SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K-A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1933
Date of Report: February 14, 2000
Commission File Number: 33-12029-D
iDial Networks, Inc.
formerly Desert Springs Acquisition Corp.
formerly Bartel Financial Group, Inc.
(Exact name of Registrant as specified in its charter)
Colorado 84-1043258
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
5160 South Valley View, Suite 106, Las Vegas NV 89118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 739-6552
Securities registered Pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Item 1. Change of Control of Registrant
On or about December 15, 1999, an effective change of control of this Registrant
occurred, in accordance with 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. This acquisition was subject to formal
shareholder approval, at a Meeting of all shareholders called for December 21,
1999. This change was reported on Form 8-K filed 12/20/99, and was ratified
by shareholders. The new name of this Acquiring corporation has been changed
from Desert Springs Acquisition to idial Networks, Inc.
Item 2. Acquisition or Disposition of Assets
The purpose of this Current Report is to provide unconsolidated, audited
financial statements of Woodcomm International, Inc. (the acquired company)
for the years ended December 31, 1998, and (un-audited) the nine months ended
September 30, 1999. Consolidated financial statements for the Reorganized
Corporation have not yet been completed.
I
Item 4. Changes in Registrant's Certifying Accountant
This Reorganized Corporation shall have new auditors, Ehrhardt, Keefe, Steiner &
Hottman, 7979 E.
Tufts Ave., Suite 400, Denver Colorado 80237-2843. There has been no
disagreement with any auditor about any item.
Item 3. Bankruptcy or Receivership
None.
Item 5. Other Events
This Reorganized Corporation has resolved to change its fiscal year from June 30
to December 31. It has resolved to effect this change effective December 31,
1999, to conform to the fiscal year of the acquired business. This means that
no quarterly report would be filed for the six months ended December 31, 1999,
but rather a transitional annual report would be filed, with consolidated
financial statements audited for the twelve months ended December 31, 1999.
Item 6. Changes of Registrant's Directors
As previously reported, the new Directors are MARK T. WOOD, KLAUS SCHOLZ, and
EDWARD JANUSZ, to serve until the next Annual Meeting of Shareholders or until
their successors are elected and qualified.
Signatures
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 Registrant and
in the capacities and on the date indicated.
February 14, 2000
iDial Networks, Inc. formerly Desert Springs Acquisition Corp.
formerly Bartel Financial Group, Inc.
by
/William Stocker/
William Stocker
SPECIAL SECURITIES COUNSEL
Exhibit
Un-consolidated Audited Financial Statements of Woodcomm International, Inc.
(the acquired company) for the years ended December 31, 1998;
and (unaudited) for the nine months ended September 30, 1999.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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iDIAL NETWORKS, INC.
(Formerly known as Woodcomm, LLC)
Financial Statements
and
Independent Auditors' Report
December 31, 1998
Table of Contents
Page
Independent Auditors' Report F - 1
Financial Statements
Balance Sheets F - 2
Statements of Operations F - 3
Statement of Retained Deficit F - 4
Statements of Cash Flows F - 5
Notes to Financial Statements F - 6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
iDial Networks, Inc.
Dallas, Texas
We have audited the accompanying balance sheet of iDial Networks, Inc.(formerly
known as Woodcomm, LLC) as of December 31, 1998 and 1997, and the related
statement of operations and members' deficit and cash flows for the year ended
December 31, 1998 and the period from Inception (May 19, 1997) to December 31,
1997. 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 iDial Networks, Inc. as of
December 31, 1998 and 1997 and the results of its operations and its cash flows
for the year ended December 31, 1998 and the period from Inception (May 19,
1997) through December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's history of operating losses and current
status of default on several notes payable raise substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
April 1, 1999
Denver, Colorado
Balance Sheets
September 30, December 31,
1999 1998 1997
___________________________________
(Unaudited)
Assets
Current assets
Cash $ 63,135 $118,493 $ -
Accounts receivable - trade 188,250 87,149 -
________ ________ _______
Total current assets 251,385 205,642 -
Property and equipment, net (Note 2) 397,527 353,914 -
Other assets
Deposits 8,855 11,009 -
Loan origination costs, net of
accumulated amortization of $1,235 14,065 16,765 -
