FORM 10-KSB-A1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 33-12029-D
iDial Networks, Inc.
(Exact name of Company as specified in its charter)
formerly
Desert Springs Acquisitions, Inc.
Nevada 84-1043258
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
16990 Dallas Parkway Suite 106, Dallas, Texas 75248
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (972) 818-1058
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Yes[X] No[] (Indicate by check mark whether the Company (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Company was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)
Not[] (Indicate by check mark whether if disclosure of delinquent filers
('229.405) is not and will not to the best of the Company's knowledge be
contained herein, in definitive proxy or information statements incorporated
herein by reference or any amendment hereto.)
As of December 31, 1999, the aggregate number of shares held by non-affiliates
was approximately 15,465,133 shares. Due to the limited market for the
Company's securities, no estimate is being supplied herewith of the market value
for such securities.
As of December 31, 1999, the number of shares outstanding of the Company's
Common Stock was 18,542,500.
Exhibit Index is found on page 17
<PAGE>
PART I
Un-Numbered Introduction
This amended Form 10K-SB is filed to correct Item 4 of Part I as follows:
Item 4. Submission of Matters to a Vote of Security Holders.
Certain matters were submitted to shareholders and apporved on December 21,
1999:.
(1) To Ratify and Approve that certain plan of reorganization and
acquisition, Dated November 30, 1999, by which this corporation would acquire
Woodcomm International, Inc., a private Corporation, for issuance of 16,000,000
new investment shares of common stock.
(2) Approve filing of "Shelf Registration Statement" for issuance of up to
2,000,000 shares of common stock at offering price of not less than $3.00 per
share.
(3) Approve and Authorize a change of the corporate name, and change of
situs of the Corporation from Colorado to Nevada, as a part of this
Reorganization, to become and be iDial Networks Inc., a Nevada Corporation, or a
substantially similar name as may be available in Nevada.
(4) Re-Elect and empower the present Directors to appoint a new Board of
three, effective upon closing the transaction mentioned in Proposals Numbers
1-3, to then consist of the following three (3) Directors, to serve until the
next Annual Meeting of Shareholders or until their successors are elected and
qualified: Mark T. Wood, Klaus Scholz, and Edward Janusz.
In all other respects, this filing is unchanged.
Item 1. Description of Business.
(a) Historical Information. Desert Springs Acquisition Corp. ("We", "Our",
"Us" and sometimes the "Company") is a Colorado corporation (formerly Bartel
Financial Group, Inc) (BFG Colorado) organized October 3, 1986, as WTS III
Capital Corporation ("WTS"). WTS conducted a public offering of its securities
pursuant to a Registration Statement filed with the Denver Regional Office of
the Securities and Exchange Commission ("SEC") which was effective on August 11,
1987, under the Securities Act of 1933. The offering closed after receipt of the
maximum proceeds of $300,000. On October 7, 1987, WTS acquired 100% of Bartel
Financial Group, Inc. ("BFG Utah"), a Utah Corporation in transaction commonly
characterized as a "reverse acquisition".
On July 11, 1995, pursuant to authority granted by shareholders at the
Special Shareholders Meeting of October 28, 1994, the Board of Directors
resolved as follows: The Officers were empowered and directed to effectuate a
200 for 1 reverse split of the Company's Common Stock; provided that no
shareholder shall be reduced to less than 10 shares as a result thereof.
Following the 200 to 1 reverse split, and as a result thereof, the existing
138,100,000 shares issued and outstanding were reduced to 690,500 shares. The
Officers were further empowered and directed to change the name of the
Corporation to Desert Springs Acquisition Corp.
On September 18, September 28, and October 7, 1995, respectively, we
entered into certain Financial Service Agreements. Attention is directed to the
Exhibits furnished with Quarterly Report on Form 10-Q dated September 30, 1995,
December 31, 1995 and March 31, 1996. These agreements were the subjects,
respectively, of three successive filings resulting in the Registration of
1,252,000 shares of common stock on Form S-8, pursuant to the Securities Act of
1933. No change of control of the Company resulted from the registration or
disposition of the Securities registered on Form S-8.
(b) The Reorganization. On December 23, 1999, we completed a reverse merger
with iDial Networks Inc., formerly Woodcomm International Inc., an Internet
based Telephony Services company. The Company subsequently changed its name to
iDial Networks, Inc. and changed its symbol to IDNW.
(c) Summary of Significant Events following Reorganization. As a result of the
foregoing transactions, as of the date of this Annual Report, the Company had a
single class of securities, namely common equity voting stock, 50,000,000 shares
(of par value $0.001) authorized; of which 18,542,500 shares were issued and
outstanding.
(d) The Business of Company and its Subsidiaries. We are an established
Application Service Provider (ASP) of Internet Protocol (IP) Telephony
communications. Through a reverse merger in December 1999, we became publicly
traded with the symbol (OTCBB:IDNW). Our web address is www.iDialnetworks.com
We compete in a business sector known as Voice Over IP (VoIP), which is
experiencing explosive growth and is projected to reach $60 billion in revenues
by 2005, according to Ovum Research. The Internet phenomenon continues, with
International Data Corporation projecting nearly 400 million global users by the
end of 2002. E-Marketer estimates that 9.4 billion e-mail messages are
delivered daily, and TeleGeography projects the international long distance
market to grow to $79 billion by the end of 2001, comprised of 143 billion
minutes of LD calls. All these factors have enabled the more efficient VoIP
technology to begin to change the face of global communications.
The Company has integrated the economics of VoIP technology with the
convenience of conventional telephony to enable web initiated telephone
services. With this iDial technology, we are able to offer consumers and
businesses telephony services at costs approaching the wholesale rates of
carriers. Unlike some competitors who offer PC to phone services, iDial's web
based services are provisioned via the Internet but all calls are made phone to
phone. The majority of PC owners does not have microphones and telephony
software and thus prefer the more familiar telephone for verbal communications.
When the market dictates, iDial will offer PC to Phone and PC to PC telephony
services.
The Company delivers high-quality traditional and VoIP telephony services
to consumers and businesses, with the following benefits:
Low Cost. Telephone calls are a fraction of the cost of traditional Long
distance service.
High Voice Quality. We offer high voice quality by integrating traditional
telephony and packet-switching technologies.
Ease of Use and Access. Designed for convenience and ease of access From
anywhere in the world, an internet connection and a standard Internet browser
such as Netscape or Microsoft Internet Explorer is all that is required.
Lacking an Internet connection, the customer may dial a toll-free or local
access number from any telephone or fax machine in the US to access our network
as well.
One-Click Online Calling. iDial services enable users to speak with anyone
worldwide with a single click of a button. On-line retailers could use this
technology to connect customers to sales Representatives when browsing their web
sites and increase the likelihood of consummating the on-line sale.
Reliable/flexible Service. The technologically advanced design allows for the
expansion of the network capacity by the simple addition of switches, and the
ability to seamlessly reroute traffic if problems arise.
Ease of Payment and Online Account Access. iDial customers are able to make
calls by opening a prepaid account using credit cards, wire transfers or checks,
and can access their accounts via the Internet to View their call history,
account balances, or to increase their prepaid amounts.
