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 June 30, 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 No X
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 14, 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 six months ended June 30, 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 SIX MONTHS ENDED
JUNE 30, 2001 AND AS OF DECEMBER 31, 2000 AND
FOR THE PERIODS DECEMBER 16, 1998
(DATE OF INCEPTION) THROUGH JUNE 30, 2001
I-TELECO.COM, INC.
(A Development Stage Entity)
TABLE OF CONTENTS
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-13
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
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AS OF JUNE 30, 2001 AND
AS OF DECEMBER 31, 2000 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2001 AND 2000 AND FOR THE PERIODS
DECEMBER 16, 1998 (DATE OF INCEPTION) THROUGH JUNE 30, 2001
I-TELECO.COM, INC.
(A Development Stage Entity)
TABLE OF CONTENTS
------------------------------------------------------------------------------
FINANCIAL STATEMENTS AS OF JUNE 30, 2001 AND AS OF DECEMBER 31, 2000 AND FOR THE
SIX MONTHS ENDED JUNE 30, 2001 AND 2000 AND FOR THE PERIOD DECEMBER 16, 1998
(DATE OF INCEPTION) THROUGH JUNE 30, 2001
Balance sheets 2
Statements of operations 3
Statements of stockholders' equity (deficit) 4
Statements of cash flows 5-6
Notes to financial statement 7-13
I-teleco.com, Inc.
(A Development Stage Company)
Balance Sheet
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
---- ----
ASSETS
CURRENT ASSETS:
Cash $ 2,285 $ 49
Prepaid expenses 0 425
--------- ---------
Total current assets 2,285 474
TOTAL ASSETS $ 2,285 $ 474
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 88,717 $ 49,268
Due to shareholder 50,000 50,000
Note payable-related parties 93,450 35,350
Loans and advances payable-related party 0 102,365
--------- ---------
Total current liabilities 232,167 236,983
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001 per share; 50,000,000 shares
Authorized; 20,014,120 & 19,000,000 shares issued and
Outstanding at June 30, 2001 & December 31, 2000, respectively 20,014 19,000
Additional paid-in capital (18,914) (18,900)
Deficit accumulated during the development stage (230,982) (236,609)
--------- ---------
Total stockholders' equity (229,882) (236,509)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,285 $ 474
========= =========
F-2
I-teleco.com
(A Development Stage Company)
Statement of Operations
(UNAUDITED) (UNAUDITED) (UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED FOR THE PERIOD
JUNE 30, JUNE 30, NOVEMBER 22, 1999
(DATE OF INCEPTION) TO
2001 2000 2001 2000 JUNE 30, 2001
---- ---- ---- ---- -------------
DEVELOPMENT STAGE REVENUES $ - $ - $ - $ - $ -
DEVELOPMENT STAGE EXPENSES:
Amortization 0 0 0 0 100
Accounting 8,169 0 5,169 0 16,169
Bank charges 102 104 45 45 410
Consulting fees 1,850 80 1,850 0 8,564
Equpiment- rental 0 480 0 480 1,599
On-line services 150 0 75 0 275
Dues and subscriptions 0 175 0 175 175
Domain names 0 0 0 0 50,000
Insurance expense 2,646 2,127 1,786 850 7,323
Legal fees 6,578 3,599 3,248 3,525 15,287
Corporate fees 4,480 1,364 446 478 4,480
Office general 0 840 0 493 868
Wages 62,500 51,854 33,654 33,654 176,854
Seminars and conferences 0 2,115 0 2,115 2,115
Payroll taxes 5,171 4,365 2,575 2,602 11,951
Telephone 428 2,525 339 1,448 4,848
Travel 566 7,582 264 4,250 8,954
Website development 0 0 0 0 18,538
Miscellaneous 0 0 0 0 230
Printing 315 0 0 0 315
--------- -------- -------- -------- ---------
TOTAL DEVELOPMENT STAGE EXPENSES 92,955 77,210 49,451 50,115 329,055
--------- -------- -------- -------- ---------
LOSS FROM OPERATION (92,955) (77,210) (49,451) (50,115) (329,055)
========= ======== ======== ======== =========
GAIN ON CANCELLATION OF INDEBT 102,365 0 0 0 102,365
INTEREST EXPENSE (3,783) 0 (3,274) 0 (4,292)
--------- -------- -------- -------- ---------
NET GAIN / (LOSS) $ 5,627 $(77,210) $(52,725) $(50,115) $(230,982)
========= ======== ======== ======== =========
LOSS PER COMMON SHARE
Basic & diluted $ 0.0003 $ (0.0041) $(0.0027) $(0.0026)
========== ========== ========== ==========
Weighted-average number of common
shares outstanding 19,442,691 19,000,000 19,226,157 19,000,000
========== ========== ========== ==========
F-3
I-teleco.com, Inc.
