 29, 2000
To present
J K Berscht Director June 2000 to
present
Alexander Anderson, age 52, President/Director
Mr. Anderson has been an officer and director since September 5, 1998.
Mr. Anderson is a veteran of 30 years in the Financial Service
Industry. He had held senior positions in all aspects of Banking and
has specialized in serving the investment industry for the last 5
years. He has managed both retail and commercial branch operations
and more recently has operated as an officer and director of a
publicly traded telecommunications company specializing in providing
fiber optic services to Asia.
Tan Sek Toh, age 65 Mr. Tan has been a director of VoIP since April
2000. Mr. Tan received his academic degrees in the UK from
Loughborough University in 1960, and the Imperial College of Science
and Technology (London) in 1961. Mr. Tan was a mechanical engineer by
profession and retired from public life in 1980. He has held several
directorships in the private sector, including RACAL Electronics (S)
Pte. Ltd., Singapore from 1987 to 1995, and the privately-owned
Tswwassen Golf and Country Club in Vancouver, of which he was
president until 1991. Mr. Tan is currently he is the president of
APAC Telecommunications Corporation, Vancouver, which he founded in
1992 and Director of Tswwassen Golf and Country Club, Vancouver.
J K Berscht, age 61 Mr. Berscht has been a director of VoIP since
. From 1994 to 1996, Mr. Berscht was a director and vice present of
Claire Technologies, a high tech computer related company. During
that time, he was also president of Pamlico Gold, Inc., a nickel
exploration company. From 1996 to 1999, Mr. Berscht was the
president of Arimex Mining Corporation. From 1998 to 1999, Mr.
Berscht had worked as a consultant on:
Benin West Africa where he assisted in financing $10 million
exploration oil project offshore in Benin,
Tintan Trading, computer trading system,
Curion Ventures involving the financing of a Bakersfield CA gass
play
Skinvisible Medical
M W Medical
From 1999 to present, Mr. Berscht has been the vice president of
marketing for Enerplus Internaitonal Energy Limited, an oil and gas
properties management firm.
In 1958 Mr. Berscht studied Senior Matriculation at Mount Royal
College in Calgary, Alberta. He received his associate degree in
business administration in 1960 from Mount Royal Junior College and
earned an honors degree in business administration from the University
of Western Ontario in London, Ontario. Mr. Berscht is a registered
representative, a general securities representative. He has obtained
has Series 63 license, securities principal series 24 license, is a
member of the Society of the American Institute of Mining,
Metallurgical and Petroleum Engineers and qualified as an I F A in
Great Britain.
<PAGE>17
Executive Compensation
Mr. Anderson has a six month contract commencing April 2000 providing
for payment for services rendered at $10,000 per month and 50,000
options to purchase common shares of VoIP at $.25 per common share.
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of the common
stock of VoIP by each of VoIP's directors and executive officers, and
as a group. The beneficial owner has sole voting and investment power
with respect to the securities indicated.
Name and Position Title of Amount of Percentage
Address Class Shares
Alexander Anderson President Common 400,000 2%
16-1 Aspenwood Drive.
Port Moody, BC V3H4X8
Kenneth F. Martin N/A Common 2,500,000 12.1%
12865 NE 85th Street
Suite 362
Kirkland WA 98033
Michael Laidlaw Common 1,000,000 5%
55 Fallon Way
Isle of Dog
London, UK E14GUP
Tan Sek Toh Common 0 0%
#4 Keng Chin Road
#0201 Singapore 258707
J K Berscht Common 0 0%
1900-700 9th Avenue
South West Calgary T2P 3V4
-------------------
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security, whether through a
contract, arrangement, understanding, relationship, or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable community property laws.
We do not know of any arrangements, including any pledge by any
personnel, which would result in the change and control of VoIP.