Customer Support. The Company offers real-time customer support in multiple
languages, and the integrated billing and call management system provides
service representatives with immediate access to customer accounts.
(1) Product Description
The Company currently offers traditional prepaid phone cards and VoIP
services based on iDial technology under the following brand names for which
various trade and service marks are registered.
NetPhoneCard - Web initiated worldwide phone calls with US dial tone and low
tariffs.
SendaCall - Prepaid calls sent within a virtual greeting card by e-mail to
recipients anywhere in the world, allowing recipient to place free call to
sender.
Phone-Me-Now - An iDial e-commerce tool. A Phone-Me-Now button is placed on a
website that allows a customer to initiate a call to his phone from a
representative of the company that is hosting the site.
CellPhoneCard - Based upon ANI recognition of a subscriber's cellular phone,
subscribers benefit from low international tariffs when nationwide calling is
included in the subscriber's cellular rate plan.
HomePhoneCard - Based upon ANI recognition of a subscriber's home phone, low
international tariffs available with a local access number.
CheapPhoneCard - Internet purchased phone cards for USA usage.
The company has additional VoIP products and services in development, targeting
specific business to business markets, as well as consumers. They include:
Conference Calling with up to 8 participants
Low cost International callback service for Internet users outside the USA.
Web based International Call Center for use by iDial Call Center
Agents who will have complete virtual call center capabilities from their web
connection allowing web based call setup, billing and reporting.
Free PC to PC calls with H.323 compliant technologies like Microsoft NetMeeting,
and marginal fees to phones worldwide.
Service to Residential and Business customers throughout the US on a direct,
post paid and billed to your credit card service.
(2) Growth Strategy
While a large number of VoIP companies have been formed in recent years, most
focus on the build out and development of international VoIP networks in the
effort to capture an ever shrinking high margin revenue base. Little attention
has been given to domestic VoIP with bundled service offerings. The Company
believes that in this very competitive landscape, offering many voice and data
transmission options, leasing time (or purchasing minutes) on VoIP networks will
quickly become a commodity business, as the various competitors whittle margins
to gain growth and market share. It is imperative to not only offer a quality,
nationwide network but to also be an aggressive marketing organization seeking
to provide value added products and services.
The Company intends to leverage its position in the Internet telephony market
to make communications services readily available worldwide. Its strategy
includes the following key elements:
1) Drive Usage through Resellers and Strategic Partners. The
Company will promote its services through direct sales and
marketing and through relationships with resellers and
leading Internet hardware, software and content companies. A
primary strategy is to offer flat rate global long distance
service to cable subscribers in a partnership with leading
cable operators.
2) Pursue Multiple Sources of Revenue. In addition to minutes-
based revenue, the Company intends to pursue new Web-based
revenue opportunities from banner and audio advertising.
3) Enhance Brand Recognition. The Company intends to strengthen
and enhance its brand recognition by cooperatively marketing
its Internet telephony services with leading companies in
other market segments.
4) Provide Unique VoIP Products and Services for Business to
Business. The Company's current suite of VoIP products will
greatly enhance the e-commerce companies.
Many e-commerce sites have discovered the necessity of having a customer service
representative talk with potential buyers. However, traditional 800 numbers are
still relatively expensive, and require some effort on the part of the buyer to
initiate the call. With iDial's "Phone-me-now" technology, a simple click of a
button will connect the buyer with the seller's representative at very low
rates. To further lower operating costs, the Company is exploring joint
ventures with customer service centers in English speaking countries where wages
are lower, and thus customer service becomes more affordable to e-commerce.
(3) Technical Support
The Company's network operations center is located at its corporate headquarters
in Dallas, with gateway equipment also located in Los Angeles to serve the Asian
market. Customer service is provided in several languages. As the Company
increases its services and minutes sold, it plans to install additional
equipment in appropriate sites. The first stage of network expansion projects
gateways in New York and Miami, in addition to the Los Angeles facility. The
Company will lease existing capacity in other locations until such time as
sufficient business is generated to warrant Company owned switching equipment.
The Company has deployed VoIP technology with leading manufacturers such
as Cisco Systems and Clarent, and contracts for carriage with major Internet
backbone suppliers such as Quest and Pacific Gateway.
The Company engineering staff consists of five software developers located at
the Company's 90% owned Technology Center in Sri Lanka, as well as two Dallas
based technicians.
(4) Proprietary Technology
The Company uses a combination of its own proprietary software applications and
commercially available licensed technology to conduct Internet and telephone
routing operations.
The Company has developed proprietary software which permits a customer
to purchase a virtual calling card on the Web site using a credit card and to
have the virtual calling card account activated while on the Web site. Also
proprietary are various credit and fraud management applications which aid in
checking credit and limiting fraudulent transactions. Additionally, the Company
has developed proprietary software that allows for the real-time provisioning of
customers on the network using a credit card and have immediate access to
multiple accounts and services serving the wireless and residential/soho
markets.
(e) Financing Plans. For information, please see Item 6 of Part II
MANAGEMENT'S DISCUSSION AND ANALYSIS
(f) Government Regulation. Congress has recently adopted legislation that
regulates certain aspects of the Internet, including online content, user
privacy, taxation, access charges, liability for third-party activities and
jurisdiction. In addition, a number of initiatives pending in Congress and state
legislatures would prohibit or restrict advertising or sale of certain products
and services on the Internet, which may have the effect of raising the cost of
doing business on the Internet generally. The European Union has also enacted
several directives relating to the Internet, one of which addresses online
commerce. In addition, federal, state, local and foreign governmental
organizations are considering other legislative and regulatory proposals that
would regulate the Internet. Increased regulation of the Internet may decrease
its growth, which may negatively impact the cost of doing business via the
Internet or otherwise materially adversely affect our business, results of
operations and financial condition.
The Federal Trade Commission has proposed regulations regarding the
collection and use of personal identifying information obtained from individuals
when accessing Web sites, with particular emphasis on access by minors. These
regulations may include requirements that companies establish certain procedures
to disclose and notify users of privacy and security policies, obtain consent
from users for certain collection and use of information and to provide users
with the ability to access, correct and delete personal information stored by
the Company. These regulations may also include enforcement and redress
provisions. There can be no assurance that we will adopt policies that conform
to any regulations adopted by the FTC. Moreover, even in the absence of those
regulations, the FTC has begun investigations into the privacy practices of
companies that collect information on the Internet. One investigation resulted
in a consent decree pursuant to which an Internet company agreed to establish
programs to implement the principles noted above. We may become subject to a
similar investigation, or the FTC's regulatory and enforcement efforts may
adversely affect the ability to collect demographic and personal information
from users, which could have an adverse effect on our ability to provide highly
targeted opportunities for advertisers and electronic commerce marketers. Any of
these developments would materially adversely affect our business, results of
operations and financial condition.
