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 quarter report ended September 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.)
16935 West Bernardo Drive, Suite 232 San Diego, CA 92127
(Address of principal executive office)
Registrants telephone no., including area code (858) 618-1710
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 September 30, 2000
Common Stock, $0.001 31,477,195
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets December 31, 1999
And September 30, 2000 4-5
Consolidated Statements of Operations three and nine months
Ended September 30, 2000 and December 31, 1999 6
Consolidated Statement of Stockholders Equity 7-9
Consolidated Statements of Cash Flows nine months
Ended September 30, 2000 and 1999 10-11
Notes to Consolidated Financial Statements 12
Item 2. Managements Discussion and Analysis and
Result of Operations 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Security 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matter to a Vote of 14
Securities Holders
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures S-1
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statement
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of September 30, 2000, and
the related audited balance sheet of the Company as of December 31, 1999, the
unaudited statement of operations and cash flows for the three months ended
September 30, 2000 and 1999 and the nine months ended September 30, 2000 and
1999 and the audited statements of stockholders equity for the period from
January 1, 1998 through December 31, 1999 and the unaudited stockholders equity
for the period January 1, 2000 through September 30, 2000 are attached hereto
and incorporated herein by this reference.
Operating results for the quarters ended September 30, 2000 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2000.
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
September 30, December 31,
2000 1999
(Unaudited) (Restated)
CURRENT ASSETS
Cash$ 116,512 $ 156
Accounts receivable 150,000 -
Total Current Assets 266,512 156
FIXED ASSETS, NET 1,982,826 -
OTHER ASSETS
Notes receivable - related party - -
Deposits 354 -
Total Other Assets 354 -
TOTAL ASSETS $2,249,692 $ 156
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 570,440 $ -
Accrued expenses 10,386 -
Notes payable 798,699 -
Notes payable - related party 11,583 -
Total Current Liabilities 1,391,108 -
STOCKHOLDERS EQUITY
Common stock: 100,000,000 shares authorized of
$0.0001 par value 31,477,195 and 13,314,002 shares
issued and outstanding, respectively 3,148 1,332
Additional paid-in capital 10,676,419 244,735
Subscription receivable - (150,000)
Deficit accumulated during the development stage (9,820,983) (95,911)
Total Stockholders Equity 858,584 156
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 2,249,692 $ 156
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
For the
Nine Months Ended
September 30
2000 1999
REVENUES $ - $ -
EXPENSES
Depreciation expense 268,501 -
General and administrative 1,693,688 -
Bad debt expense 711,790 -
Total Expenses 2,673,979 -
LOSS FROM OPERATIONS (2,673,979) -
OTHER INCOME (EXPENSE)
Impairment of goodwill (7,031,953) -
Interest expense (19,202) -
Interest income 62 -
Total Other Income
(Expense) (7,051,093) -
NET LOSS $ (9,725,072) $ -
BASIC LOSS PER SHARE $ (0.49) $ (0.00)
From
Inception on
For the May 4
Three Months Ended 1987 Through
September 30 September 30
2000 1999 2000
REVENUES $ - $ - $ -
EXPENSES
Depreciation expense 110,120 - 268,501
General and administrative 360,151 - 1,789,599
Bad debt expense 48,500 - 711,790
Total Expenses 518,771 - 2,769,890
LOSS FROM OPERATIONS (518,771) - (2,769,890)
OTHER INCOME (EXPENSE)
Impairment of goodwill - - (7,031,953)
Interest expense (1,000) - (19,202)
Interest income - - 62
Total Other Income
(Expense) (1,000) - (7,051,093)
NET LOSS $ (519,771) $ - $(9,820,983)
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
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 12,000,000 1,200
Net loss from inception on May 4,
1997 through December 31, 1997 - -
Balance, December 31, 1997 12,000,000 1,200
Net loss for the year ended
December 31, 1998 - -
Balance, December 31, 1998 12,000,000 1,200
Common stock issued for cash
at $0.15 per share 1,200,000 120
Contributed capital - -
Stock issued for cash at $1.00
per share 108,002 11
Stock issued for services at $1.00
per share 6,000 1
Net loss for the year ended
December 31, 1999 - -
Balance, December 31, 1999 13,314,002 $ 1,332
Deficit
Accumulated
Additional During
Paid in Subscription Development
Capital Receivable Stage
Inception, May 4, 1987 $ - $ - $ -
Common stock issued for cash (200) -
-
Net loss from inception on May 4,
1997 through December 31, 1997 - - (1,000)
Balance, December 31, 1997 (200) - (1,000)
Net loss for the year ended
December 31, 1998 - - (1,450)
Balance, December 31, 1998 (200) - (2,450)
Common stock issued for cash
at $0.15 per share 149,880 (150,000) -
Contributed capital 67 - -
Stock issued for cash at $1.00
per share 89,989 - -
Stock issued for services at $1.00
per share 4,999 - -
Net loss for the year ended
December 31, 1999 - - (93,461)
Balance, December 31, 1999 $ 244,735 $(150,000) $ (95,911)
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders Equity (Continued)
(Unaudited)
Commom Stock
Shares Amount
Balance, December 31, 1999 13,314,002 $ 1,332
Common stock issued for cash at
$1.00 per share 2,752,276 275
Common stock issued for cash at
$0.20 per share 3,810,000 381
Stock offering costs - -
Common stock issued for services
at $3.00 per share 60,000 6
Common stock issued for services
at $1.00 per share 1,080,600 108