Market for Common Equity and Other Shareholder Matters
Our shares trade on the OTC Bulletin Board under the symbol "VOPT"
with a Standard and Poors Cusip # 74101P107. The issue formerly
traded on the OTC Bulletin Board as Presidents' Telecom, Inc., symbol
"PRTE" and Dimension House, Inc., symbol "DHIE".
The recent high and low bids from the National Quotation Bureau were:
High Low
December 31, 1998 .05 .03
June 30, 1999 .03 .06
June 30, 1999 .05 .15
September 30, 1999 .15 .25
December 31, 1999 .15 .25
June 30, 2000 6.125 5.750
There are five broker-dealers listed as traders of VoIP stock.
- Sharp Securities
- Brockington Securities
- Hill-Thompson
- Herzog Securities
- Paragon Securities
<PAGE>18
These quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions
VoIP's shares will be subject to the provisions of Section 15(g) and
Rule 15g-9 of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), commonly referred to as the "penny stock" rule.
Section 15(g) sets forth-certain requirements for transactions
in penny stocks and title 15g-9(d)(1) incorporates the definition of
penny stock that is found in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security
that has a market price less the $5.00 per share, subject to certain
exceptions. Rule 3a51-1 provides that any equity security is
considered to be penny stock unless that security is: registered and
traded on a national securities exchange meeting specified criteria
set by the Commission; authorized for quotation from the NASDAQ stock
Market; issued by a registered investment company; excluded from the
definition on the basis of price (at least $5.00 per share) or the
issuer's net tangible assets; or exempted from the definition by the
Commission. If VoIP's shares are deemed to be a penny stock, trading
in the shares will be subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors, who generally are
persons with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security
and must have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules require the
delivery, prior to the first transaction, of a risk disclosure
document relating to the penny stock. A broker-dealer also must
disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price
information for the penny stocks held in account and information on
the limited market in penny stocks. Consequently, these rules may
restrict the ability of broker-dealers to trade and/or maintain a
market in VoIP's common stock and may affect the ability to
shareholders to sell their shares.
Dividend Policy
VoIP has not declared or paid cash dividends or made distributions in
the past, and VoIP does not anticipate that it will pay cash dividends
or make distributions in the foreseeable future. VoIP currently
intends to retain and invest future earnings to finance its
operations.
DESCRIPTION OF VoIP SECURITIES
VoIP is authorized to issue 100,000,000 common shares, par value
$.0001 par value common stock of which 22,804,402 were issued and
outstanding as of August 31, 2000. All shares of common stock have
equal rights and privileges with respect to voting, liquidation and
dividend rights. All shares of common stock entitle the holder
thereof to
- one non-cumulative vote for each share held of record on all
matters submitted to a vote of the stockholders;
- to participate equally and to receive any and all such
dividends as may be declared by the board of directors out of funds
legally available therefor; and
- to participate pro rata in any distribution of assets
available for distribution upon liquidation of VoIP. Stockholders of
VoIP have no preemptive rights to acquire additional shares of common
stock or any other securities. The common stock is not subject to
redemption and carries no subscription or conversion rights. All
outstanding shares of common stock are fully paid and non-assessable.
Transfer Agent
VoIP has designated Alexis Stock Transfer 42450 Bob Hope Drive #225,
Rancho Mirage, California 92270.
<PAGE>19
LEGAL MATTERS
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon by the law firm of Jody M. Walker,
Littleton, Colorado.
There is no litigation pending or, to our knowledge, threatened to
which the property of VoIP is subject or to which VoIP may be a party.
No such proceedings are known to be contemplated by governmental
authorities or any other parties.
REPORTS
Pursuant to the Rules and Regulations of the Securities and Exchange
Commission, we will provide our Investors with Annual Reports
containing audited financial statements, together with Quarterly
Reports containing unaudited financial statements and Interim Reports
containing information regarding relevant information about the
operations of VoIP.