The European Union has adopted a directive that imposes restrictions on the
collection and use of personal data. Under the directive, citizens of the
European Union are guaranteed rights to access their data, rights to know where
the data originated, rights to have inaccurate data rectified, rights to
recourse in the event of unlawful processing and rights to withhold permission
to use their data for direct marketing. The directive could, among other things,
affect United States companies that collect information over the Internet from
individuals in European Union member countries, and may impose restrictions that
are more stringent than current Internet privacy standards in the United States.
In particular, companies with offices located in European Union countries will
not be allowed to send personal information to countries that do not maintain
adequate standards of privacy. The directive does not, however, define what
standards of privacy are adequate. As a result, the directive may adversely
affect the activities of entities such as us that engage in data collection from
users in European Union member countries.
State Laws. Several states have also proposed legislation that would limit the
uses of personal user information gathered online or require online services to
establish privacy policies. Changes to existing laws or the passage of new laws
intended to address these issues could reduce demand for our services or
increase the cost of doing business.
In addition, because our services are accessible worldwide, and we facilitate
the sale of goods to users worldwide, other jurisdictions may claim that we are
required to comply with their laws. We are qualified to do business in
California, Colorado and Texas only, and failure by us to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject us to
taxes and penalties for the failure to qualify and could result in our inability
to enforce contracts in such jurisdictions. Any such new legislation or
regulation, or the application of laws or regulations from jurisdictions whose
laws do not currently apply to our business, could have a material adverse
effect on our business, financial condition and operating results.
Sales Taxes. We do not currently collect sales or other similar taxes for
virtual calling cards or other services sold through our Web site, other than
for virtual calling cards sold to Texas residents. However, one or more states
may seek to impose sales tax or similar collection obligations on out-of-state
companies, such as ours, which engage in Internet commerce. A number of
proposals have been made at the state and local level that would impose
additional taxes on the sale of goods and services through the Internet. Such
proposals, if adopted, could substantially impair the growth of online commerce,
and could adversely affect our opportunity to derive financial benefit from such
activities. Moreover, a successful assertion by one or more states or any
foreign country that we should collect sales or other taxes on the sale of
virtual calling cards or services on our system could have a material adverse
effect on our operations.
Legislation imposing a moratorium on the ability of states to impose taxes on
Internet-based transactions was passed by the United States Congress last year.
The tax moratorium will be in effect only for three years. The same legislation
that imposed the moratorium also established an Advisory Commission to consider
methods by which states could impose sales taxes on Internet transactions. If
the moratorium expires at the end of its three-year term, there can be no
assurance that the moratorium will be renewed at the end of such period. Failure
to renew the moratorium could allow various states to impose taxes on
Internet-based commerce. The imposition of such taxes could have a material
adverse effect on our business, financial condition and operating results.
(g) Competition. The long distance telephony market and, in particular, the
Internet telephony market, is highly competitive. There are several large and
numerous small competitors, and we expect to face continuing competition based
on price and service offerings from existing competitors and new market entrants
in the future. The principal competitive factors in the market include price,
quality of service, breadth of geographic presence, customer service,
reliability, network capacity and the availability of enhanced communications
services.
Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. As a result, certain of these competitors may be able to adopt more
aggressive pricing policies, which could hinder our ability to market our
Internet telephony services. One of our key competitive advantages is the
ability to route calls through Internet service providers, which allows us to
bypass the international settlement process and realize substantial savings
compared to traditional telephone service. Any change in the regulation of an
Internet service provider could force us to increase prices and offer rates that
are comparable to traditional telephone call providers.
We believe that the primary competitive factors determining success in
the Internet and IP communications market are: quality of service, the ability
to meet and anticipate customer needs through multiple service offerings,
responsive customer care services, and price.
Future competition could come from a variety of companies both in the
Internet and telecommunications industries. These industries include major
companies who have greater resources and larger subscriber bases than we have,
and have been in operation for many years. We also compete in the growing market
of discount telecommunications services including calling cards, prepaid cards,
call-back services, dial-around or 10-10 calling and collect calling services.
In addition, some Internet service providers have begun to aggressively enhance
their real time interactive communications, focusing initially on instant
messaging, although we expect them to begin to provide PC-to-phone services.
Internet and IP Telephony Providers. Many companies provide, or are
planning to provide, certain portions of the complete communications solution we
offer, including Net2Phone, Delta Three, Gric, iBasis, Jens Corporation,
JFAX.COM, GlocalNet and Poptel.
Traditional Telecommunications Carriers. Several traditional
telecommunications companies, including industry leaders such as AT&T, Sprint,
Deutsche Telekom, MCI WorldCom and Qwest Communications International have
recently announced their intention to offer enhanced Internet and IP
communications services in both the United States and internationally. All of
these competitors are significantly larger than we are and have substantially
greater financial, technical and marketing resources, larger networks, a broader
portfolio of services, stronger name recognition and customer loyalty,
well-established relationships with many of our target customers, and an
existing user base to which they can cross-sell their services.
With respect to prepaid calling cards, we compete with many of the
largest telecommunications providers, including AT&T, MCI WorldCom, Cable &
Wireless and Sprint. These companies are substantially larger and have greater
financial, technical, engineering, personnel and marketing resources, longer
operating histories, greater name recognition and larger customer bases than we
do. We also compete with smaller, emerging carriers in the prepaid calling card
market, including Destia Communications, Inc., RSL Communications, IDT Corp.,
Pacific Gateway Exchange, Inc., FaciliCom International, LLC, WorldQuest
Networks, Inc. and PRIMUS Telecommunications Group, Incorporated. We may also
compete with large operators in other countries. These companies may have
larger, more established customer bases and other competitive advantages.
Deregulation in other countries could also result in significant rate
reductions. We believe that additional competitors will be attracted to the
prepaid card market. These competitors include Internet-based service providers
and other telecommunications companies. Competition from existing or new
competitors could substantially reduce our revenues from the sale of these
cards. A general decrease in telecommunication rates charged by international
long distance carriers could also have a negative effect on our operations.
In addition, we compete in the market for Internet telephony services
with companies that produce software and other computer equipment that may be
installed on a user's computer to permit voice communications over the Internet.
Current Internet telephony products include VocalTec Communications, Ltd.'s
Internet Phone, QuarterDeck Corporation's WebPhone and Microsoft's NetMeeting.
Also, a number of large companies, including Cisco Systems, Inc., Lucent
Technologies, Inc., Northern Telecom Limited, Nuera Communications and Dialogic
Corp. offer or plan to offer server-based Internet telephony products. These
products are expected to allow communications over the Internet between parties
using a multimedia PC and a telephone and between two parties using telephones.
(h) Planned Acquisitions. There are no planned acquisitions.
(i) Employees. As of January 31, 2000, we employed 15 full-time and 10
part-time employees. None of our employees are covered by collective bargaining
agreements.
(j) Year 2000. We have not experienced any "Year 2000" technical or computer
deficiencies to date, however, there may be future Y2K compliance problems for
our vendors or suppliers that may indirectly affect the productivity of our
Company.
Item 2. Facilities.
We maintain our executive offices at 16990 Dallas Parkway Suite 106,
Dallas, Texas 75248. The facilities are used for software development. The
office size is 2,666 square feet.