Common stock issued for services
at $0.50 per share 25,000 3
Common stock issued for services
at $0.20 per share 172,834 17
Common stock issued to acquire
100% of Central America Fuel
Technologies, Inc. on March 15,
2000 6,000 1
Options exercised at $0.42
per share 75,000 8
Options exercised at $0.25
per share 60,000 6
Options exercised at $0.21
per share 60,000 6
Common stock issued for debt
settlement at $1.20 per share 109,343 10
Common stock issued for debt
settlement at $0.20 per share 2,152,140 215
Common stock issued for ICE at
$1.00 per share 3,000,000 300
Common stock issued for Access
Network Limited at $1.00 per share 4,800,000 480
Balance Forward 31,477,195 $ 3,148
Deficit
Accumulated
Additional During the
Paid in Subscription Development
Capital Receivable Stage
Balance, December 31, 1999 $ 244,735 $ (150,000) $ (95,911)
Common stock issued for cash at
$1.00 per share 2,293,288 - -
Common stock issued for cash at
$0.20 per share 634,619 - -
Stock offering costs (607,928) - -
Common stock issued for services
at $3.00 per share 149,994 - -
Common stock issued for services
at $1.00 per share 900,392 - -
Common stock issued for services
at $0.50 per share 12,498 - -
Common stock issued for services
at $0.20 per share 28,788 - -
Common stock issued to acquire
100% of Central America Fuel
Technologies, Inc. on March 15,
2000 14,999 - -
Options exercised at $0.42
per share 31,242 - -
Options exercised at $0.25
per share 12,494 - -
Options exercised at $0.21
per share 12,494 - -
Common stock issued for debt
settlement at $1.20 per share 91,109 - -
Common stock issued for debt
settlement at $0.20 per share 358,475 - -
Common stock issued for ICE at
$1.00 per share 2,499,700 - -
Common stock issued for Access
Network Limited at $1.00 per share 3,999,520 - -
Balance Forward $ 10,676,419 $ (150,000) $ (95,911)
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders Equity (Continued)
(Unaudited)
Common Stock
Shares Amount
Balance Forward 31,477,195 $ 3,148
Receipt of subscription receivable - -
Net loss for the nine months
September 30, 2000 - -
Balance, September 30, 2000 31,477,195 $ 3,148
Deficit
Accumulated
Additional During the
Paid in Subscription Development
Capital Receivable Stage
Balance Forward $10,676,419 $ (150,000) $ (95,911)
Receipt of subscription receivable - 150,000 -
Net loss for the nine months
September 30, 2000 - - (9,725,072)
Balance, September 30, 2000 $10,676,41 $ - $ (9,820,983)
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
For the
Nine Months Ended
September 30
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,725,072) $ -
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 268,501 -
Bad debt expense 711,790 -
Impairment of goodwill 7,031,953 -
Common stock issued for services 1,091,806 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (150,000) -
(Increase) decrease in notes receivable (1,647,426) -
(Increase) decrease in deposits (354) -
Increase (decrease) in accounts
payable and accrued expenses 580,826 -
Net Cash Provided (Used) by
Operating Activities (1,837,976) -
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (894,846) -
Net Cash Provided (Used) by
Investing Activities (894,846) -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 318,690 -
Common stock issued for subscription
receivable 150,000 -
Payment on note payable (339,377) -
related party 342,980 -
Common stock issued for cash 2,376,885 -
Net Cash Provided (Used) by
Financing Activities $ 2,849,178 $ -
From
Inception
May 4
1987 Through
September 30
2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(9,820,983)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 268,501
Bad debt expense 711,790
Impairment of goodwill 7,031,953
Common stock issued for services 1,096,806
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (150,000)
(Increase) decrease in notes receivable (1,647,426)
(Increase) decrease in deposits (354)
Increase (decrease) in accounts
payable and accrued expenses 580,826
Net Cash Provided (Used) by
Operating Activities (1,928,887)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (894,846)
Net Cash Provided (Used) by
Investing Activities (894,846)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable 318,690
Common stock issued for subscription
receivable -
Payment on note payable (339,377)
Proceeds from note payable -
related party 342,980
Common stock issued for cash 2,617,952
Net Cash Provided (Used) by
Financing Activities $ 2,940,245
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Nine Months Ended
September 30
2000 1999
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 116,356 $ -
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 156 -
CASH AND CASH EQUIVALENTS AT
ENDOF PERIOD $ 116,512 $ -
CASH PAID FOR:
Interest $ - $ -
Taxes $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $6,515,000 $ -
From
Inception
May 4
1987 through
September 30
2000
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 116,512
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS AT
ENDOF PERIOD $ 116,512
CASH PAID FOR:
Interest -
Taxes -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for acquisition of
subsidiary $ 6,515,000
VOIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial statements
September 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 September 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 September 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 during 1999. The transaction is
being recorded as if the acquisition had never occurred. Accordingly, the
financial statements as of December 31, 1999 have been restated to reflect this
change.