FINANCIAL STATEMENTS
Unaudited balance sheet dated June 30, 2000
Unaudited statement of operations for the six months ended June 30,
2000 and 1999
Unaudited statement of cash flows for the six months ended June 30,
2000 and 1999
Notes to Unaudited Financial Statements
Jones, Jensen & Company Auditor's report dated March 25, 2000
Balance Sheet dated December 31, 1999
Statement of Operations for the years ended December 31, 1999 and 1998
Statement of Stockholders' Equity for the years ended December 31,
1999 and 1998
Statement of Cash Flows for the years ended December 31, 1999 and 1998
Notes to Financial Statements
<PAGE>20
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
----------- ----------
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 2,082 2,110
Additional paid-in-capital 10,504,840 785,619
Subscription receivable - (150,000)
Deficit accumulated during the
development stage (3,181,831) (466,821)
----------- ----------
Total Stockholders' Equity 7,325,091 170,908
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $8,657,169 $302,507
========== =========
<PAGE>21
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
From
For the For the Inception on
Six Months Ended Three months Ended May 4,
June 30, June 30, 1987 through
--------------- ------------------- June 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
REVENUES $57,760 $ - $ - $ - $ 93,877
------- -------- ------- ------- ---------
EXPENSES
Depreciation expense 158,381 - 151,706 - 175,155
General and administrative 1,570,258 - 1,047,803 - 1,689,940
Loss on investment 15,000 - - - 15,000
Bad debt expense 1,344,042 - 267,510 1,710,524
--------- ------- --------- -------- ---------
Total Expenses 3,087,681 - 1,467,019 - 3,590,619
--------- -------- -------- -------- --------
LOSS FROM OPERATIONS (3,029,921) - (1,467,019) - (3,496,742)
--------- -------- -------- -------- ---------
Other Income (expense)
Interest expense (18,202) - (18,202) - (18,202)
Interest income 65 - 65 - 65
Gain on disposition of
Assets 333,048 - 333,048 - 333,048
--------- ------- -------- -------- --------
Total Other Income
(Expense) 314,911 - 314,911 - 314,911
--------- ------ -------- -------- --------
NET LOSS $(2,715,010) $ - $ (1,152,108) $ - $(3,181,831)
=========== ====== ========= ======== ===========
BASIC LOSS PER SHARE $ (0.10) $ (0.00) $ (0.01) $(0.00)
=========== ====== ======== =======
</TABLE>
<PAGE>22
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception o
Six Months Ended Three Months Ended May 4,
June 30, June 30, 1987 through
---------------------- -------------------- June 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,715,010) $ - $(1,152,108) $ - $(3,181,831)
Adjustments to reconcile net loss to net
Cash used by operating activities:
Depreciation expense 158,381 - 151,706 - 175,155
Bad debt expense 1,344,042 - 267,510 - 1,710,525
Loss on investment 15,000 - - - 15,000
Common stock issued for services 1,040,487 - 886,888 - 896,554
Gain on disposition of assets (333,048) - (333,048) - (333,048)
Changes in operating assets and
Liabilities:
(Increase) decrease in accounts
receivable 4,894 - - - -
(Increase) decrease in notes
receivable (1,729,400) - (652,868) - (1,683,005)
(Increase) decrease in deposits 34,968 - 34,968 - 34,218
Increase (decrease) in accounts
Payable and accrued expenses 79,664 - 79,664 - 79,664
---------- --------- --------- --------- ---------
Net Cash Provided (Used) by
Operating Activities (2,100,022) - (717,288) - (2,286,768)
--------- -------- --------- -------- ---------
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 318,690 - 318,690 - 318,690
Cash purchased in acquisition - - - - 6,776
Common stock issued for subscription
Receivable 150,000 - 150,000 - -
Payment on note payable (339,377) - (339,377) - (348,258)
Proceeds from note payable-related party 342,980 - 43,380 - 343,460
Common stock issued for cash 2,163,705 - 633,598 - 2,553,705
---------- ------ --------- -------- ---------
Net Cash Provided (Used) by
Financing Activities $2,635,998 $ - $806,291 $ - $2,874,373
========== ====== ========= ======== ==========
</TABLE>
<PAGE>23
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Six Months Ended Three Months Ended May 4,
June 30, June 30, 1987 through
----------------- ----------------- June 30,
2000 1999 2000 1999 2000
---- ---- ----- ---- ------
<S> <C> <C> <C> <C> <C>
NET INCREASE (DECCREASE) IN
CASH AND CASH EQUIVALENTS $135,976 $ - $ 89,003 $ - $ 144,315
CASH AND CASH DQUIVALENTS AT
BEGINNING OF PERIOD 8,339 - 55,312 - -
-------- --------- ---------- --------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 144,315 $ - $144,315 $ - $ 144,315
========= ======== ======== ====== =========
CASH PAID FOR:
Interest $ - $ - $ - $ - $ -
Taxes $ - $ - $ - $ - $ -
NON-CASH FINANCINBG ACTIVITIES:
Common stock issued for acquisition of
Subsidiary $6,515,000 $ - $6,500,000 $ - $ 7,057,662
</TABLE>
<PAGE>24
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 Company's 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 rescission 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.
