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 March 31, 2002
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 000-28047
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.)
4162 Delp St., Memphis, TN 83118
(Address of principal executive office)
Registrants telephone no., including area code (901) 365-7650
N/A
(Former name, changed since last report)
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 March 31, 2002
Common Stock, $0.0001 4,776,149
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 3-4
Consolidated Balance Sheets March 31, 2002
And December 31, 2001 5-6
Consolidated Statements of Operations three months
Ended March 31, 2002 and March 31, 2001 7-9
Consolidated Statement of Stockholders Equity 10-13
Consolidated Statements of Cash Flows three months
Ended March 31, 2002 and 2001 14
Notes to Consolidated Financial Statements 15-29
Item 2. Managements Discussion and Analysis and
Result of Operations 20-21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Security 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matter to a Vote of 22
Securities Holders
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Signatures S-1
ii
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 March 31, 2002, and the
balance sheet derived from the Companys audited financial statement as of
December 31, 2001, the unaudited statement of operations and cash flows for the
three months ended March 31, 2002 and 2001 the statements of stockholders equity
for the period from May 4, 1987 through March 31, 2002 are attached hereto and
incorporated herein by this reference.
Operating results for the quarters ended March 31, 2002 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2002.
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc)
Notes to Consolidated Financial Statements
As of March 31, 2002
17
296 H Street 2nd floor, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANTS
( A Professional Corporation)
Armando C. Ibarra,
C.P.A.
Members of the California Society of
Armando Ibarra, Jr.,
C.P.A.
Certified Public Accountants
The Board of Directors
VoIP Telecom, Inc.
(Formerly Presidents Telecom, Inc.)
We have reviewed the accompanying consolidated balance sheets of VoIP Telecom,
Inc. (Formerly Presidents Telecom, Inc.) as of March 31, 2002 and December 31,
2001 and the related statements of operations, changes in stockholders equity,
and cash flows for the three months ended March 31, 2002 and 2001, in accordance
with Statements on Standards for Accounting Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of VoIP
Telecom, Inc. A review consists principally of inquiries of company personnel
and analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with generally accepted accounting principles.
_________________________
ARMANDO C. IBARRA, CP
Chula Vista, California
May 15, 2002
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Balance Sheets
As of March 31, 2002 and December 31, 2001
ASSETS
2002 2001
CURRENT ASSETS
Cash .............................. $ --
Note receivable ................... -- 269,591
Receivable - related party ........ -- 28,781
Loan receivable ................... -- 200,822
--------
Total Current Assets ............ -- 507,938
NET PROPERTY & EQUIPMENT ............. 9,917 323,317
OTHER ASSETS
Deposits .......................... -- 55,354
Note receivable ................... 399,057 --
--------
Total Other Assets .............. 399,057 55,354
--------
TOTAL ASSETS ....... $408,974 $886,609
========
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Balance Sheets
As of March 31, 2002 and December 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001
CURRENT LIABILITIES
Accounts payable .......................... $ 700 $ 897,088
Accrued accounts payable .................. 46,548 207,130
Loans payable ............................. 23,870 625,224
------------ ------------
Total Current Liabilities ............... 71,118 1,729,443
------------ ------------
TOTAL LIABILITIES ............................ 71,118 1,729,443
STOCKHOLDERS' EQUITY
Common stock ($0.0001 par value
, 100,000,000 shares
authorized; 4,776,149 and
40,722,972 shares issued
and outstanding for 2001
and 2000, respectively) ........................ 477 4,073
Additional paid-in capital ................ 12,969,684 12,424,067
Deficit accumulated during
development stage ............................. (95,911) (95,911)
Deficit ................................... (12,536,394) (13,175,063)
------------ ------------
Total Stockholders' Equity .............. 337,856 (842,834)