<PAGE>
Item 3. Legal Proceedings.
There are no legal or other proceedings pending against the Company, as of
the preparation of this Report, and no facts are known or suspected which would
give rise to any anticipation of any such proceedings in the foreseeable future.
Item 4. Submission of Matters to a Vote of Security Holders.
Certain matters were submitted to shareholders and apporved on December 21,
1999:.
(1) To Ratify and Approve that certain plan of reorganization and
acquisition, Dated November 30, 1999, by which this corporation would acquire
Woodcomm International, Inc., a private Corporation, for issuance of 16,000,000
new investment shares of common stock.
(2) Approve filing of "Shelf Registration Statement" for issuance of up to
2,000,000 shares of common stock at offering price of not less than $3.00 per
share.
(3) Approve and Authorize a change of the corporate name, and change of
situs of the Corporation from Colorado to Nevada, as a part of this
Reorganization, to become and be iDial Networks Inc., a Nevada Corporation, or a
substantially similar name as may be available in Nevada.
(4) Re-Elect and empower the present Directors to appoint a new Board of
three, effective upon closing the transaction mentioned in Proposals Numbers
1-3, to then consist of the following three (3) Directors, to serve until the
next Annual Meeting of Shareholders or until their successors are elected and
qualified: Mark T. Wood, Klaus Scholz, and Edward Janusz.
PART II
Item 5. Market for Common Equity and Stockholder Matters.
(a) Market Information. The Company has one class of securities, Common Voting
Equity Shares ("Common Stock"). As of the date of this Annual Report, the
securities of the Company may be traded over the counter, but the market is
young and sporadic. Quotations for, and transactions in the Securities so traded
are capable of rapid fluctuations, resulting from the influence of supply and
demand on relatively thin volume. There may be buyers at a time when there are
no sellers, and sellers when there are no buyers, resulting in significant
variations of bid and ask quotations by market-making dealers, attempting to
adjust changes in demand and supply. A young market is also particularly
vulnerable to "short selling", sell orders by persons owning no shares of stock,
but intending to drive down the market price so as to purchase the shares to be
delivered at a price below the price at which the shares were sold "short".
Of the Company's issued and outstanding 18,542,500 shares of Common Stock
as of December 31, 1999, all shares, subject to an exception for the 3,077,367
shares owned by affiliates of the Company, might be presently sold in compliance
with Rule 144, in brokerage transactions, at such time as there may be trading
in the common stock of this Company. Rule 144 provides among other things and
subject to certain limitations that a person holding "Restricted Securities" for
a period of two years, who is not an affiliate of the Company, may sell those
securities, free of restriction in brokerage transactions. Further, shares
issued pursuant to 1933 Act Registration, again subject to exceptions for
affiliate ownership, are not "Restricted Securities" and are freely tradeable in
brokerage transaction. Affiliates are permitted by Rule 144 to sell
affiliate-owned securities (Restricted Securities held for more than one year
and Registered Affiliate Control Securities however long held) in limited
amounts. Possible or actual sales of the Company's Common Stock under Rule 144
or otherwise might have a depressive effect upon the price of the Company's
Common Stock, at such time, if and when the common stock of this Company might
be tradeable in brokerage transactions.
(b) Holders. Management calculates that the approximate number of holders
of the Company's Common Stock, as of December 31, 1999 was 723.
(c) Dividends. No cash dividends have been paid by the Company on its Common
Stock and no such payment is anticipated in the foreseeable future. No other
dividends have been paid or declared by the Company and none are anticipated.
(d) Sales of Unregistered Common Stock 1999. None
(e) Market Information. Our Common Stock is quoted Over-The-Counter on the
Bulletin Board ("OTCBB"). The Company's trading symbol is IDNW.
Period High bid Low bid
1st 1999 1.00 0.05
2nd 1999 1.05 0.10
3rd 1999 1.37 0.20
4th 1999 1.87 0.20
The foregoing price information is based upon inter-dealer prices without
retail mark-up, mark-down or commissions and may not reflect actual
transactions.
Item 6. Selected Financial Data.
The following information is provided as of the Date of this Report:
December 31 1999 1998 1997 1996 1995
Total Assets 617,537 0 0 0 0
Revenues 1,575,826 0 0 0 0
Operating Expenses 560,106 6,000 22,234 25,034 1,314
Net Earnings or (Loss) (650,760) (6,000) (22,234) (25,034) (1,314)
Per Share Earnings or (Loss) (0.05) (0.00) (0.01) (0.02) (0.00)
Average Common Shares
Outstanding 14,211,267 2,074,500 1,942,500 1,942,500 690,500
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations .
(a) Plan of Operation for the next twelve months.
In December 1999, Desert Springs Acquisition Corporation (DSAC) acquired all of
the issued and outstanding shares of Woodcomm International, Inc. in exchange
for 15,316,000 shares of common stock of DSAC. For financial reporting purposes
the business combination was accounted for as a reverse acquisition with WCI as
the acquirer. The historical financial statements prior to the merger are those
of WCI.
The Company provides Internet-based voice telecommunication to customers around
the world.
(b) Liquidity and Capital Resources
The Company used cash in operations of $33,400 compared to cash used in
operations of $8,040 for 1998. This is primarily due to net losses offset by
increases in accounts payable and accounts receivable.
The Company has primarily funded investing activities through the issuance of
long-term debt and advances from Member. The Company is currently exploring
other financing alternatives.
Year ended 1999 compared to 1998
- -------------------------------------
The Company's recorded loss for the year ended 1999 was $650,760 compared to
$201,447 for the year ended 1998. This $449,313 increase in the loss was
comprised of an increase in sales and gross margin significantly offset by an
increase in general and administrative expenses of $461,927 and an increase in
interest expense of $72,685.
The $1,050,893 increase in sales was due to an increase in products being
offered as well as an increase in the overall customer base. Throughout 1998
and most of 1999, the majority of the Company's sales were to one customer. The
terms of this relationship allowed for minimal gross margins on sales. Late in
1999, the Company expanded its customer base as well as its product mix.
Along with the typical Internet-based telecommunication service offered through
third parties, the Company began selling phone cards and offering web-based
service. This created more opportunity for sales as well as an increase in
gross margin.
The increase in general and administrative expense is primarily attributable to
an increase of approximately $200,000 in consulting and professional fees
incurred in connection with the reorganization. Approximately $150,000 of an
increase in depreciation expense due to the increase in fixed assets and an
increase of approximately $150,000 in salaries.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Reference is made to Auditors Report of December 31, 1999 filed herewith.
Those financial statements, attached thereto are incorporated herein by this
reference as though fully set forth herein.
Please see the Exhibit Index found on page 17 of this Report.
Item 9. Change of Company's Auditor.
This Reorganized Corporation shall have new auditors, Ehrhardt, Keefe,
Steiner & Hottman, 7079 E Tufs Ave, Suite 400, Denver Colorado 80237-24843.
There has been no disagreement with any auditor about any item.