<PAGE>25
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Presidents Telecom, Inc.
(A Development Stage Company)
Newport Beach, California
We have audited the accompanying balance sheet of Presidents Telecom,
Inc. (a development stage company) as of December 31, 1999 and the
related statements of operations, stockholders' equity (deficit) and
cash flows for the years ended December 31, 1999 and 1998 and from
inception on May 4, 1987 through December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Presidents
Telecom, Inc. (a development stage company) as of December 31, 1999
and the results of its operations and its cash flows for the years
ended December 31, 1999 and 1998 and from inception on May 4, 1987
through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepare assuming that
the Company will continue as a going concern. As discussed in Note 5
to the financial statements, the Company is a development stage
company with no significant operating results to date, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in
Note 5. The financial statements do not include any adjustments that
might result from the outcome of the uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
March 25, 2000
F-1
<PAGE>26
PRESIDENTS TELECOM, INC
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
ASSETS
<S> <C>
December 31,
1999
------------
CURRENT ASSETS
Cash $ 8,339
Accounts receivable 4,894
----------
Total Current Assets 13,233
----------
FIXED ASSETS (Note 3) 254,306
----------
OTHER ASSETS
Notes receivable - related party (Note 4) -
Deposits 34,968
----------
Total Other Assets 34,968
----------
TOTAL ASSETS $ 302,507
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - related party (Note 2) 131,599
----------
Total Current Liabilities 131,599
----------
STOCKHOLDERS' EQUITY
Common stock: 100,000,000 shares authorized of
$0.0001 par value 21,095,002 shares issued
and outstanding 2,110
Additional paid-in capital 785,619
Subscription receivable (150,000)
Deficit accumulated during the development stage (466,821)
----------
Total Stockholders' Equity 170,908
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 302,507
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>27
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From
Inception on
May 4, 1987
Through
December 31, December 31,
1999 1998 1999
------ ------ ---------------
<S> <C> <C> <C>
REVENUES $ 36,117 $ - $ 36,117
EXPENSES 500,488 1,450 502,938
---------- -------- ---------
NET LOSS $ (464,371) $ (1,450) $ (466,821)
========== ======== =========
BASIC LOSS PER SHARE $ (0.09) $ (0.00)
========== ========
WEIGHTED AVERAGE NUMBER
OF SHARES 5,259,096 1,250,000
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE>28
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Subscription Development
Shares Amount Capital Receivable Stage
-------- -------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
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 for services at $1.00
per share 5,000 1 4,999 - -
Net loss for the year ended
December 31, 1999 - - - - (464,371)
------------ --------- --------- ---------- -----------
Balance, December 31, 1999 21,095,002 $ 2,110 $785,619 $(150,000) $ (466,821)
============ ========= ========= ========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE>29
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
From
Inception on
May 4, 1987
Through
December 31, December 31,
1999 1998 1999
------ ------ --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (464,371) $ (1,450) $ (466,821)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 16,774 - 16,774
Bad debt expense 366,483 - 366,483
Common stock issued for services 5,067 - 6,067
Changes in operating assets and liabilities:
Increase (decrease) in accounts receivable (4,894) - (4,894)
Increase (decrease) in notes receivable 46,395 - 46,395
Increase (decrease) in deposits (750) - (750)
Increase (decrease) in current liabilities
and accrued interest (1,450) 1,450 -
---------- -------- ------------
Net Cash Provided (Used) by Operating
Activities (36,746) - (36,746)
---------- -------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (43,290) - (43,290)
