U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
Commission File No. 0-32033
I-TELECO.COM, INC.
(Name of Small Business Issuer in Its Charter)
Florida
(State of Other Jurisdiction of
Incorporation or Organization)
65-0928369
(I.R.S. Employer
Identification No.)
1221 Brickell Avenue, Suite 900, Miami, Florida 33131
(Address of Principal Executive Offices) (Zip Code)
(305) 358-3678
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 11, 2001 the Company had
19,014,120 shares of Common Stock outstanding, $0.0001 par value.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The accompanying statements should be read in conjunction with the audited
financial statements for the year ended December 31, 2000. In the opinion of
management, all adjustments (consisting only of normal occurring accruals)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the three months ended March 31, 2001
are not necessarily indicative of results that may be expected for the year
ending December 31, 2001. The financial statements are presented on the accrual
basis.
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND AS OF DECEMBER 31, 2000 AND
FOR THE PERIODS DECEMBER 16, 1998
(DATE OF INCEPTION) THROUGH MARCH 31, 2001
I-TELECO.COM, INC.
(A Development Stage Entity)
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 1
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-14
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Signatures
INDEPENDENT AUDITORS' REPORT
To the Stockholders and
Board of Directors
I-Teleco.com, Inc.
(A Development Stage Company)
Miami, Florida
We have audited the accompanying balance sheets of I-Teleco.com, Inc. (a
development stage company) as of December 31, 2000 and the related statements of
operations, changes in stockholders' equity and cash flows for years ended
December 31, 2000. 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 audit.
We conducted our audit 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 included 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 the audit provides 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 I-Teleco.com, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for the
years ended December 31, 2000 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 4 to the financial
statements, the Company is development stage company. The realization of a major
portion of its assets is dependent upon its ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
this uncertainty.
Salibello & Broder LLP
New York, NY
April 4, 2001
-1-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
(UNAUDITED) DECEMBER 31, 2000
MARCH 31, 2001
CURRENT ASSETS:
Cash $ 4,160 $ 49
Prepaid expenses 0 425
--------- ---------
Total current assets 4,160 474
TOTAL ASSETS
$ 4,160 $ 474
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 115,423 $ 99,268
Note payable-related parties 67,950 35,350
Loans and advances payable-related party 0 102,365
--------- ---------
Total current liabilities 183,373 236,983
STOCKHOLDERS' EQUITY:
Common Stock, par value $.0001 per share; 50,000,000 shares
Authorized; 19,014,120 and 19,000,000 shares issued and
Outstanding at March 31, 2001 & December 31, 2000, respectively 19,014 19,000
Additional paid-in capital (18,914) (18,900)
Deficit accumulated during the development stage (179,313) (236,609)
--------- ---------
Total stockholders' equity (179,213) (236,509)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,160 $ 474
========= =========
The accompanying notes are an integral part of
these financial statements.
-2-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
(UNAUDITED) FOR THE PERIOD
THREE MONTHS ENDED DECEMBER 16, 1998
MARCH 31 (INCEPTION) TO
2001 2000 MARCH 31, 2001
---- ---- --------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
------------ ------------ ------------
DEVELOPMENT STAGE EXPENSES:
Amortization $ 0 $ 0 $ 100
Accounting 3,000 0 11,000
Bank charges 57 59 365
Corporate fees 2,447 886 8,893
Consulting fees 0 80 268
Domain name 0 0 50,000
Dues and subscriptions 0 0 175
Equipment rental 0 0 1,599
Insurance 860 1,277 5,537
Legal fees 3,330 74 12,039
Office general 0 347 868
On-line services 75 0 200
Payroll taxes 2,596 0 9,376
Salary 28,846 19,963 143,200
Seminars and conferences 0 0 2,115
Telephone 89 1,078 4,509
Travel 302 3,332 8,690
Website development fee 0 0 18,538
Miscellaneous 0 0 230
Shareholder Related Service 163 0 163
Transfer Agent Fees 1,424 0 1,424
Printing 315 0 315
------------ ------------ ------------
TOTAL DEVELOPMENT STAGE EXPENSES 43,504 27,096 279,604
------------ ------------ ------------
LOSS FROM OPERATION $ (43,504) $ (27,096) $ (279,604)
============ ============ ============
CANCELLATION OF INDEBT INCOME 102,365 0 102,365
INTEREST EXPENSE (1,565) 0 (2,074)
NET INCOME (LOSS) (57,296) (27,096) $ (179,313)
============ ============ ============
LOSS PER COMMON SHARE
Basic and diluted $ (0.0030) $ (0.0014)
============ ============
Weighted-average number of
common shares outstanding 19,007,217 19,000,000
============ ============
The accompanying notes are an integral part of these financial statements.