The remainder of this page is intentionally left blank
<PAGE>
PART III
Item 10. Directors and Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The Company has assembled a team of seasoned senior management, and is
currently recruiting other industry veterans to fill key leadership roles.
Additionally, the Company is augmenting its Board of Directors and Board of
Advisors with skilled executives that can aid the growth of the Company through
high level access to potential customers and strategic alliance partners.
The following table sets forth certain information as of DECEMBER 31, 1999
concerning our executive officers.
NAME AGE POSITION
Mark T. Wood 40 Chairman of the Board
George V. Stein 58 CEO, President and Director (as of January 2000)
Klaus Scholz 50 Chief Operating Officer and Director
Edward J. Janusz 52 Director
Mark T. Wood, Chairman of the Board
Mark Wood has served as managing officer since the inception (May 1997) of
Woodcomm International, predecessor to iDial Networks Inc. From 1996 to May
1997, Mr. Wood was Vice President and General Manager of Loxcomm America Inc.,
an international telecommunications company. From 1995 to 1996 he served as
chief Operating Officer of WorldQuest Networks L.L.C., a Dallas, Texas-based
international Internet Telecommunications company. From 1992 to 1995 B Vice
President, International Sales of Intellicall, Inc. (AMEX:ICL) an international
telecommunications company.
George V. Stein, became CEO, President and Director in January of 2000.
Mr. Stein is a 30-year veteran of the cable and telecommunications industry,
recognized as one of the top 100 most influential executives in 1998 by CableFax
Magazine. He was co-founder of Encore Media Corporation, a Liberty Media company
(NYSE:LMG) that serves in excess of 50 million subscribers with a host of
programming services including ENCORE and STARZ. Most recently, Mr. Stein was
the founder and Chief Executive Officer of Hallmark Entertainment Networks,
Inc., a Hallmark Cards company. Renamed Crown Media Holdings, Inc., (NYSE:CRWN),
the company has filed an S-1 registration and will become a billion dollar cap
entity upon completion of it's underwriting, led by DLJ. A Wharton MBA with
brand management experience at Procter and Gamble, Mr. Stein brings a unique
combination of marketing and financial skills to the VoIP industry.
Klaus Scholz, Director and Chief Operating Officer
Mr. Scholz introduced the worldwide first Internet based Payphone when he was
the Managing Director of The PayPhone Co. (PPC) on behalf of the Thai
conglomerate, Loxley PLC. A native of Germany, he served ten years at Hewlett
Packard (Country Manager South East Europe) before moving to Asia in 1987. In
Thailand, he became the Managing Director of the publicly listed Semiconductor
Ventures International LTD. He joined that company as the Country Manager of
the German Engineering and Certification Body TUV that cooperated with the
Chinese government to improve quality and safety standards in the Taiwanese
industry.
Edward J. Janusz, Director Mr. Janusz is a seasoned sales and operations
executive serving the Company as a Director. Mr. Janusz is Vice President of Cap
Gemini, a leading worldwide IT consulting firm serving Fortune 500 companies.
Item 11. Executive Compensation.
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Common Stock
To the best of Company's knowledge and belief the following disclosure
presents, as of the date of this report, December 31, 1999, the total beneficial
security ownership of all Directors and Nominees, naming them, and by all
Officers and Directors as a group, without naming them, of the Company, known to
or discoverable by the Company, and the total security ownership of all persons,
entities and groups, known to or discoverable by Company, to be the beneficial
owner or owners of more than five percent of any voting class of Company's
stock. More than one person, entity or group could be beneficially interested
in the same securities, so that the total of all percentages may accordingly
exceed one hundred percent. The Company has only one class of stock, namely
Common Voting Equity Shares.
Please see table on following page
<PAGE>
Security Ownership of Officers and Directors and 5% Owners
Name and Address of Beneficial Owner Amount and Nature Percent of
Class
of Ownership
- --------------------------------------------------------------------------------
Mark T. Wood, Chairman of the Board
5919 Buffridge Trail
Dallas, TX 75252 3,385,000 18.26
- --------------------------------------------------------------------------------
George V. Stein, CEO, President, Director(1) 0 0.00
- --------------------------------------------------------------------------------
Klaus Scholz, Director and COO
19019 Preston Road, Suite 616
Dallas, TX 75252 1,500,000 8.09
- --------------------------------------------------------------------------------
Edward J. Janusz, Director
7 Lacewing Place
The Woodlands, TX 50,00 0.27
- --------------------------------------------------------------------------------
All Officers and Directors as a Group 4,935,000 26.61
================================================================================
Mauricio Vega III
14910 Ridge Hill
San Antonio, TX 78233 1,000,000 5.39
- --------------------------------------------------------------------------------
Fostures Ventures(2)
5919 Buffridge Trail
Dallas, TX 75252 8,000,000 43.14
- --------------------------------------------------------------------------------
REXCO
900-609 Granville Street
P.O. Box 10341 Pacific Centre
Vancouver, BC V7Y 1H4 Canada 1,530,133 8.25
- --------------------------------------------------------------------------------
Total Shares Issued and Outstanding 18,542,500 100.00
================================================================================
(1) Amount of ownership is 2,500,000 shares of Mark Wood's 3,385,000 issued in
2000.
(2) Fosters Ventures is a family trust beneficially owned by Mark T. Wood.
Item 13. Certain Relationships and Related Transactions.
None.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements. Reference is made to Auditors Report of December
31, 1999 filed with herewith. Those financial statements, attached as Exhibit
"F" thereto are incorporated herein by this reference as though fully set forth
herein.
(b) Form 8-K Reports. A Form 8-K was filed on December 15, 1999. The Form
8-K reported the change of control of this Company, in accordance with the plan
of reorganization and acquisition, dated November 30, 1999, by which this
Company acquired Woodcomm International, Inc., a private Corporation, for
issuance of 16,000,000 new investment shares of common stock. In addition to the
change of control, certain other proposals incidental to the acquisition and
change of control are were approved: (a) filing of "Shelf Registration
Statement" for issuance of up to 2,000,000 shares of common stock at an offering
price of not less than $3.00 per share; (b) a change of the corporate name, and
change of Situs of the Corporation from Colorado to Nevada, as a part of this
Reorganization, to become and be iDial Networks Inc., a Nevada Corporation, or a
substantially similar name as may be available in Nevada; (c) election of the
following three Directors, to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified: Mark T. Wood,
Klaus Scholz, and Edward Janusz.
(c) Exhibits. Please see Exhibit Index, following.
- --------------------------------------------------------------------------------
Exhibit Index
Financial Statements and Documents
Furnished as a part of this Annual Report
- --------------------------------------------------------------------------------
Exhibit 1. Articles of Amendment - Desert Springs Acquisition Corp.
Exhibit 2. Articles of Amendment - iDial Networks, Inc.
Exhibit 3. Articles/Certificate of Share Exchange and Merger
Exhibit F. Audited Financial Statements - December 31, 1999.
- --------------------------------------------------------------------------------
<PAGE>
Supplementary Information to be Furnished With
Reports Filed Pursuant to Section 15(d) of the Act by
Companies which Have Not Registered Securities
Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security holders.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the individual capacities and on the date indicated.