TOTAL LIABILITIES ............................ -- --
& STOCKHOLDERS' EQUITY .... $ 408,974 $ 886,609
============ ============
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Statements of Operations
For the Three Months Ended March 31, 2002 and 2001
2002 2001
REVENUES
Sales $ 18,700 $ 184,629
Costs of revenues (17,840) -
-------------------------------------------
Total Net Revenues 860 184,629
OPERATING COSTS
Depreciation 27,868 26,753
Bank charges 142 690
Bad debt expense 561 -
Administrative expenses 562,217 400,315
Total Operating Costs 590,788 427,758
OTHER INCOME & (EXPENSES)
Interest income - 7
(Loss) on investment - (137,393)
Other expenses (1,175) -
Exchange gain or loss - 15
Gain on disposal of assets 1,229,809 -
Interest expense (37) (62,850)
-------------------------------------------
Total Other
Income & Expenses 1,228,597 (200,221)
-------------------------------------------
NET INCOME / (LOSS) $ 638,669 $ (443,350)
===========================================
BASIC EARNINGS INCOME
/ (LOSS) PER SHARE $ 0.21 (0.01)
===========================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 3,098,593 31,362,558
===========================================
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Statement of Changes in Stockholders' Equity
From May 4, 1987(Inception) through March 31, 2002
Common Additional
Common Stock Paid in
shares amount capital
Inception, May 4, 1987 - - -
Common stock
issued for cash 600,000 60 940
Net loss from inception on May 4,
1987 through
December 31, 1997 - - -
- -------------------------------------------------------------------------------
Balance, December 31, 1997 600,000 60 940
===============================================================================
Net loss for the year ended December
31, 1998 - - -
- -------------------------------------------------------------------------------
Balance, December 31, 1998 600,000 60 940
===============================================================================
Common stock issued December 31, 1998
for cash at $ 0.15 60,000 6 149,994
Contributed capital - - 67
Common stock issued June 17, 1998
for cash at
$ 0.84 per share
5,400 1 89,999
Stock issued on June 2, 2000
for services
valued at $ 0.84
300 1 4,999
Net loss for the year ended
December 31, 1999
- -------------------------------------------------------------------------------
Balance, December 31, 1999
665,700 68 245,999
===============================================================================
Common stock issued on March 31, 2000
for cash at
$ 0.54 per share
137,614 13 2,752,263
Common stock issued on March 31, 2000
for cash at $ 0.20
190,500 19 761,981
Stock offering costs - - (607,928)
Common stock issued on April 20, 2000
for services valued
at $ 3.00 per share
3,000 1 179,999
Common stock issued on April 28, 2000
for services valued
at $ 1.00 per share
54,030 5 1,080,595
Common stock issued on May 17, 2000
for services valued
at $ 0.50 per share
1,250 1 12,499
Stock
Subscription Retained
Receivale Earnings Total
Inception, May 4, 1987 $ - - -
Common stock issued for cash - - 1,000
Net loss from inception on May 4,
1987 through December 31, 1997 - (1,000) (1,000)
- --------------------------------------------------------------------------------
Balance, December 31, 1997 - (1,000) -
================================================================================
Net loss for the year ended December
31, 1998 - (1,450) (1,450)
- --------------------------------------------------------------------------------
Balance, December 31, 1998 - (2,450) (1,450)
================================================================================
Common stock issued December 31, 1998
for cash at $ 0.15
(150,000) - -
Contributed capital - - 67
Common stock issued June 17, 1998
for cash at $ 0.84 per share
- - 90,000
Stock issued on June 2, 2000
for services valued at $ 0.84
- - 5,000
Net loss for the year ended
December 31, 1999 - (93,461) (93,461)
- --------------------------------------------------------------------------------
Balance, December 31, 1999
(150,000) (95,911) 156
================================================================================
Common stock issued on March 31, 2000
for cash at $ 0.54 per share
- - 2,752,276
Common stock issued on March 31, 2000
for cash at $ 0.20
- - 762,000
Stock offering costs - - (607,928)
Common stock issued on April 20, 2000
for services valued at $ 3.00 per share
- - 180,000
Common stock issued on April 28, 2000
for services valued at $ 1.00 per share