-3-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------- ----- -----
Balance, December 16, 1998 (inception) 0 $ 0 $ 0 $ 0 $ 0
Common stock issued to related party for
management services 19,000,000 19,000 (18,900) 0 100
Loss during the development stage
for the period December 16, 1998
(inception) through December 31, 1998 0 0 0 (100) (100)
---------- ------ ------- -------- --------
Balance, December 31, 1998 19,000,000 19,000 (18,900) (100) 0
Loss during the development stage for the year
ended December 31, 1999 0 0 0 (7,549) (7,549)
---------- ------ ------- -------- --------
Balance, December 31, 1999 19,000,000 19,000 (18,900) (7,649) (7,549)
Loss during the development stage
for the year ended
December 31, 2000 0 0 0 (228,960) (228,960)
---------- ------ ------- -------- --------
Balance, December 31, 2000 19,000,000 $ 19,000 $ (18,900) $ (236,609) $ (236,509)
Increase in common stock issued
resulting from agreement and
plan of distribution ("spin-off") 14,120 14 (14) 0 0
Gain during the development stage
for the three months ended
March 31, 2001 0 0 0 57,296 57,296
---------- ------ ------- -------- --------
Balance, March 31, 2001 19,014,120 19,014 (18,914) (179,313) (179,213)
========== ====== ======= ======== ========
The accompanying notes are an integral part of these financial statements.
-4-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(UNAUDITED) FOR THE PERIOD
THREE MONTHS ENDED DECEMBER 16, 1998
MARCH 31 (INCEPTION) TO
2001 2000 MARCH 31, 2001
---- ---- --------------
OPERATING ACTIVITES
Income (Deficit) accumulated during the development stage $ 57,296 $(27,116) $(179,313)
Adjustments to reconcile net loss to net cash used by
operations
Amortization 0 100 100
Changes in assets and liabilities
(Increase) Decrease in prepaid expenses 425 0 0
Increase (Decrease) in accounts payable and accrued
Expenses 16,155 4,806 115,423
--------- -------- ---------
Net cash used by operating activities 73,876 (22,210) (63,790)
--------- -------- ---------
INVESTING ACTIVITIES:
Net cash used for investing activities 0 0 0
FINANCING ACTIVITIES
Proceed from loans and advances-related party (102,365) 22,615 0
Proceed from short term borrowings-net 32,600 0 67,950
--------- -------- ---------
Net cash used for financing activities (69,765) 22,615 67,950
--------- -------- ---------
INCREASE (DECREASE) IN CASH 4,111 405 4,160
--------- -------- ---------
CASH, BEGINNING OF YEAR 49 51 0
--------- -------- ---------
CASH, END OF YEAR $ 4,160 $ 456 $ 4,160
========= ======== =========
The accompanying notes are an integral part of these financial statements.
-5-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 16, 1998 (INCEPTION) TO MARCH 31, 2001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the three months ended March 31, 2001 and for the cumulative period
December 16, 1998 (inception) to March 31, 2001, the Company did not pay any
interest.
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVIITES:
The Company entered into the following non-cash transactions:
During the period ended December 31, 1998, the Company issued 19,000,000, post
split, shares of common stock to I-Incubator.Com, Inc. formerly known as Master
Communications, Corp. in consideration of management services in connection with
the formation of the Company. The transaction was valued at $100. (See note
8).
The accompanying notes are an integral part of these financial statements.
-6-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
I-Teleco.com, Inc. ("the Company"), formerly Mastertel Communications Corp., was
incorporated on December 16, 1998 under the laws of the State of Florida. The
Company's operations have been devoted primarily to structuring and positioning
itself to take advantage of opportunities available in the internet industry.
The Company intends to grow through internal development, strategic alliances
and acquisitions of existing business. The company has the authority to issue
50,000,000 shares of common stock. The Company is a development stage company
and has had limited activity.
Between October 2000 and December 2000, the Company issued to Atlas Equity
Group, Inc. three promissory notes aggregating $7,600. The promissory notes bear
interest of 10% per annum and were due and payable on dates ranging from January
2001 through February 2001. Michael Farkas is a beneficial owner of Atlas
Equity.
Between September 2000 and December 2000, the Company issued to Ostonian
Securities Limited seven promissory notes aggregating $27,750. The promissory
notes bear interest of 8.25% per annum and are due and payable on dates ranging
from September 2001 through December 2001. Atlas Equity Group, Inc. acts as an
advisor and consultant to Ostonian.