(A Development Stage Company)
Statments of Chnages on Stockholders' Equity (Deficit)
(Unaudited)
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------- ----- -----
Balance, December 16, 1998 (date of inception) 0 $ 0 $ 0 $ 0 $ 0
Common stock issued to a related party for management service 19,000,000 19,000 (18,900) 0 100
Loss during the development stage for the period
December 16, 1998 (date of 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
---------- ------- -------- --------- ---------
Restricted common stock issued for services
rendered to the Company 1,000,000 1,000 0 0 6,000
Gain during the development stage for the six months ended
June 30, 2001 0 0 0 5,627 5,627
---------- ------- -------- --------- ---------
Balance, June 30, 2001 20,014,120 $20,014 $(18,914) $(230,982) $(229,882)
========== ======= ======== ========= =========
F-4
I-teleco.com, Inc.
(A Development Stage Company)
Statments of Cash Flows
(UNAUDITED) (UNAUDITED)
SIX MONTHS ENDED FOR THE PERIOD
JUNE 30, DECEMBER 16, 1998
(DATE OF INCEPTION)
2001 2000 TO JUNE 30, 2001
---- ---- ----------------
OPERATING ACTIVITES
Income (Deficit) accumulated during the development stage $ 5,627 $(77,230) $(230,982)
Adjustments to reconcile net loss to net cash used by
operations:
Amortization 0 100 100
Share issued for management services 1,000 0 1,000
Changes in assets and liabilities:
(Increase) Decrease in prepaid expenses 425 0 0
Increase (Decrease) in accounts payable and accrued
expenses (10,551) 17,428 88,717
--------- -------- ---------
Net cash used by operating activities (3,499) (59,702) (144,825)
--------- -------- ---------
INVESTING ACTIVITIES:
Net cash used for investing activities 0 0 0
--------- -------- ---------
FINANCING ACTIVITIES
Proceed from loans and advances-related party (102,365) 0 0
Proceed from short term borrowings-net 108,100 60,214 143,450
--------- -------- ---------
Net cash used for financing activities 5,735 60,214 143,450
--------- -------- ---------
INCREASE (DECREASE) IN CASH $ 2,236 $ 512 $ (2,285)
========= ======== =========
CASH, BEGINNING OF YEAR $ 49 $ 51 $ 0
========= ======== =========
CASH, END OF YEAR $ 2,285 $ 563 $ (2,285)
========= ======== =========
F-5
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 16, 1998 (INCEPTION) TO JUNE 30, 2001
------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the six months ended June 30, 2001 and for the cumulative period
December 16, 1998 (date of inception) to June 30, 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).
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. The transaction was valued at $14 (See note 8).
On May 22, 2001, the Company issued Joshua Lurie the president of the
Company, 1,000,000 shares of restricted common stock for management
services rendered to the company. The transaction was valued at $1,000 (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.
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.
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.
-7-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
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.
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.
-8-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
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
Stock-based compensation is recognized using the intrinsic value method
prescribed in Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Accordingly, compensation expense for stock options is measured as the
excess, if any, of the fair value of the Company's'stock at the date of the
grant over the amount an employee must pay to acquire the stock and is
amortized over the vesting period. The Company has adopted the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, which
requires the Company to disclose the pro forma effects on earnings and
earnings per share as if SFAS No. 123 had been adopted.