- - 1,080,600
Common stock issued on May 17, 2000
for services valued at $ 0.50 per share
- - 12,500
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Statement of Changes in Stockholders' Equity
From May 4, 1987(Inception) through March 31, 2002
Common Additional
Common Stock Paid in
Shares Amount Capital
continued
Common stock issued on May 19, 2000
for services valued
at $ 0.17 per share
8,642 1 28,804
Common stock issued to acquire 100%
of Central America Fuel Technologies,
Inc. on March 15, 2000
300 1 14,999
Options exercised at $ 0.42 per share
3,750 1 31,249
Options exercised at
$ 0.21 per share
3,000 1 12,499
Options exercised at
$ 0.21 per share
3,000 1 12,499
Common stock issued on June 30, 2000
for acquisition of ICE
at $ 0.83 per share
150,000 15 2,499,985
Common stock issued on June 30, 2000
Access Network Limited
at $ 0.83 per share
240,000 24 3,999,976
Common stock issued on August 30, 2000
for debt settlement at
$ 0.20 per share
107,607 10 358,680
Common stock issued for debt
settlement at
$ 0.83 per share
5,467 1 90,751
Receipt of subscription
receivable - - -
Options exercised
at $ 0.2084
600 1 2,499
Options exercised
at $ 0.4167
2,130 1 17,749
Options exercised
at $ 0.4167
120 1 999
Common stock issued for cash
at $ 0.10
per share
6,000 1 11,999
Common stock issued for cash
at $ 0.10
per share
25,000 2 49,998
Common stock issued for services
at $ 0.16827
per share
26,000 2 87,498
Net loss for the year ended
December 31, 2000 - -
- -----------------------------------------------------------------------------
Balance, December
31, 2000
1,633,710 170
Stock
Subscription Retained
receivabel earnings Total
continued
Common stock issued on May 19, 2000
for services valued at $ 0.17 per share
- - 28,805
Common stock issued to acquire 100%
of Central America Fuel Technologies,
Inc. on March 15, 2000
- - 15,000
Options exercised at $ 0.42 per share
- - 31,250
Options exercised at $ 0.21 per share
- - 12,500
Options exercised at $ 0.21 per share
- - 12,500
Common stock issued on June 30, 2000
for acquisition of ICE at $ 0.83 per share
- - 2,500,000
Common stock issued on June 30, 2000
Access Network Limited at $ 0.83 per share
- - 4,000,000
Common stock issued on August 30, 2000
for debt settlement at $ 0.20 per share - - 358,690
Common stock issued for debt
settlement at $ 0.83 per share
- - 90,752
Receipt of subscription receivable 150,000 - 150,000
Options exercised at $ 0.2084
- - 2,500
Options exercised at $ 0.4167
- - 17,750
Options exercised at $ 0.4167
- - 1,000
Common stock issued for cash
at $ 0.10 per share
- - 12,000
Common stock issued for cash
at $ 0.10 per share
- - 50,000
Common stock issued for services
at $ 0.16827 per share
- - 87,500
Net loss for the year ended
December 31, 2000 - (11,281,619) (11,281,619)
- ------------------------------------------------------------------------------
Balance, December 31, 2000
- (11,377,530) 268,232
===============================================================================
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Statement of Changes in Stockholders' Equity
From May 4, 1987(Inception) through March 31, 2002
Common Additional
Common stock paid in
shares amount capital
continued
Recission of ICE at $ 0.10 per share
(150,000) (22) (299,978)
Common stock issued on January 25, 2001
for services at $ 0.10 per share
90,000 9 179,991
Common stock issued on February 9, 2001
for debt service at $ 0.10 per share
31,425 2 62,848
Common stock issued on February 20, 2001
for services at $ 0.10 per share
1,014 1 2,027
Common stock issued on March 9, 2001
for services valued at $ 0.10 per share
12,500 1 24,999
Common stock issued March 10, 2001
for services valued at $ 0.10 per share
5,000 1 9,999
Common stock issued on June 30, 2001
for services valued at $ 0.10 per share
12,500 1 2,499
Common stock issued on July 17, 2001
at $ 0.10 per share
400,000 40 799,960
Net loss for the period ended
December 31, 2001 - - -
- -------------------------------------------------------------------------------
Balance, December 31, 2001
2,036,149 203 12,427,937
===============================================================================
Common stock issued on February 11, 2002
for services at $ 0.01 per share
100,000 10 19,990
Common stock issued on February 25, 2002
for services at $ 0.12 per share
20,000 2 47,998
Common stock issued on February 25, 2002
for services at $ 0.12 per share
2,200,000 220 263,801
Common stock issued on March 1, 2002
for services at $ 0.50 per share
420,000 42 209,958