---------- -------- ------------
Net Cash Provided (Used) by Investing
Activities (43,290) - (43,290)
---------- -------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash purchased in acquisition 6,776 - 6,776
Common stock issued for subscription
receivable (150,000) - (150,000)
Payment on note payable (8,881) - (8,881)
Proceeds from note payable - related party 480 - 480
Common stock issued for cash 240,000 - 240,000
---------- -------- ------------
Net Cash Provided (Used) by Financing
Activities 88,375 - 88,375
---------- -------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD - - -
---------- -------- ------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 8,339 $ - $ 8,339
========== ======== ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE>30
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception on
May 4, 1987
Through
December 31, December 31,
1999 1998 1999
------ ------ ---------------
<S> <C> <C> <C>
CASH PAID FOR:
Interest $ - $ - $ -
Taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for
acquisition of Global E-Com $ 541,662 $ - $ 541,662
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE>31
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the financial statements
December 31, 1999 and 1998
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 Rico. 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.
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.
F-7
<PAGE>32
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 as follows:
<TABLE>
<CAPTION>
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
<S> <C> <C> <C>
For the year ended
December 31, 1998 $ (1,450) 1,250,000 $ (0.00)
For the year ended
December 31, 1999 $ (97,887) 5,259,096 $ (0.02)
</TABLE>
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 December 31, 1999
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 re offset by
a valuation account of the same amount.
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.
F-8
<PAGE>33
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 3 - FIXED ASSETS
Fixed assets at December 31, 1999 consisted of the following:
1999
------
Telecommunications equipment $ 271,080
Less accumulated depreciation (16,774)
$ 254,306
Equipment was purchased in the acquisition of Global E-COM,
transferring equipment in October 1999. Telecommunications equipment
method of depreciation. Office equipment and furniture is depreciated
over 5 years.
NOTE 4 - NOTES RECEIVABLE - RELATED PARTY
The Company has related party accounts receivable consisting
of the following at December 31, 1999:
E-Vegas.COM, Inc. $ 96,417
Allied Telecom 270,066
Less: allowance for bad debt (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.
F-9
<PAGE>34
PRESIDENTS TELECOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 7 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS
The historical information contained herein has been
consolidated on a proforma basis. The purchase of GlobalE.com on
October 2, 1999 is described in Note 1. The purchase has been
presented as though it were effective January 1, 1998. All significant
accounting policies for Presidents Telecom, Inc. are the same as the
Company's as defined in
Note 1.
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1998
--------------------------------------------------------
Presidents
Telecom, Global Proforma Proforma
Inc. E-com Adjustments Combined
------------ ---------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
Cost of products sold - - - -
--------- -------- -------- ----------
Gross Margin - - - -
--------- -------- -------- ----------
Depreciation and
amortization - 5,271 - 5,271
General and
administration 1,450 3,117 - 4,567
--------- -------- -------- ----------
Total Operating
Expenses 1,450 (8,338) - (9,838)
--------- -------- -------- ----------
Operating Loss (1,450) (8,338) - (9,838)
--------- -------- -------- ----------
Net Loss $ (1,450) $ (8,338) $ - $ (9,838)
--------- -------- -------- ----------
</TABLE>
NOTE 8 - SUBSEQUENT EVENTS
During the first quarter of 2000, the Company entered into two letters
of intent, neither deal had been completed by March 31, 2000.