December 31, 1999.
iDial Networks, Inc.
a Nevada corporation
by
________________________ _______________________
Mark Wood George V. Stein
Chairman of the Board President/
Director
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 1
Articles of Amendment
Desert Springs Acquisition Corp.
- --------------------------------------------------------------------------------
<PAGE>
ARTICLES OF INCORPORATION
OF
Desert Springs Acquisition Corp.
Article I. The name of the Corporation is Desert Springs Acquisition Corp.
Article II. Its principal office is in the State of Nevada is 774 Mays Blvd.
#10, Incline Village NV 89452. The initial resident agent for services of
process at that address is N&R Ltd. Group, Inc.
Article III. The purposes for which the corporation is organized are to engage
in any activity or business not in conflict with the laws of the State of Nevada
or of the United States of America. The period of existence of the corporation
shall be perpetual.
Article IV. The corporation shall have authority to issue an aggregate of
100,000,000 shares of common voting equity stock of par value one mil ($0.001)
per share, and no other class or classes of stock, for a total capitalization of
$100,000. The corporation's capital stock may be sold from time to time for such
consideration as may be fixed by the Board of Directors, provided that no
consideration so fixed shall be less than par value.
Article V. No shareholder shall be entitled to any preemptive or preferential
rights to subscribe to any unissued stock or any other securities which the
corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any shareholders meeting, for
the purpose of electing Directors, or otherwise.
Article VI. The name and address of the Incorporator of the corporation is
William Stocker, Attorney at Law, 34700 Pacific Coast Highway, Suite 303,
Capistrano Beach CA 92624, phone (949) 248-9561, fax (949) 248-1688. The affairs
of the corporation shall be governed by a Board of Directors of not less than
one (1) nor more than (7) persons. The Incorporator shall act as Sole Initial
Director.
Article VII. The Capital Stock, after the amount of the subscription price or
par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
<PAGE>
Article VIII. The initial By-laws of the corporation shall be adopted by its
Board of Directors. The power to alter, amend or repeal the By-laws, or adopt
new By-laws, shall be vested in the Board of Directors, except as otherwise may
be specifically provided in the By-laws.
I the undersigned, being the Incorporator hereinbefore named for the purpose of
forming a corporation pursuant the General Corporation Law of the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are true, and accordingly have set my
hand hereunto this Day,
December 16, 1999.
/S/
William Stocker
attorney at law
Incorporator
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 2
Articles of Amendment
iDial Networks Inc.
- --------------------------------------------------------------------------------
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
Desert Springs Acquisition Corp.
(before payment of capital and issuance of stock)
We the Undersigned, Officers of Desert Springs Acquisition Corp. ("the
Corporation"), incorporated on December 17, 1999, hereby certify:
The Initial Incorporator of the Corporation at a meeting duly convened and held
on December 20, 1999 adopted a resolution to amend the Articles of Incorporation
as Originally filed and/or amended.
The former Article One read:
Article One. The name of the Corporation is Desert Springs Acquisition Corp.
Article One is superseded and replaced as follows:
Article One. The name of the Corporation is iDial Networks, Inc.
The number of shares of the Corporation outstanding is zero, and the
Incorporator is entitled to amend the Articles of Incorporation.
/S/
William Stocker
Incorporator
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 3
ARTICLES/CERTIFICATE of SHARE EXCHANGE and MERGER
iDial Networks Inc.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ARTICLES/CERTIFICATE of SHARE EXCHANGE and MERGER
BY WHICH
Desert Springs Acquisitions Corp.
(a Colorado corporation)
FIRST ACQUIRED AND EXCHANGE WITH
Woodcomm International Inc.
(a Nevada corporation)
AND THEN MOVED ITS PLACE OF INCORPORATION TO NEVADA
BY MERGER OF THE COLORADO CORPORATION WITH AND INTO
iDial Networks, Inc.
(a Nevada corporation)
(Colorado: CRS 7-11-107)
(Nevada: NRS 92A.200-230)
- --------------------------------------------------------------------------------
First, the Plans: of Reorganization and Acquisition; and of
Merger:
(1) There are two transactions and two plans which together, and in order
constitute the acquisition, share exchange and relocation of the resulting
acquiring entity to Nevada, to join the Nevada subsidiary:
(2.1) That certain Plan of Reorganization and Acquisition, dated November 30,
1999, is attached hereto and incorporated herein by this reference as though
fully set forth herein. The Colorado parent acquires a Nevada Subsidiary.
(2.2) That certain Plan of Reorganization and Merger for Change of Situs, dated
January 7, 2000, is attached hereto and incorporated herein by this reference as
though fully set forth herein. The former Colorado parent then moves to Nevada.
Second, information re Shareholder Action:
(2.1) A Special meeting of shareholders of the Colorado Corporation was duly
called upon notice to all shareholders of record on the record date. The meeting
was held on December 21, 1999. On recommendation of the Board of Directors of
the Colorado Corporation, approval was given by shareholder for the
afore-mentioned acquisition and subsequent move to Nevada, 99% of all
shareholders entitled to vote, present and voting in favor.
(2.2) Unanimous consent by the owners of the private Woodcomm International Inc.
was given to both the acquisition and subsequent move to Nevada of the resulting
Colorado Parent.
(2.3) As to the new Nevada Corporation, iDial Networks, Inc., formerly and
originally Desert Springs Acquisitions Corp. (of Nevada), no shareholder action
was necessary, and none was possible, for the reason that no shares had been
issued. This Nevada corporation was been created solely for the purpose of this
change of situs to Nevada.
Third, Corporate Authority:
(3.1) The Plan of Reorganization and Acquisition and the performance of its
terms by the each and all of the parties and entities mentioned therein were
duly authorized by all action required by the laws under which each was
incorporated or organized and by its constituent documents, to which
representation each of the undersigned duly certifies and attests.
(3.2) The Plan of Reorganization and Merger for Change of Situs and the
performance of its terms by each and all of the parties and entities mentioned
therein were duly authorized by all action required by the laws under which each
was incorporated or organized and by its constituent documents, to which
representation each of the undersigned duly certifies and attests.
Fourth, Significant Provisions:
(4.1) The Colorado Corporation first acquired the private Nevada Corporation
Woodcomm International Inc. as a wholly-owned subsidiary.
(4.2) The Colorado Corporation then moved to Nevada by merger with and into
iDial Networks, Inc., a new Nevada Corporation (with no shares issued) created
for the purpose of this merger.
Fifth, Effective Date:
(5) The exchange and the conversion of shares shall become effective at the
earliest date provided or allowed by law, and not later than certification by
each applicable State Official that this document has been accepted for filing
and filed.
The remainder of this page is intentionally left blank
<PAGE>
Sixth Signing:
(6) These Articles of Exchange are signed by the duly authorized Officers of the
each applicable entity as follows:
Desert Springs Acquisitions Corp. Woodcomm International, Inc.
(a Colorado corporation) (a Nevada corporation)
and
iDial Networks, Inc.