The Company was a wholly owned subsidiary of I-Incubator.com, Inc.
("Incubator"), formerly known as Master Communication, Inc., a publicly traded
company listed on the OTC Electronic Bulletin Board (OTCBB:INQU). On January 19,
2001, the Company entered into an agreement and plan of distribution
("spin-off") with Incubator. Upon spin-off, the shareholders of I-Incubator
received 0.7810 shares of the Company's common stock for each share of Incubator
owned as of February 13, 2001, totaling 19,014,120 common shares. As a result of
this spin-off and share distribution Atlas Equity Group, Inc., a related party,
in which Michael D. Farkas is a beneficial owner, received 3,999,985 shares,
representing approximately 21% of the Company's outstanding common stock, The
Farkas Group, Inc., in which Michael D. Farkas is a beneficial owner, received
2,577,300 shares representing approximately 13.5% of the Company's common stock
and GSM Communications, Inc. in which Michael D. Farkas is a beneficial owner,
received 2,153,217 shares representing approximately 11.3% of the Company. Also,
as a result of the spin off I-Incubator has agreed to cancel the debt owed by
the Company of $102,365.
-7-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 disclosures of
contingent assets and liabilities as of the date of the financial statements and
reporting period. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, the company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
CARRYING VALUES
The Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment. Whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable, the Company will reduce the carrying value of the assets and charge
operations in the period the impairment occurs.
INCOME TAXES
The Company utilizes Statement of Financial Standards ("SFAS") No. 109,
"Accounting for Income Taxes", which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in financial statements or tax returns. Under this method,
deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The accompanying
financial statements have no provisions for deferred tax assets or liabilities.
-8-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NET LOSS PER SHARE
The Company has adopted SFAS No. 128 "Earnings Per Share". Basic loss per share
is computed by dividing the loss available to common shareholders by the
weighted-average number of common shares outstanding. Diluted loss per share is
computed in a manner similar to the basic loss per share, except that the
weighted-average number of shares outstanding is increased to include all common
shares, including those with the potential to be issued by virtue of warrants,
options, convertible debt and other such convertible instruments. Diluted
earnings per share contemplates a complete conversion to common shares of all
convertible instruments only if they are dilutive in nature with regards to
earnings per share. Since the Company has incurred net losses for all periods,
and since there are no convertible instruments, basic loss per share and diluted
loss per share are the same.
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosures about Fair Value of Financial Instruments" requires
the disclosure of the fair value of financial instruments. The Company's
management, using available market information and other valuation methods, has
determined the estimated fair value amounts. However, considerable judgment is
required to interpret market data in developing estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market exchange.
STOCK COMPENSATION
The Company has adopted SFAS No. 123 "Accounting for Stock-Based Compensation."
SFAS No. 123 encourages the use of the fair market method to account for
transactions involving stock based compensation that are entered into for fiscal
years beginning after December 15, 1995. Under the fair value method, the
issuance of equity instruments to non-employees in exchange for goods or
services should be accounted for based on the fair value of the goods or
services received or the fair value of the income instruments issued, whichever
is more reliably measured.
3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (`FASB") issued SFAS No.
130, "Reporting Comprehensive Income". This statement requires companies to
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial
-9-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
position. SFAS No. 130 is effective for financial statements issued for fiscal
years beginning after December 15, 1997. Management believes that SFAS No. 130
will not have a material effect on the Company's financial statements.
In June 1997, FASB issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information". This statement establishes additional
standards for segment reporting in financial statements and is effective for
financial statements for fiscal years beginning after December 15, 1997.
Management believes that SFAS No. 131 will not have a material effect on the
Company's financial statements.
In April, 1998, the American Institute of Certified Public Accountants issued
Statement of Position No. 98-5, "Reporting for Costs of Start-Up Activities",
("SOP 98-5"). The Company is required to expense all start-up costs related to
new operations as incurred. In addition, all start-up costs that were
capitalized in the past must be written off when SOP 98-5 is adopted. The
Company's adoption did not have a material impact on the Company's financial
position or results of operations.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", is
effective for financial statements issued for fiscal years beginning after June
15, 1999. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Management does not believe that
SFAS No. 133 will have a material effect on its financial position or results of
operations.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after The
Securitization of Mortgage Loans Held for Sale by Mortgage Banking Enterprises",
is effective for financial statements issued in the first fiscal quarter
beginning after December 15, 1998. This statement is not applicable to the
Company.
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical Corrections",
is effective for financial statements issued for fiscal years beginning February
1999. This statement is not applicable to the Company.
4. DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN MATTERS
The Company's initial activities have been devoted to developing a business
plan, structuring and positioning itself to take advantage of opportunities
available in the internet industry and raising capital for future operations and
administrative functions.