The Company has entered into a letter of intent with Access Network
Limited. The acquisition will be a stock for stock deal with the
Company acquiring 100% of the capital stock of Access Network Limited.
The Company has also entered into a letter of intent with
International Communication and Equipment Corporation. The
acquisition will be a stock for stock deal with the Company acquiring
100% of the capital stock of International Communications and
Equipment Corporation
F-10
<PAGE>35
4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Nevada Corporation Code grants to VoIP the power to indemnify the
officers and directors of VoIP, under certain circumstances and
subject to certain conditions and limitations as stated therein,
against all expenses and liabilities incurred by or imposed upon them
as a result of suits brought against them as such officers and
directors if they act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of VoIP and,
with respect to any criminal action or proceeding, have no reasonable
cause to believe their conduct was unlawful.
Our bylaws provide as follows:
VoIP shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of VoIP, by
reason of the fact that he is or was a director, officer, employee,
fiduciary or agent of VoIP or is or was serving at the request of VoIP
as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorney fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best
interest of VoIP and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in the best interest of VoIP and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
VoIP shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or
suit by or in the right of VoIP to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or
agent of VoIP or is or was serving at the request of VoIP as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
expenses (including attorney fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed
to be in the best interest of VoIP; but no indemnification shall be
made in respect of any claim, issue, or matter as to which such person
has been adjudged to be liable for negligence or misconduct in the
performance of his duty to VoIP unless and only to the extent that the
court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in view
of all circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which such court deems
proper.
To the extent that a director, officer, employee, fiduciary or agent
of VoIP has been successful on the merits in defense of any action,
suit, or proceeding referred to in the first two paragraphs of this
Article VII or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorney fees)
actually and reasonably incurred by him in connection therewith.
Any indemnification under the first two paragraphs of this Article VII
(unless ordered by a court) shall be made by VoIP only as authorized
in the specific case upon a determination that indemnification of the
director, officer, employee, fiduciary or agent is proper in the
circumstances because he has met the applicable standard of conduct
set forth in said first two paragraphs. Such determination shall be
made by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit, or
proceeding, or, if such quorum is not obtainable or even if obtainable
a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion or by the shareholders.
<PAGE>36
Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by VoIP in advance of
the final disposition of such action, suit, or proceeding as
authorized in this Article VII upon receipt of an undertaking by or on
behalf of the director, officer, employee, fiduciary or agent to repay
such amount unless it is ultimately determined that he is entitled to
be indemnified by VoIP as authorized in this Article VII.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled under the Articles of Incorporation, any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, and any
procedure provided for by any of the foregoing, both as to action in
his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased
to be a director, officer, employee, fiduciary or agent and shall
inure to the benefit of heirs, executors, and administrators of such a
person.
A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, fiduciary or agent
of VoIP or who is or was serving at the request of VoIP as a director,
officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any
liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not VoIP
would have the power to indemnify him against such liability under the
provisions of this Article VII.
Item 25. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the
common stock being registered hereunder other than underwriting
commissions and expenses are estimated below.
Registration fee $1,023.90
Printing expenses 5,000.00
Accounting fees and expenses 15,000.00
Legal fees and expenses 20,000.00
State securities law fees
and expenses 3,000.00
Stock Transfer Agent Fees 1,500.00
Miscellaneous expenses 2,000.00
---------
Total 47,523.90
=========
Item 25. Recent Sales of Unregistered Securities
On October 15, 1999 VoIP was authorized to issue 10,000,000 shares
of common stock to E-Vegas.COM, Inc., a Nevada corporation, pursuant
to a purchase agreement entered into October 2, 1999 and approved at a
Special Meeting of Shareholders held October 15, 1999. Shares were
issued in exchange for 100% of the equity interests of Global E-COMM,
S.A., a Costa Rican corporation. These common shares were later
rescinded during the six months ended June 30, 2000.
