UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C., 20549 FORM 10-Q SB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly report ended June 30, 2000 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ___________ Commission File number 000-28697 VOIP TELECOM, INC. (Exact name of small business issuer as registrant as specified in charter) Nevada 86-0880742 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 460-1301 Dove Street, Newport Beach, CA 92660 (Address of principal executive office) Registrants telephone no., including area code (702) 866-5834 Check whether the registrant (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 registrant was required to file such reports), Yes [X] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the last practicable date. Class Outstanding as of June 30, 2000 Common Stock, $.0001 19,939,402 TABLE OF CONTENTS Heading Page Item 1. Consolidated Financial Statements 3 Consolidated Balance Sheets June 30, 2000 And June 30, 1999 4 Consolidated Statements of Operations three months Ended June 30, 2000 and 1999 5 Consolidated Statements of Stockholders Equity 6-7 Consolidated Statements of Cash Flows three Ended June 30, 2000 and 1999 8-9 Notes to Consolidated Financial Statements 10-11 Item 2. Managements Discussion and Analysis and Result of Operations 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Security 14 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matter to a Vote of Securities Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports of Form 8-K 16 Signatures 17 PART 1 Item 1. Financial Statement The following unaudited Financial Statements for the period ended March 31, 2000 have been prepared by the Company. VOIP Telecom, Inc. FKA Presidents Telecom, Inc. (A Development Stage Company) FINANCIAL STATEMENTS June 30, 2000 and December 31, 1999 VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Balance Sheets ASSETS June 30, December 31, 2000 1999 (Unaudited) CURRENT ASSETS Cash $ 144,315 $ 8,339 Accounts receivable -- 4,894 Total Current Assets 144,315 13,233 FIXED ASSETS, NET 1,598,100 254,306 OTHER ASSETS Goodwill, net 6,914,754 -- Notes receivable - related party -- -- Deposits -- 34,968 Total Other Assets 6,914,754 34,968 TOTAL ASSETS $ 8,657,169 $ 302,507 LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable $ 61,462 $ -- Accrued expenses 18,202 -- Notes payable 1,117,212 -- Notes payable - related party 135,202 131,599 Total Current Liabilities 1,332,078 131,599 STOCKHOLDERS EQUITY Common stock: 100,000,000 shares authorized of $0.0001 par value 19,939,402 and 21,095,002 shares issued and outstanding 1,994 2,110 Additional paid-in capital 9,619,441 785,619 Subscription receivable -- (150,000) Deficit accumulated during the development stage (2,296,344) (466,821) Total Stockholders Equity 7,325,091 170,908 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,657,169 $ 302,507 VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Statements of Operations (Unaudited) For the Six months ended June 30, 2000 1999 REVENUES $ 57,760 $ - EXPENSES Depreciation expense 158,381 - General and administrative 684,771 - Loss on investment 15,000 - Bad debt expense 1,344,042 - Total Expenses 2,202,194 - LOSS FROM OPERATIONS (2,144,434) - OTHER INCOME (EXPENSE) Interest expense (18,202) - Interest income 65 - Gain on disposition of assets 333,048 - Total Other Income (Expense) 314,911 - NET LOSS $ (1,829,523) $ - BASIC LOSS PER SHARE $ (0.10) $ (0.00) For the Three Months Ended June 30, 2000 1999 REVENUES $ - $ - EXPENSES Depreciation expense 151,706 - General and administrative 162,317 - Loss on investment - - Bad debt expense 267,510 - Total Expenses 581,533 - LOSS FROM OPERATIONS (581,533) - OTHER INCOME (EXPENSE) Interest expense (18,202) - Interest income 65 - Gain on disposition of assets 333,048 - Total Other Income (Expense) 314,911 - NET LOSS $ (266,622) $ - BASIC LOSS PER SHARE $ (0.01) $ (0.00) From Inception on May 4 1987 through June 30 2000 REVENUES $ 93,877 EXPENSES Depreciation expense 175,155 General and administrative 804,453 Loss on investment 15,000 Bad debt expense 1,710,524 Total Expenses 2,705,132 LOSS FROM OPERATIONS (2,611,255) OTHER INCOME (EXPENSE) Interest expense (18,202) Interest income 65 Gain on disposition of assets 333,048 Total Other Income (Expense) 314,911 NET LOSS $ (2,296,344) BASIC LOSS PER SHARE VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Statements of Stockholders Equity Common Stock Shares Amount Inception, May 4, 1987 - $ - Common stock issued for cash 10,000,000 1,000 Net loss from inception on May 4, 1997 through December 31, 1997 - - Balance, December 31, 1997 10,000,000 1,000 Net loss for the year ended December 31, 1998 - - Balance, December 31, 1998 10,000,000 1,000 Common stock issued for cash at $0.15 per share 1,000,000 100 Common stock issued for purchase of Global E-Com at $0.054 per share 10,000,000 1,000 Contributed