(a Nevada corporation)
by by
/S/ /S/
James L. Bartel Mark T. Wood
President President
/S/ /S/
Mitchell Milgaten Mark T. Wood
Secretary Secretary
<PAGE>
- --------------------------------------------------------------------------------
Plan of Reorganization and Acquisition
BY WHICH
Desert Springs Acquisitions Corp.
(a Colorado corporation)
SHALL ACQUIRE
Woodcomm International Inc.
(a Nevada corporation)
- --------------------------------------------------------------------------------
This Plan of Reorganization and Acquisition is made and dated this day
of November 30,1999 by and between the above referenced corporations, and shall
become effective on "the Effective Date" as defined herein.
I. The Interested Parties
A. The Parties to this Plan
1. Desert Springs Acquisitions Corp. ("DSAQ"),
2. Woodcomm International Inc. ("WII"),
II. Recitals
A. The Capital of the Parties:
1. The Capital of DSAQ consists of 500,000,000 shares of common voting stock of
$.0001 par value authorized, of which 2,542,500 shares are issued and
outstanding.
2. The Capital of WII consists of shares of common voting stock of $.0001 par
value authorized, of which equitable ownership by its principals, nor shares
having been formally issued, is expressed as 16,000,000 shares which 16,000,000
shares are treated as if issued and outstanding, for purposes of this share
exchange.
B. The Background for the Acquisition: DSAQ desires to acquire WII and the
shareholders of WII wish to be acquired by a public company.
C. The Boards of Directors of both Corporations respectively have determined
that it is advisable and in the best interests of each of them and both of them
to proceed with the acquisition by the Colorado Corporation, in accordance with
IRS ss368(a)(1)(B) and (C).
D. A Majority of Shareholders of DSAQ, having approved the acquisition, this
agreement was approved and adopted by the Board of Directors of DSAQ in a manner
consistent with the laws of its Jurisdiction and its constituent documents,
subject to ratification by all shareholders at meeting called for that purpose,
expected to be held on December 21, 1999.
E. 100% of Shareholders of WII, have approved the acquisition, this agreement
was approved and adopted by the Board of Directors of WII in a manner consistent
with the laws of its Jurisdiction and its constituent documents.
F. No Reverse Split for 18 Months: the parties have agreed and do agree, as a
material element of this Reorganization that DSAQ shall effect no reverse split
of its common stock within 18 months of the effective date hereof.
III. Plan of Acquisition
A. Reorganization and Acquisition: Desert Springs Acquisitions Corp. and the
Woodcomm International Inc. are hereby reorganized, as of the effective date
hereof, such that Desert Springs Acquisitions Corp. shall acquire all assets,
businesses and capital stock of the Woodcomm International Inc., and Woodcomm
International Inc. shall become a wholly-owned subsidiary of Desert Springs
Acquisitions Corp.
B. Effective Date: This Plan of Reorganization and Acquisition shall become
effective immediately upon approval and adoption by the parties hereto, in the
manner provided by the law of the places of incorporation and constituent
corporate documents, and the time of such effectiveness shall be called the
effective date hereof.
C. Surviving Corporation: Both corporations shall survive the Reorganization
herein contemplated and shall continue to be governed by the laws of its
respective State of Incorporation.
Rights of Dissenting Shareholders: Desert Springs Acquisitions Corp. is the
entity responsible for the rights of dissenting shareholders.
a. Service of Process: Desert Springs Acquisitions Corp. may be served with
process in Nevada in any proceeding for the enforcement of the rights of a
dissenting shareholder, if any, pursuant to any extent required by the laws
thereof. The President of the corporation hereby irrevocably appoints the
Secretary of the State of Colorado as agent to accept service of process for the
Nevada corporation with respect to any such proceeding to the extent required by
the laws thereof.
b. Agent for Mailing Process: corporation hereby further complies with the
laws of Delaware by designating a person to whom process served upon the
Secretary of that State may be forwarded and mailed: William Stocker,
Attorney at Law, 34700 Pacific Coast Highway, Suite 303, Capistrano Beach CA
92624, phone (949) 248-9561, fax (949) 248-1688.
D. Surviving Articles of Incorporation: The Articles of Incorporation of each
Corporation shall remain in full force and effect, unchanged.
E. Surviving By-Laws: The By-Laws of each Corporation shall remain in full
force and effect, unchanged.
F. Conversion of Outstanding Stock: Forthwith upon the effective date hereof,
Desert Springs Acquisitions Corp. shall issue 16,000,000 new investment shares
of its common stock to or for the shareholders of Woodcomm International Inc.;
and each and every share of Woodcomm International Inc. shall be converted into
one such new share of Desert Springs Acquisitions Corp.
G. Further Assurance, Good Faith and Fair Dealing: The Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and to do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and good faith with
each other and each others shareholders.
H. General Mutual Representations and Warranties. The purpose and general
import of the Mutual Representations and Warranties, are that each party has
made appropriate full disclosure to the others, that no material information has
been withheld, and that the information exchanged is accurate, true and correct.
1. Organization and Qualification. Each Corporation warrants and represents
that it is duly organized and in good standing, and is duly qualified to conduct
any business it may be conducting, as required by law or local ordinance.
2. Corporate Authority. Each Corporation warrants and represents that it has
Corporate Authority, under the laws of its jurisdiction and its constituent
documents, to do each and every element of performance to which it has agreed,
and which is reasonably necessary, appropriate and lawful, to carry out this
Agreement in good faith.
3. Ownership of Assets and Property. Each Corporation warrants and represents
that it has lawful title and ownership of its property as reported to the other,
and as disclosed in its financial statements.
4. Absence of Certain Changes or Events. Each Corporation warrants and
represents that there are no material changes of circumstances or events which
have not been fully disclosed to the other party, and which, if different than
previously disclosed in writing, have been disclosed in writing as current as is
reasonably practicable.
5. Absence of Undisclosed Liabilities. Each Corporation warrants and represents
specifically that it has, and has no reason to anticipate having, any material
liabilities which have not been disclosed to the other, in the financial
statements or otherwise in writing.
6. Legal Proceedings. Each Corporation warrants and represents that there are
no legal proceedings, administrative or regulatory proceedings, pending or
suspected, which have not been fully disclosed in writing to the other.
7. No Breach of Other Agreements. Each Corporation warrants and represents that
this Agreement, and the faithful performance of this agreement, will not cause
any breach of any other existing agreement, or any covenant, consent decree, or
undertaking by either, not disclosed to the other.
8. Capital Stock. Each Company warrants and represents that the issued and
outstanding shares and all shares of capital stock of such corporation, is as
detailed herein, that all such shares are in fact issued and outstanding, duly
and validly issued, were issued as and are fully paid and non-assessable shares,
and that, other than as represented in writing, there are no other securities,
options, warrants or rights outstanding, to acquire further shares of such
Corporation.
9. Brokers' or Finder's Fees. Each Corporation warrants and represents that it
is aware of no claims for brokers' fees, or finders' fees, or other commissions
or fees, by any person not disclosed to the other, which would become, if valid,
an obligation of either company.