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. An impairment loss on goodwill of $4,065,167 was recorded during the
nine months ended September 30, 2000 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. An impairment loss on goodwill of
$2,966,786 was recorded during the nine months ended September 30, 2000 as a
result of the acquisition.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Going Concern and Ability of the Company to Continue
The Company has a net operating loss carry forward of $9,820,983 since
inception through September 30, 2000.
The Companys consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. Management believes
that the Company will soon be able to generate revenues sufficient to cover its
operating costs. In the interim, the Company intends to raise additional capital
through private placements of its common stock.
Liquidity and Capital Resources
As of September 30, 2000 the Company has $266,512 in total current assets
and equity of 858,584 with which to pay its obligations. The Company is
involved in a best efforts financing in order to increase the Companys
liquidity and capital resources.
Results of Operations
For the three months ending September 30, 2000 the Company had a net loss
of $(519,771). The loss includes $110,120 in depreciation and amortization.
For the nine month period ending September 30, 2000 the Company had a net
loss of $(9,725,072). The loss includes $268,501 in depreciation and
amortization.
Since the Companys inception there has been no revenues from the Companys
telecom operations.
Subsequent Events
In July 2000, the Company signed a Memorandum of Understanding to be a
supplier of exclusive GoldWeb technology to a subsidiary of one of Chinas three
largest Telecom/ISP Companies. This exclusive technology consists of Internet
Protocol (IP) phones and high speed wireless networks. This agreement has been
amended. On November 6, 2000 the Company announced it will assign the GoldWeb
technology licensing distribution agreement to Tesmark, Inc. As consideration
for the assignment, Tesmark will reimburse the Company for funds advanced to
GoldWeb, as well as all development and other expenses incurred, to date.
Further, the Company has been released of the requirement to reimburse GoldWeb
for three site license payments of $5,000,000 payable in common shares per
developed site.
On October 20, 2000 the Company entered into a Letter of Intent with North
Voice Communications, Inc., of San Diego, California. North Voice is a global
provider of long distance telephone and other network related enhanced
communications services. The terms of the deal were undisclosed.
On November 6, 2000 the Company entered into a Memorandum of Understanding,
whereby the Company will acquire all of the outstanding and issued shares of two
subsidiary companies of Keppel Communications PTE, LTD., a company wholly owned
by Keppel Telecommunications and Transportation, LTD. The terms of the agreement
call for $2,500,000 cash paid in installments and $2,500,000 in VOIP Telecom
common shares to be issued under Rule 144. The acquisitions are subject to due
diligence by all of the parties involved, as well as the obtaining of any
regulatory or other approvals that may be necessary.
Sale of Common Capital Stock
During the third quarter of 2000, the Company received payment for a stock
subscription receivable in the amount of $150,000. There were no issuances or
sales of common stock for the quarter.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the third quarter of 2000, the Company received payment for a stock
subscription receivable in the amount of $150,000. There were no issuances or
sales of common stock for the quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On September 26, 2000 the Company signed a Memorandum of Understanding to
be a supplier of exclusive GoldWeb technology to a subsidiary of one of Chinas
three largest Telecom/ISP Companies. This exclusive technology consists of
Internet Protocol (IP) phones and high speed wireless networks This agreement
has been amended. On November 6, 2000 the Company announced it will assign the
GoldWeb technology licensing distribution agreement to Tesmark, Inc. As
consideration for the assignment, Tesmark will reimburse the Company for funds
advanced to GoldWeb, as well as all development and other expenses incurred, to
date. Further, the Company has been released of the requirement to reimburse
GoldWeb for three site license payments of $5,000,000 common shares per
developed site.
On October 20, 2000 the Company entered into a Letter of Intent with North
Voice Communications, Inc., of San Diego, California. North Voice is a global
provider of long distance telephone and other network related enhanced
communications services. The terms of the deal were undisclosed.
On November 6, 2000 the Company entered into a Memorandum of Understanding,
whereby the Company will acquire all of the outstanding and issued shares of two
subsidiary companies of Keppel Communications PTE, LTD., a company wholly owned
by Keppel Telecommunications and Transportation, LTD. The terms of the agreement
call for $2,500,000 cash paid in installments and $2,500,000 in VOIP Telecom
common shares to be issued under Rule 144K. The acquisitions are subject to due
diligence by all of the parties involved, as well as the obtaining of any
regulatory or other approvals that may be necessary.
Sale of Common Capital Stock
During the third quarter of 2000, the Company received payment for a stock
subscription receivable in the amount of $150,000. There were no issuances or
sales of common stock for the quarter.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. Exhibit 27 Financial Data Schedule
b. *SB-2 Registrants Statement for Small Business Issuers filed 9/20/2000
* 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: November 15, 2000
By:/S/ Alexander Anderson
Alexander Anderson
President