The ability of the Company to achieve its business objectives is contingent upon
its success in raising additional capital until adequate revenues are realized
from operations.
-10-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, development stage losses from December 16, 1998 (inception) to March
31, 2001 aggregated $179,313. The Company's cash flow requirements during this
period have been met by contributions of capital and debt financing. No
assurance can be given that these sources of financing will continue to be
available. If the Company is unable to generate profits, or unable to obtain
additional funds for its working capital needs, it may have to cease operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of assets or liabilities that might be
necessary should the Company be unable to continue as a going concern.
5. INCOME TAXES
No provisions for income taxes have been made because the Company has sustained
cumulative losses since the commencement of operations. As of March 31, 2001 and
December 31, 2000, the Company had net operating loss carryforwards ("NOL's") of
$179,313 and $236,609, respectively, which will be available to reduce future
taxable income and expense in the year ending December 31, 2015 and 2014,
respectively.
In accordance with SFAS No. 109 the Company has computed the components or
deferred income taxes as follows.
March 31, 2001 December 31, 2000
-------------- -----------------
Deferred tax assets $ 70,829 $ 93,461
Valuation allowance (70,829) (93,461)
----------------- -----------------
Deferred tax asset, net $ - $ -
================= =================
At March 31, 2001 and December 31, 2000, a valuation allowance has provided and
realization of the deferred tax benefit is not likely.
The effective tax rate varies from the U.S. Federal statutory tax rate for both
the periods ended March 31, 2001 and December 31, 2000, principally due to the
following
-11-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
U.S. statutory tax rate 34%
State and local taxes 5.5
Valuation allowance (39.5)
-----
Effective rate - %
=====
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of March 31, 2001 and December 31, 2000
consisted of the following:
March 31, 2001 December 31, 2000
--------- ---- -----------------
Accounts payable $ 55,146 $ 44,759
Accrued expenses 8,203 4,000
Due to related party 50,000 50,000
Accrued interest 2,074 509
------------ ------------
Total accounts payable
accrued expenses $ 115,423 $ 99,268
============ ============
7. NOTE PAYABLE
As of March 31, 2001 and December 31, 2000, notes payable consist of twenty-one
and ten individual notes aggregating a total of $67,950 and $35,350,
respectively. These notes are short-term borrowings with maturities of less then
or equal to one year with an interest rate ranging from 8.25% to 11%.
As of March 31, 2001 and December 31, 2000, notes payable to related parties
totaled $64,350 and $35,350, respectively, with interest rates of 8.25% to 10%
and 10% per annum, respectively.
-12-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
8. STOCKHOLDERS' EQUITY
On December 16, 1998 the Company issued 1,000 restricted common shares to
I-Incubator.com, Inc. ("Incubator"), formerly known as Master Communication
Corp. in consideration for services rendered in formation of the company valued
at $100.
On May 18, 2000, the Company authorized a forward split of 19,000 to 1 on its
common stock. Immediately following the split Incubator owned 19,000,000
restricted common shares.
On January 19, 2001 the Company entered into an agreement and plan of
distribution ("spin-off") with its parent company Incubator. Shareholders of
Incubator received .7810 shares of the Company's common stock for each share of
incubator. The spin-off resulting in 14,120 additional shares issued due to
rounding.
9. RELATED PARTY TRANSACTIONS
The Company has received funds from Incubator to meet various working capital
requirements. As of December 31, 2000, these advances totaled $102,365 and are
non-interest bearing and due on demand. In January 2001, the total amount of
debt was cancelled due to spin off agreement with Incubator.
On March 1, 2000 the Company agreed to reimburse Atlas Equity Group, Inc., a
related party, $159.85 per month (on a month-to-month basis) for the use of a
laptop computer. Atlas Equity Group, Inc. is owned by Michael D. Farkas.
On September 1, 2000, the Company entered into an agreement with Michael D.
Farkas, the director of Incubator, a related party to purchase a domain name,
I-Teleco.com, for $50,000.
On October 5, 2000, the Company entered into an agreement with Envitro.com,
Inc., a related party, to design and construct a web page for $18,538. Envitro
.com, Inc. is a subsidiary of WealthHound.com, Inc., in which Michael D. Farkas
is a beneficial owner.
Between October 2000 and March 31, 2001, the Company issued to Atlas Equity
Group, Inc. thirteen promissory notes aggregating $36,600. The promissory notes
bear interest of 10% per annum and were due and payable on dates ranging from
January 2001 through June 2001. Michael Farkas is a beneficial owner of Atlas
Equity.