I. Miscellaneous Provisions
1. At the closing date, there shall be no undisclosed changes from that
reflected in the financial and other statements exchanged by the parties.
2. Except as required by law, no party shall provide any information concerning
the Subject Property or any aspect of the transactions contemplated by this
Agreement to anyone other than their respective officers, employees and
representatives without the prior written consent of the other parties hereto.
The aforesaid obligations shall terminate on the earlier to occur of (a) the
Closing, or (b) the date by which any party is required under its articles or
bylaws or as required by law, to provide specific disclosure of such
transactions to its shareholders, governmental agencies or other third parties.
In the event that the transaction does not close, each party will return all
confidential information furnished in confidence to the other.
3. This Agreement may be executed simultaneously in two or more counterpart
originals. The parties can and may rely upon facsimile signatures as binding
under this Agreement, however, the parties agree to forward original signatures
to the other parties as soon as practicable after the facsimile signatures have
been delivered.
4. The Parties to this agreement have no wish to engage in costly or lengthy
litigation with each other. Accordingly, any and all disputes which the parties
cannot resolve by agreement or mediation, shall be submitted to binding
arbitration under the rules and auspices of the American Arbitration
Association, as a further incentive to avoid disputes, each party shall bear its
own costs, with respect thereto, and with respect to any proceedings in any
court brought to enforce or overturn any arbitration award. This provision is
expressly intended to discourage litigation and to encourage orderly, timely and
economical resolution of any disputes which may occur.
5. If any provision of this agreement or the application thereof to any person
or situation shall be held invalid or unenforceable, the remainder of the
Agreement and the application of such provision to other persons or situations
shall not be effected thereby but shall continue valid and enforceable to the
fullest extent permitted by law.
6. No waiver by any party of any occurrence or provision hereof shall be deemed
a waiver of any other occurrence or provision.
7. The parties acknowledge that both they and their counsel have reviewed and
revised this agreement and that the normal rule of construction shall not be
applied to cause the resolution of any ambiguities against any party
presumptively. The Agreement shall be governed by and construed in accordance
with the laws of the State of Nevada.
8. The parties acknowledge that they have agreed to and contemplate later
corporate action by which the Resulting Colorado Corporation shall merge with
and into a new Nevada Corporation, for the purpose of changing the corporate
name and place of incorporation.
This Plan of Reorganization and Merger is executed on behalf of each
Company by its duly authorized representatives, and attested to, pursuant to the
laws of its respective place of incorporation and in accordance with its
constituent documents.
Desert Springs Acquisitions Corp. Woodcomm International, Inc.
(a Colorado corporation) (a Nevada corporation)
by by
/S/ /S/
James L. Bartel Mark T. Wood
President President
/S/ /S/
Mitchell Milgaten Mark T. Wood
Secretary Secretary
<PAGE>
- --------------------------------------------------------------------------------
PLAN OF MERGER FOR CHANGE OF SITUS
BY WHICH
Desert Springs Acquisitions Corp.
(a Colorado corporation)
WILL MERGE WITH AND INTO
iDial Networks, Inc.
(a Nevada corporation)
FOR THE PURPOSE OF CHANGING THE PLACE OF INCORPORATION
- --------------------------------------------------------------------------------
This Plan of Reorganization is made and dated this day of January 7, 2000,
by and between the above referenced corporations, sometimes referred to herein
as "the Public Company" and "the Private Company", respectively.
I. Recitals
A. The Parties to this Agreement
1. Desert Springs Acquisitions Corp. ("the Public Company") is a Colorado
Corporation. It has recently acquired Woodcomm International Inc., a private
Nevada Corporation, as a wholly-owned subsidiary.
2. iDial Networks, Inc. ("the Private Company") is a Nevada Corporation, having
been created originally as Desert Springs Acquisitions Corp. (of Nevada) for the
purpose of changing the place of incorporation of the Colorado corporation to
Nevada.
B. The Capital of the Parties:
1. The Capital of the Public Company consists of 500,000,000 shares of common
voting stock of $.0001 par value authorized, of which 18,542,500 shares are
issued and outstanding. There were 2,542,500 shares issued and outstanding,
immediately before the acquisition of Woodcomm International Inc. (a Nevada
Corporation) as a wholly-owned subsidiary of the Public Company, 16,000,000
shares having been issued for that acquisition.
2. The Capital of the Private Company consists of 100,000,000 shares of common
voting stock of $0.001 par value authorized, of which no shares have been or are
issued or outstanding.
C. The Decision to Reorganize to Change Situs: The Parties have resolved,
following the acquisition of Woodcomm International Inc. (a Nevada Corporation),
to merge and relocate the place of incorporation of the Public Parent Company,
by means of the following reorganization, by which the Public Company will merge
with and into the Private Company and move to Nevada. As an intended result of
this change of situs, the Parent Public Corporation shall be located and
incorporated in the same State as its principal wholly-owned Subsidiary.
II. Plan of Reorganization
A. Change of Situs: The Public Company (Colorado) and the Private Company
(Nevada) are hereby reorganized for the sole and singular purpose of changing
the place of incorporation of the Public Desert Springs Acquisitions Corp.; such
that immediately following the Reorganization the Colorado Public Company will
move to Nevada.
1. The Public Company: Desert Springs Acquisitions Corp. of Colorado will merge
with and into and thereafter be iDial Networks, Inc. of Nevada. The Public
Company will retain its corporate personality and status, and will continue its
corporate existence uninterrupted, in and through, and only in and through the
new Nevada Corporation.
2. Conversion of Outstanding Shares: Forthwith upon the effective date hereof,
each and every one share of stock of the Public Colorado Company shall be
converted to one share of the Nevada Company. Any such holders of shares may
surrender them to the transfer agent for common stock of the Public Colorado
Company, which transfer agent shall remain and continue as transfer agent for
the Nevada Company.
3. Effective Date: This Plan of Reorganization shall become effective
immediately upon approval and adoption by Corporate parties hereto, in the
manner provided by the law of its place of incorporation and its constituent
corporate documents, the time of such effectiveness being called the effective
date hereof.
4. Surviving Corporations: The Nevada Company shall survive the Reorganization
after Reorganization, with the operational history of the Colorado Company
before the Reorganization, and with the management, duties and relationships to
its shareholders unchanged by the Reorganization and with all of its property
and with its shareholder list unchanged. The Colorado Company shall not survive
the merger.
5. Further Assurance, Good Faith and Fair Dealing: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and in good faith
with each other and each others shareholders.
The remainder of this page is intentionally left blank
<PAGE>
III. Signing
This Reorganization Agreement is executed on behalf of each Company by its
duly authorized representatives, and attested to, pursuant to the laws of its
respective place of incorporation and in accordance with its constituent
documents.
Desert Springs Acquisitions Corp. iDial Networks, Inc.
(a Colorado corporation) (a Nevada corporation)
by by
/S/ /S/
James L. Bartel Mark T. Wood
President President
/S/ /S/
Mitchell Milgaten Mark T. Wood
Secretary Secretary
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Exhibit F
Audited Financial Statements
December 31, 1999