(1999) and $3,935 (1998) _______ _______ _______
Total assets $ 671,832 $587,330 $ -
Liabilities and Members' Equity
Current liabilities
Current portion of long-term debt $ 436,284 $10,252 $ -
(Note 3)
Advances from member (Note 5) 135,800 186,844 92,302
Accrued interest 17,969 17,969 -
Accounts payable 397,475 175,221 -
Accrued wages 145,000 40,000 -
_________ _______ ______
Total current liabilities 1,132,528 430,286 92,302
Long-term debt, net of current portion 82,862 450,793 -
(Note 3),
Total liabilities 1,215,390 881,079 92,302
Commitments and contingencies (Notes 3,
4 and 5)
Equity (Note 6)
Common stock, $.0001 par value,
100,000,000 shares authorized, $1,000 1 - -
shares issued and outstanding
Additional paid in capital 299 - -
Members' capital - 300 300
Retained deficit (543,858) (294,049) (92,602)
_________ _________ ________
Total members' equity (543,558) (293,749) (92,302)
_________ _________ ________
Total liabilities and members' equity $ 671,832 $587,330 $ -
========== ========= ========
Statement of Retained Deficit
For the Years Ended December 31, 1998 and Inception (May 19, 1997)
Through December 31, 1997
Members' Additional
Capital Common Stock Paid-in Accumulated Total
Amount Shares Amount Capital Deficit Equity
-------- ------- ------- ------- ------- -------
Balance,Inception (May $ 300 $ - $ - $ - $ - $ 300
19,1997)
Net loss - - - - (92,602) (92,602)
________ _______ _______ _______ ________ ________
Balance December 31, 1997 300 - - - (92,602) -
Net loss - - - -(201,447) (201,447)
Balance, December 31, 300 - - -(294,049) (293,749)
1998
Reorganization (Note 6) (300) 1,000 1 299 - -
Net loss - - - - (249,809) (249,809)
Balance, September 30, $ - $ 1,000 $ - $ 299 (543,558) $(543,558)
1999
Statements of Operations and Members' Deficit
Inception
For the Year (May 19,1997)
Nine Months Ended Ended through
September 30, December 31, December 31,
1999 1998 1998 1997
--------------------------------------------------
(Unaudited)
Sales $ 1,368,026 $ 134,925 $ 524,933 $ -
Cost of Sales 1,167,816 188,071 513,109 -
--------------------------------------------------
200,210 (53,146) 11,824 -
Selling, general and
administrative
expenses 436,527 113,279 195,302 92,602
--------------------------------------------------
Operating Loss (236,317) (166,425) (183,478) (92,602)
Interest Expense (13,492) - (17,969) -
--------------------------------------------------
Net loss $(249,809) $(166,425) $(201,447) $(92,602)
Statements of Cash Flows
Inception
For the Year (May 19, 1997)
Ended through
September 30, December December
------------------------ 31, 31,
1999 1998 1998 1997
-------------------------------------------------
(Unaudited)
Cash flows from
operating activities
Net loss $(249,809) $(166,425) $(201,447) $(92,602)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities
Depreciation and 128,255 16,549 47,366 -
amortization
Changes in assets and
liabilities
Accounts receivable (101,101) (13,192) (87,149) -
Accounts payable 222,254 32,215 175,221 -
Accrued expenses 105,000 25,000 40,000 -
Accrued interest - - 17,969 -
----------------------------------------------
354,408 60,572 193,407
Net cash provided by
(used in) operating
activities 104,599 (105,853) (8,040) (92,602)
----------------------------------------------
Cash flows from
investing activities
Purchase of property (132,743) (321,182) (342,395) -
and equipment
Deposits 2,154 (32,010) (11,009) -
----------------------------------------------
Net cash used in
investing activities (130,589) (353,192) (353,404) -
----------------------------------------------
Cash flows from
financing activities
Proceeds from issuance
of long-term debt 35,000 379,474 404,474 -
Net (repayments to)
advances from member (51,044) 142,438 94,542 92,302
Members' capital - - - 300
contribution
Payments on long-term (13,324) - (1,079) -
debt
Loan origination cost - - (18,000) -
----------------------------------------------
Net cash (used in)
provided by financing (29,368) 521,912 479,937 92,602
activities
(Decrease) increase in (55,358) 62,867 118,493 -
cash
Cash, beginning of year 118,493 - - -
----------------------------------------------
Cash, end of year $ 63,135 $ 62,867 $ 118,493 $ -
==============================================
Supplemental disclosure of cash flow information:
Cash paid for interest was $0 for the year ended December 31, 1998 and the
period May 19, 1997 through December 31, 1997. Cash paid for interest was
$13,492 and $0 for the nine months ended September 30, 1999 and 1998,
respectively (unaudited).
Supplemental disclosure of noncash investing activity:
During the year ended December 31, 1998, $57,650 of office equipment was
financed by capital lease obligations. $36,425 and $36,520 of computer,
office and telephone equipment was financed during the nine months ended
September 30, 1999 and 1998, respectively (unaudited).