Net lncome for the period ended
March 31, 2002
- -------------------------------------------------------------------------------
Balance, March 31, 2002 4,776,149 477 12,969,684
===============================================================================
Stock
Subscription Retained
receivale earnings total
continued
Recission of ICE at $ 0.10 per share
- - (300,000)
Common stock issued on January 25, 2001
for services at $ 0.10 per share
- - 180,000
Common stock issued on February 9, 2001
for debt service at $ 0.10 per share
- - 62,850
Common stock issued on February 20, 2001
for services at $ 0.10 per share
- - 2,028
Common stock issued on March 9, 2001
for services valued at $ 0.10 per share
- - 25,000
Common stock issued March 10, 2001
for services valued at $ 0.10 per share
- - 10,000
Common stock issued on June 30, 2001
for services valued at $ 0.10 per share
- - 2,500
Common stock issued on July 17, 2001
at $ 0.10 per share
- - 800,000
Net loss for the period ended
December 31, 2001 - (1,893,444) (1,893,444)
- -------------------------------------------------------------------------------
Balance, December 31, 2001
- (13,270,974) (842,834)
================================================================================
Common stock issued on February 11, 2002
for services at $ 0.01 per share
- - 20,000
Common stock issued on February 25, 2002
for services at $ 0.12 per share
- - 48,000
Common stock issued on February 25, 2002
for services at $ 0.12 per share
- - 264,021
Common stock issued on March 1, 2002
for services at $ 0.50 per share
- - 210,000
Net lncome for the period ended
March 31, 2002 - 638,669 638,669
- -------------------------------------------------------------------------------
Balance, March 31, 2002 - (12,632,305) 337,856
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2002 and 2001
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from
operations $ 638,669 $ (443,350)
Depreciation expense 27,868 26,753
(Increase) in account
receivable 298,372 (33,282)
Decrease in loans
receivable (198,246) -
Decrease in deposits 55,354 -
(Decrease) in accounts
payable (896,388) (543,647)
(Decrease) in accrued
accounts payable (160,582)
Common stock issued
for services 542,021 279,878
Net Cash (used) by
Operating Activities 307,068 (713,649)
CASH FLOWS FROM INVESTING ACTIVITIES
Net purchase of
fixed assets - (6,000)
Common stock retired
in ICE recission - (300,000)
Disposal of equipment 285,543 1,053,596
Net Cash provided / (Used)
by Investing Activities 285,543 747,596
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) in loans
payable (601,354) (43,981)
Additional paid in
capital
Net Cash Provided by
Financing Activities (601,354) (43,981)
Net Increase / (Decrease)
in Cash (8,743) (10,034)
Cash at Beginning
of Period 8,743 50,392
Cash at End of Period 40,385 -
Supplemental Cash Flow Disclosures
Cash paid during period
for interest $ 37 $ -
Schedule of Non-Cash
Activities
Common stock issued
for services $ 542,021 $ 279,878
Common stock retired
in ICE recission $ - $ (300,000)
Gain on disposal of
assets $ 1,229,809 -
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
VoIP Telecom, Inc. (the Company) was incorporated, May 4, 1987, under the laws
of the state of Nevada, as Energy Realty Corporation. On July 31, 1993 the
Companys name changed to Balcor International and on December 18, 1998 the name
was again changed to Dimension House, Inc. As of December 31, 1998 the Company
had no operations and in accordance with SFAS # 17 was considered a development
stage company. As of December 31, 1998 the Company was authorized to issue
100,000,000 shares of $0.0001 par value of which 10,000,000 shares were
outstanding. On October 28, 1999 the Company changed its name to Presidents
Telecom, Inc. Pursuant to an acquisition agreement and plan of merger dated as
of March 15, 2000 between the Company then known as Presidents Telecom, Inc. and
Central America Fuel Technology, Inc. (CAFT), a Nevada corporation, all the
outstanding common shares of CAFT were exchanged for 5,000 restricted common
shares of VoIP. On April 17, 2000, the Company changed its name to VoIP Telecom,
Inc. On March 29, 2002 the Company sold Access Network Limited their subsidiary
for a net gain of $1,229,809. The Company delivers international long distance
services via flexible, server-based networks consisting of re-sale arrangements
with other long distance providers, various foreign termination relationships,
VoIPs own international servers and leased/owned transmission facilities.