On or about October 17, 1999, 1,000,000 shares of VoIP's authorized
but unissued common stock was sold to Michael Laidlaw, an English
investor for $150,000.
In the fourth quarter of 1999, VoIP issued 5,000 common shares for
services valued at $1.00 per common share.
VoIP completed a private placement pursuant to Regulation D,
Rule 505/506 of the Securities Act of 1933, in the fourth quarter of
1999 (90,002 common shares for $90,002) and the first quarter of 2000
(2,288,000 common shares for $2,288,000) to non-affiliates. These
common shares were issued to not more than 35 non-accredited
investors. No general solicitation was used and the appropriate
documents were filed with the states.
On March 24, 2000, VoIP issued 50,000 shares for underwriting
services at a value of $150,000 pursuant to 4(2) of the
Securities Act of 1933.
<PAGE>37
On March 15, 2000, VoIP 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) of the Securities Act.
On May 15, 2000, VoIP issued 4,000,000 common shares valued at $1.00
in exchange for 100% ownership of Access Network Limited.
On June 5, 2000, VoIP issued 2,500,000 common shares, valued at $1.00
in exchange for 100% ownership of International Communications and
Equipment Corporation.
During the second quarter of 2000, VoIP issued 886,888 common shares
for finder fee services rendered in the acquisition of Access valued
at $1.00 for an aggregate value of $886,888.
The shares issued since March 15, 2000 were issued pursuant to an
exemption from registration under Rule 4(2) of the Securities Act of
1933. The issuances were made to sophisticated investors. All of
the securities were issued as restricted shares for investment
purpose and not with a view to distribute or resale.
Item 27. Exhibit Index.
<TABLE>
<S> <C>
(1) Not Applicable
(2.1) * Agreement and Plan of Merger between Presidents Telecom, Inc. and
Central America Fuel Technology, Inc.
2.2* Certificate of Merger between Presidents Telecom, Inc. and
Central America Fuel Technology, Inc.
2.3* Unanimous consent of Stockholder
(3) Articles of Incorporation dated
(3.1) Bylaws
(4) Specimen certificate for common stock
(5) Consent and Opinion of Malcolm Crawford regarding
legality of securities registered under this
Registration Statement and to the references to
such attorney in the prospectus filed
as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of HJ & Associates L.L.C.
(formerly Jones Jensen)
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule
(28) Not Applicable
</TABLE>
* Previously filed.
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
<PAGE>38
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation form the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, , the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, we shall treat each such post-effective amendment as a
new registration statement of the securities offered, and the offering
of the securities at that time shall be deemed to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
<PAGE>38
(b) to supplement the prospectus, after the end of the subscription
period, to include the results of the subscription offer, the
transactions by the underwriters during the subscription period, the
amount of unsubscribed securities that the underwriters will purchase
and the terms of any later reoffering. If the underwriters make any
public offering of the securities on terms different from those on the
cover page of the prospectus, we shall file a post-effective amendment
to state the terms of such offering.
(c) Not applicable.
(d) to provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
<PAGE>39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized
in Vancouver, B.C., as of the 20th day of September, 2000.
VoIP Telecom, Inc.
By /s/Alexander Anderson
------------------------
Alexander Anderson
President and Director
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated and
each of the undersigned persons, in any capacity, hereby severally
constitutes a majority of the Board of Directors.
<TABLE>
Signature Title Date
--------- ------ -----
<S> <C> <C>
/s/ Alexander Anderson
---------------------- CEO, CFO, Controller 9/20/00
Alexander Anderson Director
/s/ Tan Sek Toh
---------------------- Director 9/20/00
Tan Sek Toh
/s/ J.K. Berscht
---------------------- Director 9/20/00
J.K. Berscht
</TABLE>