Note 1 - Organization and Summary of Significant Accounting Policies
Organization and Business
As discussed more fully in Note 6, the Company reorganized subsequent to
December 31, 1998, ultimately becoming iDial Networks, Inc. (the Company). The
predecessor Company, Woodcomm, LLC was established in May 1997 in the state of
Nevada. The Company began commercial operations in June 1998 as a facilities-
based wholesale provider of international long-distance telephone services into
South East Asia from the United States. Following its purchase of certain
telecommunications-related assets from Advanced Business Communications
Corporation (ABC) the Company began providing wholesale international long-
distance service to ABC.
The Company is providing Internet-based voice telecommunication to customers
around the world. It operates selected communication services, including phone
cards and Internet enabled telephony. The Internet triggered calls combine the
flexibility of a computer (on-line billing and call records) with the low
tariffs of USA based carriers via calling centers or direct from home anywhere
in the world.
Continued Operations and Realization of Assets
The accompanying consolidated financial statements have been prepared on a going
concern basis which contemplates the realization of assets and liquidation of
liabilities in the ordinary course of business. The Company has suffered losses
from operations since inception, resulting in an accumulated deficit of $543,858
at September 30, 1999 (unaudited) and is currently in default on several note
payable agreements to ABC and ABC's parent.
The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
Interim Financial Statements (Unaudited)
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position of the Company at September 30, 1999
and 1998. The results of operations for the nine months ended September 30,
1999 and 1998 are not necessarily indicative of the results to be expected for a
full year.
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk
The Company's financial instruments that are exposed to concentration of credit
risk consist primarily of cash and accounts receivable. Additionally, the
Company maintains cash balances in bank deposit accounts which, at times, may
exceed federally insured limits. During the year ended December 31, 1998,
predominantly all of the Company's sales were generated from ABC. At December
31, 1998, receivables consisted of $82,614 or 95% of its total accounts
receivable - trade was due from ABC, respectively. During the nine months ended
September 30, 1999 and 1998, respectively, approximately 91% and 100% of the
Company's sales were generated from ABC. At September 30, 1999 and 1998,
respectively 74% and 100% of the Company's total accounts receivable - trade
(unaudited).
Loan Origination Fees
Direct costs incurred for the origination of loans are deferred and amortized to
interest expense using the interest method over the contractual terms of the
loans.
Advertising Costs
The Company expenses advertising costs as incurred.
Use of 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.
Property and Equipment
Property and equipment are stated at cost; equipment under capital lease is
stated at the lower of fair market value or net present value of minimum lease
payments at inception of the leases. Depreciation is computed using straight-
line over the estimated useful lives or lease terms of the related assets of
three to five years.
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Income Taxes
Prior to March 31, 1999, The Company was organized as an LLC. No tax was paid
by the LLC as each member is allocated their respective share of the Company's
income or loss for the year in accordance with federal and state tax laws.
Accordingly, no tax provision is included in the accompanying financial
statements.
As discussed more fully in Note 7, subsequent to December 31, 1998 the Company
was reorganized, changing from an LLC to a Nevada corporation. Effective with
the reorganization, the company will recognize deferred tax liabilities and
assets based on the differences between the tax basis of assets and liabilities
and their reported amounts in the financial statements that would result in
taxable or deductible amounts in future years.
Note 2 - Property and Equipment
Property and equipment consists of the following:
December 31,
September 30, ----------------------
1999 1998 1997
----------- ---------- ----------
(Unaudited)
Telephony equipment $443,404 $288,974 $ -
Computers, equipment and 125,809 111,071 -
software -----------------------------------
569,213 400,045 -
Less Accumulated (171,686) (46,131) -
depreciation -----------------------------------
$397,527 $353,914 $ -
===================================
Note 3 - Long-Term Debt
Long-term debt consists of the following:
December 31,
September 30, --------------
1998 1998 1997
-------------------------------
(Unaudited)
Various note payables to ABC and
ABC's Parent, interest at 15%,
due in monthly installments
ranging from $5,000 to $18,000
commencing April 1999 through
maturity of January 2003. The $404,474 $404,474 $ -
notes are collateralized by the
Company's telephone equipment.
Note payable to American Express,
interest at 12.9%, due in monthly
installments of approximately
$795, commencing July 1999 33,732 - -
through maturity of June 2004.