Employing digital switching and transmission technologies supported by
comprehensive monitoring and technical support personnel, the Company provides
services in foreign countries.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Companys financial statements are prepared using the accrual method of
accounting. The company has elected a December 31, year end.
b. Basis of Consolidation
The consolidated financial statements of VoIP Telecom, Inc. include those
accounts of VoIP Telecom, Inc., and Access Network Limited. All significant
intercompany transactions have been eliminated.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c. Basic Loss per Share
In February 1997, the FASB issued SFAS No. 128,Earnings Per Share, which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective December 6, 1993 (inception).
Basic net loss per share excludes dilution and is computed by dividing net loss
by the weighted average number of common shares outstanding during the reported
periods. Diluted net loss per share reflects the potential dilution that could
occur if a stock option and other commitments to issue common stock were
exercised.
d. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
e. Estimates and Adjustments
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
f. Basis of Presentation and Considerations Related to Continued Existence
(going concern)
The Companys financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Companys
management intends to raise additional operating funds through operations and/or
debt offerings.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of temporary differences by applying enacted statutory tax
rates applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. See note 3 regarding income tax benefit.
h. Property & Equipment
Property and equipment are recorded at cost. Minor additions renewals are
expensed in the year incurred. Major additions and renewals are capitalized and
depreciated over their estimated useful lives. Depreciation and amortization is
calculated using straight-line and accelerated methods for income tax purposes
(five years for vehicles and equipment, and seven years for office furniture).
Total depreciation for the three months-ended March 31, 2002 is $ 27,868.
NOTE 3 - INCOME TAXES
As of March 31, As of December 31,
2002 31, 2001
Deferred tax assets:
Net operating loss carryforwards $ 4,321,306 $ 4,544,840
-----------------------------------------------
Other -0- -0-
Valuation allowance (4,321,306) (4,544,840)
-----------------------------------------------
Net deferred tax assets $ -0- $ -0-
===============================================
Realization of deferred tax assets is dependent upon sufficient future
taxable income during the period that deductible temporary differences and
carryforwards are expected to be available to reduce taxable income.
NOTE 4 NOTE RECEIVABLE
This Company sold various assets to Universal Commerce Limited in the
amount of $399,057. The receivable is due on or before March 29, 2012. As of
March 31, 2002 the note bears no interest rate.
NOTE 5 - GOING CONCERN
As shown in the accompanying financial statements the Company has incurred
a deficit of $12,632,305 since its inception in 1987. The ability of the Company
to continue as a going concern is dependent on the significant generation of
revenue from the Companys international long distance services. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
NOTE 6 - PROPERTY & EQUIPMENT
Property is stated at cost. Additions, renovations, and improvements are
capitalized. Maintenance and repairs, which do not extend asset lives, are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment.
March 31, 2002
Equipment $ 12,728
---------------------------------
Total Equipment $ 12,728
Less Accumulated Depreciation (2,811)
---------------------------------
---------------------------------
Net Property and Equipment $ 9,917
=================================
NOTE 7 - STOCK TRANSACTIONS
As of December 31, 1998 the Company had 12,000,000 shares outstanding. On
June 17, 1998, the Company issued 1,200,000 shares of common stock valued at
$0.15 per share for cash. On June 17, 1998 the Company issued 108,002 shares of
common stock for cash valued at $1.00 per share. On June 17, 1998. The Company
issued 6,000 shares of common stock for services valued at $1.00 per share. As
of December 31, 1999 the Company had 13,314,002 shares of common stock
outstanding. On March 31, 2000, the Company issued 2,752,276 shares of common
stock for cash valued at $0.54 per share. On March 31, 2000, the Company issued
3,810,000 shares of common stock for cash valued at $0.20 per share.