capital - - Stock issued for cash at $1.00 per share 90,002 9 Stock issued for services at $1.00 per share 5,000 1 Net loss for the year ended December 31, 1999 - - Balance, December 31, 1999 21,095,002 $ 2,110 Additional Paid - in Subscription Capital Receivable Inception, May 4, 1987 $ - $ - Common stock issued for cash - - Net loss from inception on May 4, 1997 through December 31, 1997 - - Balance, December 31, 1997 - - Net loss for the year ended December 31, 1998 - - Balance, December 31, 1998 - - Common stock issued for cash at $0.15 per share 149,900 (150,000) Common stock issued for purchase of Global E-Com at $0.054 per share 540,662 - Contributed capital 67 - Stock issued for cash at $1.00 per share 89,991 - Stock issued for services at $1.00 per share 4,999 - Net loss for the year ended December 31, 1999 - - Balance, December 31, 1999 $ 785,619 $ (150,000) Deficit Accumulated During the Development Stage Inception, May 4, 1987 $ - Common stock issued for cash - Net loss from inception on May 4, 1997 through December 31, 1997 (1,000) Balance, December 31, 1997 (1,000) Net loss for the year ended December 31, 1998 (1,450) Balance, December 31, 1998 (2,450) Common stock issued for cash at $0.15 per share - Common stock issued for purchase of Global E-Com at $0.054 per share - Contributed capital - Stock issued for cash at $1.00 per share - Stock issued for services at $1.00 per share - Net loss for the year ended December 31, 1999 (464,371) Balance, December 31, 1999 $ (466,821) VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) (Unaudited) Common Stock Shares Amount Balance, December 31, 1999 21,095,002 $ 2,110 Common stock issued for cash at $1.00 per share 2,284,400 228 Stock offering costs - - Common stock issued for services at $3.00 per share 50,000 5 Common stock issued to acquire 100% of Central America Fuel Technology, Inc. on March 15, 2000 5,000 - Common stock issued for services at $1.00 per share 5,000 1 Sale of Global E-Com (10,000,000) (1,000) Common stock issued for Access at $1.00 per share 4,000,000 400 Common stock issued for ICE at $1.00 per share 2,500,000 250 Receipt of subscription receivable - - Net loss for the six months June 30, 2000 (unaudited) - - Balance, June 30, 2000 (unaudited) 19,939,402 $ 1,994 Additional Paid In Subscription Capital Receivable Balance, December 31, 1999 $ 785,619 $ (150,000) Common stock issued for cash at $1.00 per share 2,284,172 - Stock offering costs (120,695) - Common stock issued for services at $3.00 per share 149,995 - Common stock issued to acquire 100% of Central America Fuel Technology, Inc. on March 15, 2000 15,000 - Common stock issued for services at $1.00 per share 5,000 - Sale of Global E-Com 1,000 - Common stock issued for Access at $1.00 per share 3,999,600 - Common stock issued for ICE at $1.00 per share 2,499,750 - Receipt of subscription receivable - 150,000 Net loss for the six months June 30, 2000 (unaudited) - - Balance, June 30, 2000 (unaudited) $ 9,619,441 $ - Deficit Accumulated During the Developement Stage Balance, December 31, 1999 $ (466,821) Common stock issued for cash at $1.00 per share - Stock offering costs - Common stock issued for services at $3.00 per share - Common stock issued to acquire 100% of Central America Fuel Technology, Inc. on March 15, 2000 - Common stock issued for services at $1.00 per share - Sale of Global E-Com - Common stock issued for Access at $1.00 per share - Common stock issued for ICE at $1.00 per share - Receipt of subscription receivable - Net loss for the six months June 30, 2000 (unaudited) (1,829,523) Balance, June 30, 2000 (unaudited) $ (2,296,344) VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (1,829,523) $ - Adjustments to reconcile net loss to net cash used by operating activities: Depreciation expense 158,381 - Bad debt expense 1,344,042 - Loss on investment 15,000 - Common stock issued for services 155,000 - Gain on disposition of assets (333,048) - Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 4,894 - (Increase) decrease in notes receivable (1,729,400) - (Increase) decrease in deposits 34,968 - Increase (decrease) in accounts payable and accrued expenses 79,664 - Net Cash Provided (Used) by Operating Activities (2,100,022) - CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (400,000) - Net Cash Provided (Used) by Investing Activities (400,000) - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable 318,690 - Cash purchased in acquisition - - Common stock issued for subscription receivable 150,000 - Payment on note payable (339,377) - Proceeds from note payable - related party 342,980 - Common stock issued for cash 2,163,705 - Net Cash Provided (Used) by Financing Activities $ 2,635,998 $ - For the Three Months Ended June 30 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (266,622) $ - Adjustments to reconcile net loss to net cash used by operating activities: Depreciation expense 151,706 -- Bad debt expense 267,510 -- Loss on investment -- -- Common stock issued for services 5,000 -- Gain on disposition of assets (333,048) -- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable -- -- (Increase) decrease in notes receivable (652,868) -- (Increase) decrease in deposits 34,968 -- Increase (decrease) in accounts payable and accrued expenses 79,664 -- Net Cash Provided (Used) by Operating Activities (713,690) -- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets -- -- Net Cash Provided (Used) by Investing Activities -- -- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable 318,690 -- Cash purchased in acquisition -- -- Common stock issued for subscription receivable 150,000 -- Payment on note payable (339,377) -- Proceeds from note payable - related party 43,380 -- Common stock issued for cash 630,000 -- Net Cash Provided (Used) by Financing Activities $ 802,693 $ -- From Inception on May 4 1987 through June 30 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(2,296,344) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation expense 175,155 Bad debt expense 1,710,525 Loss on investment 15,000 Common stock issued for services 11,067 Gain on disposition of assets (333,048) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable -- (Increase) decrease in notes receivable (1,683,005) (Increase) decrease in deposits 34,218 Increase (decrease) in accounts payable and accrued expenses 79,664 Net Cash Provided (Used) by Operating Activities (2,286,768) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (443,290) Net Cash Provided (Used) by Investing Activities (443,290) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable 318,690 Cash purchased in acquisition 6,776 Common stock issued for subscription receivable -- Payment on note payable (348,258) Proceeds from note payable - related party 343,460 Common stock issued for cash 2,553,705 Net Cash Provided (Used) by Financing Activities $ 2,874,373 VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Consolidated Statements of Cash Flows (Continued) (Unaudited) For the Six Months Ended June 30 2000 1999 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 135,976 $ - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,339 - CASH AND CASH EQUIVALENTS AT ENDOF PERIOD $ 144,315 $ - CASH PAID FOR: Interest $ - $ - Taxes $ - $ - NON-CASH FINANCING ACTIVITIES: Common stock issued for acquisition of subsidiary $ 6,515,000 $ - For the Three Months Ended June 30 2000 1999 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 89,003 $ -- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 55,312 -- CASH AND CASH EQUIVALENTS AT ENDOF PERIOD $ 144,315 $ -- CASH PAID FOR: Interest $ -- $ -- Taxes $ -- $ -- NON-CASH FINANCING ACTIVITIES: Common stock issued for acquisition of subsidiary $6,500,000 $ -- From Inception on May 4 1987 through June 30 2000 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 144,315 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- CASH AND CASH EQUIVALENTS AT ENDOF PERIOD $ 144,315 CASH PAID FOR: Interest $ -- Taxes $ -- NON-CASH FINANCING ACTIVITIES: Common stock issued for acquisition of subsidiary $7,057,662 VOIP TELECOM, INC. (Formerly Presidents Telecom, Inc.) (A Development Stage Company) Notes to the Consolidated Financial statements June 30, 2000 and December 31, 1999 NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2000 and 1999 and for all periods presented have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Companys December 31, 1999 audited consolidated financial statements. The results of operations for periods ended June 30, 2000 and 1999 are not necessarily indicative of the operating results for the full years. NOTE 2 - MATERIAL EVENTS On May 15, 2000, the Company entered into a recission agreement with E-Vegas, whereby the Company was returned its 10,000,000 shares of stock previously issued to E-Vegas for Global-E-Com, resulting in a gain on disposition of assets of $333,048. On May 31, 2000, the Company issued 4,000,000 shares of common stock, valued at $1.00 per share, in exchange for 100% ownership of Access Network Limited. Goodwill of $4,065,167 was recorded as a result of the acquisition. On June 5, 2000, the Company issued 2,500,000 shares of common stock, valued at $1.00 per share, in exchange for 100% ownership of International Communications and Equipment Corporation. Goodwill of $2,966,786 was recorded as a result of the acquisition. Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with financial statements and notes thereto appearing elsewhere in this Form 10-QSB. Overview The Company generated revenues of $57,760 in the first quarter of 2000 from its telecom operation in Costa Rica. The Companys current capital was provided by the sale of common stock in the first quarter of 2000. On March 1, 2000 the Company entered into an agreement to acquire Access Network, Ltd., on a share exchange. The transaction is scheduled to close in the second quarter. On March 15, 2000 the Company completed a merger with Central American Fuel Technologies, Inc., a Nevada corporation, whereby Presidents Telecom, Inc. was the surviving corporation. On May 15, 2000 the Company entered into a recission agreement with E-Vegas, whereby the Company was returned its 10,000,000 shares of stock previously issued to E-Vegas for Global E-Com, resulting in a gain on disposition of assets of $333,048. On May 31, 2000, the Company issued 4,000,000 shares of common stock, valued at $1.00 per share, in exchange for 100% ownership of Access Network Limited. Goodwill of $4,065,167 was recorded as a result of the acquisition. On June 5, 2000 the Company issued 2,500,000 shares of common stock, valued at $1.00 per share, in exchange for 100% ownership of International Communication and Equipment Corporation. Goodwill of $2,966,786 was recorded as a result of the acquisition. Results of Operations the First Three Months of 2000 For the second quarter and the six months ended June 30, 2000 the Company had total operating expenses of $ 581,533 for general and administrative expenses. There were no operations in the second quarter of 1999. Management expects expenses to increase significantly once the Company begins marketing its product. Net Operating Loss The Company has accumulated approximately 2,296,344 of net operating loss carryforwards as of June 30, 2000, which may be offset against taxable income and income taxes in future years. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The carryforwards expire in the year 2015. In the event of certain changes in control of the Company, there will be an annual limitation on the amount of net operating loss carryforwards, which can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 1999 or in the six month period ended June 30, 2000 because there is a 50% or greater potential tax chance that the carryforward will not be used. Accordingly, the potential tax benefit of the loss carryforward is offset by a valuation allowance of the same amount. Inflation In the opinion of management, inflation has not had a material effect on the operations of the Company. Risk Factors and Cautionary Statements Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company wishes to advise readers that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed on or implied by the statements, including, but not limited to, the following: the ability of the Company to successfully meet its cash and working capital needs, the ability of the Company to successfully market its product, and other risks detailed in the Companys periodic report filings with the Securities and Exchange Commission. Part II Item 1. Legal Proceedings There are presently no pending legal proceedings to which the Company or any of its subsidiaries or a party or to which any of its property is subject and, to the best of its knowledge, no such actions against the Company are contemplated or threatened. Item 2. Changes in Securities The Company completed a private placement pursuant to Regulation D, Rule 505/506 of the Securities Act of 1933, on March 24, 2000 selling 1,654,400 shares of common stock for $1,654,400 or $1.00 per shares to thirty-six individuals. Shares were restricted. On March 24, 2000 the Company issued 50,000 shares for underwriting services at a value of $150,000 pursuant to 4(2) and 4(6) of the Securities Act of 1933 on a restricted class. On March 15, 2000 the Company issued 5,000 shares at a value of $3.00 per chase ($15,000) to acquire 100% of Central American Fuel Technology, Inc. Shares were issued pursuant to 4(2) and 4(6) of the Securities Act. In April 2000 the Company issued 5,000 shares of common stock at $1.00 for services. May 15, 2000 the Company acquired Access Communications for 4,000,000 shares of common stock for $1.00 per share. On June 5, 2000 the Company acquired International Communications and Equipment for 2,500,000 shares of common stock for $1.00 per share. All of the securities were issued as restricted shares for investment purpose and not with a view to distribute or resale. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to be a Vote of Security Holders None. Item 5. Other Information This item is not applicable to the Company. Item 6. Exhibits and Reports on 8-K a. Exhibit 27 Financial Data Schedule b. * 8KA Filed February 28, 2000, Period Ending February 23, 2000 * 8K Filed March 8, 2000, Period Ending March 2, 2000 * 8K Filed March 21, 2000 Period Ending March 21, 2000 * 8KA Filed March 24, 2000, Period Ending March 24, 2000 * 8K Filed April 21, 2000, Period Ending March 31, 2000 * Previously filed. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VOIP TELECOM, INC. Dated: August 18, 2000 By:/S/ Alexander Anderson Alexander Anderson, President By:/S/ Robert Hogarth Robert Hogarth, Vice President By: /S/ Antal Markus Antal Markus, Secretary