3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board issued SFAS No. 138,
"Accounting for Derivative Instruments and Hedging Activities - An
Amendment of FASB Statement No. 133." SFAS 138 amends the accounting and
reporting standards for certain derivatives and hedging activities such as
net settlement contracts, foreign currency transactions and inter company
derivatives. The Company does not currently hold derivative instruments or
engage in hedging activities. The requirements of SFAS 138 does not have a
material effect on our financial statements and related disclosures.
-9-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
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.
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 (date of
inception) to June 30, 2001 aggregated $230,982. 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
June 30, 2001 and December 31, 2000, the Company had cumulative net
operating loss carryforwards ("NOL's") of $230,982 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.
June 30, 2001 December 31, 2000
Deferred tax assets $ 91,238 $ 93,461
Valuation allowance (91,238) (93,461)
--------- ---------
Deferred tax asset, net $ - $ -
======= =======
-10-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
At June 30, 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 June 30, 2001 and December 31, 2000, principally due
to the following
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 June 30, 2001 and December 31,
2000 consisted of the following:
June 30, December 31,
2001 2000
----- ----
Accounts payable $ 80,825 $ 44,759
Accrued expenses 3,600 4,000
Accrued interest 4,292 509
------ ----
Total accounts payable and accrued expenses $ 88,717 $ 49,268
======== ========
7. NOTE PAYABLE
As of June 30, 2001 and December 31, 2000, notes payable consist of twenty
seven and ten individual notes aggregating a total of $93,450 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%.
-11-
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.
On May 22, 2001, the Company issued 1,000,000 restricted common shares to
Joshua Lurie, the president of the Company for management services rendered
to the company valued at $1,000.
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 a 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. Michael D.Farkas owns Atlas Equity Group, Inc. The
contract was cancelled at the end of 2000.
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 Website 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 June 30, 2001, the Company issued to Atlas Equity
Group, Inc. nineteen promissory notes aggregating $62,100. The promissory
notes bear interest of 10% per annum and were due and payable on dates
ranging from January 2001 through June 2002. Michael Farkas is a beneficial
owner of Atlas Equity.
-12-
I-TELECO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
Between September 2000 and June 30, 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., in which Michael Farkas is a beneficial owner, acts as an
advisor and consultant to Ostonian.
10. SUBSEQUENT EVENT
In July, 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 $1,500 at a rate of 10% per annum. The promissory note
principal amount and accrued interest are due and payable on July 9, 2002.
-13-
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 (DATE OF INCEPTION) THROUGH JUNE 30, 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 $229,982, primarily
consisting of accounting ($16,169), legal ($15,287), salary ($176,854), 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.
SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
Development stage income during the six months ended June 30, 2001 was $6,627 as
compared to expenses of $77,210 for the six months ended June 30, 2000.
Expenses for the six months ended June 30, 2001 were primarily salary ($62,500)
accounting ($8,169), legal ($6,578), and corporate fees ($4,480). These fees are
related to the Company's quarterly regulatory filings along with the expenses
incurred as a result of the agreement and plan of distribution ("spin-off") from
I-Incubator. Also resulting from the spin-off, Incubator agreed to cancel
$102,365 of debt owed by the Company which result in gain for the six months
ended June 30, 2001.
Expenses for the six months ended June 30, 2000 were primarily salary ($51,854),
travel ($7,583), insurance ($2,127), corporate fees ($1,364) and payroll taxes
($4,365). These expenses are in connection with daily operations and the
formation of the Company.
THREE MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
Development stage expenses during the three months ended June 30, 2001 were $48,
451 as compared to $50,115 for the period ended June 30, 2000.
Expenses for the three months ended June 30, 2001 were primarily salary
($33,654) along with accounting ($5,169) and legal fee ($3,248) in connection
with quarterly regulatory filings.
Expenses for the three months ended June 30, 2000 were primarily salary
($33,654), travel ($4,250), payroll taxes ($2,575) and seminars and conferences
($2,115). These expenses resulted from daily operation in forming 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.
For the six months ended June 30, 2001, we had a net income of $6,627. Our
accumulated deficit since inception is $229,982. Such accumulated losses have
resulted primarily from costs incurred in the purchase of our domain name,
salary and various professional 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.
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 October 25, 2001.
I-Teleco.com, Inc.
(Registrant)
Date: October 25, 2001 /s/ Jamee Kalimi
---------------------
Vice President
Secretary