NOTE 7 - STOCK TRANSACTIONS (CONTINUTED)
On April 20, 2000 the Company issued 60,000 shares of common stock for
services valued at $3.00 per share. On April 28, 2000, the Company issued
1,080,600 shares of common stock for services valued at $1.00 per share. On May
17, 2000, the Company issued 25,000 shares of common stock for services valued
at $0.50 per share. On May 19, 2000, the Company issued 172,834 shares of common
stock for services valued at $0.17 per share. On June 2, 2000 the Company issued
6,000 shares of common stock to acquire 100% of Central America Fuel
Technologies, Inc. valued at $2.50 per share. On June 30, 2000 the Company had
75,000 shares of common stock exercised valued at $0.42 per share. On June 30,
2000 the Company had 60,000 shares of common stock exercised valued at $0.21 per
share. On June 30, 2000 the Company had 60,000 shares of common stock exercised
valued at $0.21 per share. On June 30, 2000 the Company issued 3,000,000 shares
of common stock to acquire ICE valued at $0.83 per share. On June 30, 2000 the
Company issued 4,800,000 shares of common stock to acquire Access Network
Limited valued at $0.83 per share. On August 30, 2000 the Company issued
2,152,140 shares of common stock for debt settlement valued at $0.20 per share.
On August 30, 2000 the Company issued 109,340 shares of common stock for debt
settlement valued at $0.83 per share. On October 1, 2000 the Company had 12,000
shares of common stock exercised valued at $0.2084 per share. On October 4, 2000
the Company had 42,600 shares of common stock exercised at $0.4167 per share.
NOTE 7 - STOCK TRANSACTIONS (CONTINUTED)
On October 12, 2000 the Company had 2,400 shares of common stock exercised
valued at $0.4167 per share. On December 27, 2000 the Company issued 120,000
shares of common stock for cash valued at $0.10 per share. On December 27, 2000
the Company issued 500,000 shares of common stock for cash valued at $0.10 per
share. On December 31, 2000 the Company issued 525,000 shares of common stock
for cash valued at $0.17 per share. On January 1, 2001 the Company rescinded the
issuance of 3,000,000 shares for the acquisition of ICE at a value of $0.10. On
January 25, 2001 the Company issued 1,800,000 shares of common stock for
services valued at $0.10 per share. On February 9, 2001 the Company issued
628,500 shares of common stock for debt settlement valued at $0.10 per share. On
February 20, 2001 the Company issued 20,280 shares of common stock for services
valued at $0.10 per share. On March 9, 2001 the Company issued 100,000 shares of
common stock for services valued at $0.10 per share. On March 10, 2001 the
Company issued 250,000 shares of common stock for services valued at $0.10 per
share. As of March 31, 2001 there were 35,472,972 shares of common stock
outstanding. On June 30, 2001 the Company issued 250,000 shares of common stock
for services valued at $0.01 per share. On July 17, 2001 the Company issued
8,000,000 shares of common stock for services valued at $0.10 per share. On
February 11, 2002 the Company issued 2,000,000 shares of common stock for
services valued at $0.10 per share. On February 25, 2002 the Company declared a
20:1 split of its outstanding common stock.
NOTE 7 - STOCK TRANSACTIONS (CONTINUTED)
On February 25, 2002 the Company issued 20,000 shares of common stock for
services valued at $0.12 per share. On February 25, 2002 the Company issued
2,200,000 shares of common stock for services valued at $0.12 per share. On
March 31, 2002 the Company issued 420,000 shares of common stock for services
valued at $0.50 per share. As of March 31, 2002 the Company had 4,776,149 shares
of common stock outstanding.
NOTE 8 - ISSUANCE OF SHARES FOR SERVICES STOCK OPTIONS
The company has a nonqualified stock option plan, which provides for the
granting of options to key employees, consultants, and nonemployees directors
of the Company. The valuations of shares for services are based on the fair
market value of services. The Company has elected to account for the stock
option plan in accordance with paragraph 30 of SFAS 123 where the compensation
to employees should be recognized over the period(s) in which the related
employee services are rendered. In accordance with paragraph 19 of SFAS 123 the
fair value of a stock option granted is estimated using an option-pricing model.
A total of 2,740,000 shares were issued for services to management and key
employees for the three months ended March 31, 2002.