-13-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Between September 2000 and March 31, 2001, the Company issued to Ostonian
Securities Limited seven promissory notes aggregating $27,750. The promissory
notes bear interest of 8.25% per annum and are due and payable on dates ranging
from September 2001 through December 2001. Atlas Equity Group, Inc. acts as an
advisor and consultant to Ostonian.
10. SUBSEQUENT EVENT
In April, 2001, the Company issued a promissory note to Atlas Equity Group,
Inc., a related party in which Michael D. Farkas is a beneficial owner, for an
amount of $4,000 at a rate of 10% per annum. The promissory note principal
amount and accrued interest are due and payable on July 17, 2001.
-14-
Item 2. Management's Discussion and Analysis
The following plan of operation provides information which management believes
is relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our financial
statements and notes thereto. I-Teleco.com, Inc., is a development - stage
company. Because the Company has not generated any revenue, it intends to report
its plan of operation below.
The following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results, expectations and plans discussed in these
forward-looking statements.
The Company's operations have been devoted primarily to developing a business
plan and raising capital for future operations and administrative functions. The
Company intends to grow through internal development, strategic alliances, and
acquisitions of existing businesses. Because of uncertainties surrounding its
development, the Company anticipates incurring development stage losses in the
foreseeable future. The ability of the Company to achieve its business
objectives is contingent upon its success in raising additional capital until
adequate revenues are realized from operations.
PERIOD FROM DECEMBER 16, 1998 (INCEPTION) THROUGH MARCH 31, 2001
Our cumulative net losses since the inception are attributable to the fact that
we have not derived any revenue from operations to offset out business
development expenses.
Operating expenses since inception have amounted to $179,313, primarily
consisting of accounting ($11,000), legal ($12,039), salary ($143,200), website
development fees ($18,538) and the expense in retaining their domain name
($50,000). The accounting and legal expenses were in connection with the
Company's annual and quarterly regulatory filings.
YEAR ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999
Development stage expenses during the year ended December 31, 2000 were $228,960
as compared to $7,549 for the period ended December 31, 1999.
Expenses for the year ended December 31, 2000 were primarily professional fees
($13,209) in connection with quarterly regulatory filings, fees in connection
with the purchase of a domain name ($50,000), Website development fees
($18,538), and salary ($114,354).
Expenses for the year ended December 31, 1999 were primarily professional fees
($3,500) and corporation fee ($4,019) in connection with costs incurred with the
formation and annual regulatory filings of the Company.
QUARTER ENDED MARCH 31, 2001 AND MARCH 31, 2000
Development stage income during the quarter ended March 31, 2001 was $57,296 as
compared to expenses of $27,096 for the quarter ended March 31, 2000.
Expenses for the quarter ended March 31, 2001 were primarily salary ($28,846)
accounting ($3,000), legal ($3,330), and transfer agent fees ($1,424). These
fees are related to the Company's annual and quarterly regulatory filings along
with the expenses incurred as a result of the agreement and plan of distribution
("spin-off") from I-Incubator. Also as a result of the spin-off Incubator agreed
to cancel $102,365 of debt owed by the Company.
Expenses for the quarter ended March 31, 2000 were primarily salary ($19,963),
travel ($3,332), insurance ($1,277), and corporate fees ($886). These expenses
are in connection with daily operations and the formation of the Company.
Liquidity and Capital Resources
Despite capital contributions and both related party and third party loan
commitments, the company from time to time experienced, and continues to
experience, cash flow shortages that have slowed the Company's growth.
The Company has primarily financed its activities from sales of capital stock of
the Company and from loans from related and third parties. A significant portion
of the funds raised from the sale of capital stock has been used to cover
working capital needs such as office expenses and various consulting fees.
The Company continues to experience cash flow shortages, and anticipates this
continuing through the foreseeable future. Management believes that additional
funding will be necessary in order for it to continue as a going concern. The
Company is investigating several forms of private debt and/or equity financing,
although there can be no assurances that the Company will be successful in
procuring such financing or that it will be available on terms acceptable to the
Company.
For the three months ended March 31, 2001, we incurred a net income of $57,296.
Our accumulated deficit since inception is $179,313. Such accumulated losses
have resulted primarily from costs incurred in the purchase of our domain name,
salary and various professional fees.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K. None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed in its
behalf by the undersigned, thereunto duly authorized, on May 16, 2001.
I-Teleco.com, Inc.
(Registrant)
Date: May 16, 2001 /s/ Jamee Kalimi
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Vice President
Secretary