Capital leases with monthly
installments totaling $3,295
including interest at 23% and
expiring December 2001 through
August 2003. Collateralized by
equipment with a net book value
of approximately $74,000 and
$57,000 at September 30, 1999
(unaudited) and December 31,
1998, respectively. 80,940 56,571 -
-------------------------------
$519,146 $461,045 $ -
===============================
Note 3 - Long-Term Debt (continued)
Maturities of long-term debt as of September 30, 1999 (unaudited) are as
follows:
Long-Term Capital
Year Ending December 31, Debt Leases Total
-----------------------------
1999 (3 months remaining) $405,784 $15,032 $420,816
2000 5,680 39,536 45,216
2001 6,458 36,214 42,672
2002 7,342 14,933 22,275
2003 8,348 8,236 16,584
2004 4,594 - 4,594
-----------------------------
Less amount representing interest 438,206 113,951 552,157
- (33,011) (33,011)
-----------------------------
438,206 80,940 519,146
Less current maturities (409,976) (26,308) (436,284)
-----------------------------
$28,230 $54,632 $82,862
=============================
The net book value of assets under capital lease was approximately $55,000 as of
December 31, 1998, and 74,000 as of September 30, 1999 (unaudited).
As of September 30, 1999 the Company is in default per the terms of its notes
payable to ABC and ABC's Parent. Although no agreement has been reached, the
Company is currently negotiating with these lenders to convert this debt to
equity in the Company.
Note 4 - Commitments
The Company leases office space and furniture and equipment under operating
leases which expire February 2000 through July 2002. Additionally, the Company
entered into an agreement with an internet service provider which required
monthly payments of $2,467 through August 1999.
Note 4 - Commitments - (continued)
Future minimum obligations under the non-cancelable operating leases at
September 30, 1999 (unaudited) are as follows:
Year Ending December 31,
1999 $ 28,314
2000 110,320
2001 74,176
2002 3,155
--------
$215,965
========
Rent expense under the operating leases was $30,275 and $7,443 for the year
ended December 31, 1998 and the period from inception (May 19, 1997) to December
31, 1997, respectively, and $44,238 and 20,614 for the nine months ended
September 30, 1999 and 1998, respectively (unaudited).
Note 5 - Member Advance
In 1998, the Company received advances from a member to fund operations. The
advances are non interest bearing and payable on demand. As of September 30,
1999 (unaudited) and December 31, 1998 and 1997 the advances from member totaled
$135,800, $186,844 and $92,302, respectively.
Note 6 - Stockholders' Equity
In March 1999, the Company changed its name to Woodcom International, Inc. and
reorganized as a C corporation.
Note 7 - Subsequent Events
In November 1999, Woodcom International, Inc. exchanged common stock with Desert
Springs Acquisition Corp (a Colorado corporation) which had no assets and
approximately $65,000 in liabilities. Prior to this exchange, Woodcom
International, Inc. issued an additional 16,000,000 shares of common stock for
approximately $165,000. Desert Springs Acquisition Corp subsequently moved its
state of incorporation to Nevada by merger of the Colorado corporation with and
into iDial Networks, Inc. (a Nevada corporation). There was not a significant
change in capitalization as a result of these transactions.
Note 7 - Subsequent Events (continued)
The following table reflects the pro forma effect of the common stock exchange
with Desert Springs Acquisition Corp. and the additional common shares issued in
connection therewith as of September 30, 1999 and for the nine months ended
September 30, 1999:
Balance Sheet (Unaudited)
Desert
Woodcom Springs Pro Forma Adjustments
International Acquisition --------------------------------
Inc. Corp. Debit Credit Combined
-------------------------------------------------------------
Total assets $671,832 $ - $ - $ - $671,832
=============================================================
Total
liabilities (1,215,390) (76,184) 165,000 (2) - (1,126,574)
Common stock $ 1 $ 254 254 (1) $1600 (2) $ 1,601
Additional
paid-in
capital 299 425,981 425,591 (1) 163,400 (2) 163,699
Retained (543,858) (502,419) - 426,235 (1) 620,042
deficit
Total Equity 543,558 76,184 - - -
=============================================================
Total $ 671,832 $ 76,184 $ 426,235 $(591,235) $454,742
=============================================================
Statement of Operations (Unaudited)
Sales $1,368,026 $ - $ - $ - $1,368,026
Cost of sales (1,167,816) - - - (1,167,816)
Selling
general and
administrative
expenses (436,527) (41,322) - - (477,859)
Interest
expense (13,492) - - - (13,492)
--------------------------------------------------------------
Net loss $ (249,809) $ (41,332) $ - $ - $(291,141)
==============================================================
Loss per $ (.16) $ (.002) $ - $ - $ (.18)
share
(1) To reflect assumption of liabilities and exchange by common stock.
(2) To reflect additional issuance of 16,000,000 common shares.
In December 1999, the Company entered into a consulting agreement requiring
total payments of approximately $65,000.
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