3
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 $12,632,305 since
inception through March 31, 2002.
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 March 31, 2002 the Company has $0 in current assets compared to
current liabilities of $71,118. This is compared to current assets of $507,938
and current liabilities of $1,729,443. Management recognizes there is a severe
impairment to the Companys financial statement. The current liabilities are
comprised of $47,248 in accounts payable and $23,870 in loans payable.
Results of Operations
For the first quarter ended March 31, 2002 the Company had revenues of
$18,700 and operating expenses including costs of revenues of $608,628 compared
to revenues of $184,629 and operating expenses of $427,758 as of March 31, 2001.
The Company has a gain on the sale of disposable assets of $1,229,809 due to the
phasing out of the telecom business. General and Administrative costs increased
$161,902 for the three months ended March 31, 2002 due to the Company changing
direction to enter the refractory services business. As of March 31, 2002 the
Company had a net income of $638,669 compared to a net loss of $443,350 for the
same period the year before.
Net Operating Loss
The Company has accumulated approximately $12,632,305 of net operating
losses caryforwards as of March 31, 2002, which maybe offset against taxable
income and income taxes in future years. The use of these to losses to reduce
future income taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net loss carryforwards. The carryforwards expire
in the year 2022. In the event of certain changes in control of the Company,
there will be an annual limitation on the amount of carryforwards, which can be
used.
Sale of Common Capital Stock
None to report.
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 wished to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve
30
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 OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no pending legal proceedings to which the Company or
any of its subsidiaries are a party, to the best of knowledge of the Company. No
actions against the Company are contemplated or threatened.
ITEM 2. CHANGES IN SECURITIES
On January 11, 2002 the Company issued 100,000 shares of common stock at
$.20 per share to Jerry Hunter for services rendered for total consideration of
$20,000. The above shares were issued pursuant to Regulation S-8.
Effective the opening of the business day the Company announced a 1 for 20
reverse split.
On February 25, 2002 the Company issued 20,000 shares of common stock at
$.12 per share to eight individuals for services rendered on the Keppel
acquisition that never was consummated for total consideration of $48,000. The
above issued shares were issued under section 4 (2) of the 1933 Securities Act
and bear a restrictive legend.
On February 25, 2002 the Company also issued 2,200,000 shares of common
stock at $.12 to management and directors for services rendered and debt for
total consideration of $264,021. The above issued shares were issued under
section 4 (2) of the 1933 Securities Act and bear a restrictive legend.
On March 1, 2002 the Company issued 420,000 shares of common stock at $.50
per share for services rendered and total consideration of $210,000. The above
shares were issued pursuant to Regulation S-8.
As of March 31, 2002 there were 4,776,149 shares of common stock
outstanding.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
At a Special Meeting of the Shareholders on March 28, 2002 the security
holders were asked to vote on the following:
The election of Directors for 2002:
For Against Abstain
B. Grant Hunter 2,457,545
Jerry Hunter 2,457,545
Ed H. Gatlin 2,457,545
For Against Abstain
W. Burley Shedd 2,457,545
Mary A. Eubanks 2,457,545
The appointment of the Independent Auditor for the year 2002.
For Against Abstain
Armando C. Ibarra 2,457,545
350 E. St.
Chula Vista, CA 91910
The appointment of the Independent Registrar and Transfer Agent for 2002.
For Against Abstain
Signature Stock Transfer 2,457,545
14675 Midway Rd.
Addison, TX 75001
For the ratification to sell the remaining telecom assets.
For Against Abstain
2,457,545
All motions at the Special Meeting of Shareholders were approved.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
1. Form 8KA filed by reference on January 31, 2001
2. Form 10KSBA filed by reference on January 31, 2002
3. DEF14A filed by reference on March 1, 2002
4. S8 filed by reference on March 1, 2002
5. DEFR14A filed by reference on March 1, 2002
6. 10QSBA filed by reference on March 21, 2002
7. 10KSB filed by reference on March 27, 2002
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed in its behalf by the
undersigned hereto duly authorized.
VOIP TELECOM, INC.
Dated: May 17, 2002
By:/S/ Grant Hunter
B. Grant Hunter
President
S-1
........