UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter report ended June 30, 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
DIVERSIFIED THERMAL SOLUTIONS, 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
VOIP TELECOM, INC.
(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 June 30, 2002
Common Stock, $0.0001 4,776,149
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets June 30, 2002
And December 31, 2001 5-6
Consolidated Statements of Operations six months
Ended June 30, 2002 and June 30, 2001 7
Consolidated Statement of Stockholders Equity 8-10
Consolidated Statements of Cash Flows six months
Ended June 30, 2002 and June 30, 2001 11
Notes to Consolidated Financial Statements 12-19
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 June 30, 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
six months ended June 30, 2002 and 2001, the statements of stockholders equity
for the period from May 4, 1987 through June 30, 2002 are attached hereto and
incorporated herein by this reference.
Operating results for the quarters ended June 30, 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 June 30, 2002
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 June 30, 2002 and December 31,
2001 and the related statements of operations, changes in stockholders equity,
and cash flows for the three and six months ended June 30, 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
July 25, 2002
24
296 H Street 2nd floor, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Balance Sheets
As of June 30, 2002 and December 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
2002 2001
------------------------
CURRENT LIABILITIES
Accounts payable $ 162,719 $ 1,104,219
Loans payable 43,398 625,224
----------------------------------------
Total Current Liabilities 206,117 1,729,443
----------------------------------------
TOTAL LIABILITIES 206,117 1,729,443
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock ($0.0001
par value, 100,000,000 shares
authorized; 4,776,149
and 40,722,972 shares issued
and outstanding for
June 30, 2002 and December 31,
2001, respectively.) 477 4,073
Paid-in capital 12,969,684 12,424,067
Deficit accumulated during development stage (95,911) (95,911)
Deficit (12,672,453) (13,175,063)
----------------------------------------
Total Stockholders' Equity 201,797 (842,834)
TOTAL LIABILITIES ----------------------------------------
& STOCKHOLDERS' EQUITY (DEFICIT) $ 407,914 $ 886,609
========================================
Statements of Operations
For the Six and Three Months Ended June 30, 2002 and 2001
Six Months Three Months
Ended Ended
June 30, March 31,
2002 2001
REVENUES
Sales $ 18,700 $ 440,699
Cost of revenues (17,840) -
Total Revenues 860 440,699
OPERATING COSTS
Depreciation & amortization 28,928 53,515
Bank charges 142 774
Bad debt expense 561 -
Administrative expenses 697,216 594,690
Total Operating Costs
726,847 648,979
OPERATING INCOME (LOSS) (725,987) (208,280)
OTHER INCOME & (EXPENSES)
Interest income - 308
Loss on investment - (150,260)
Exchange gain or loss - 16
Gain on disposal of assets 1,229,809 -
Other expenses (1,175) (632)
Interest expense (37) (63,066)
Total Other Income & (Expenses)
1,228,597 (213,634)
NET INCOME (LOSS) 502,610 (421,914)
BASIC EARNINGS (LOSS) PER SHARE
$ 0.13 $ (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,942,005 31,946,725
Three Months Three MOnths
ended ended
june 30 june 30
2002 2001
REVENUES
Sales $ - $ 256,070
Cost of revenues -
Total Revenues - 256,070
OPERATING COSTS
Depreciation & amortization 1,060 26,762
Bank charges - 84
Bad debt expense - -
Administrative expenses 134,999 194,375
Total Operating Costs
136,059 221,221
OPERATING INCOME (LOSS) (136,059) 34,849
OTHER INCOME & (EXPENSES)
Interest income - 301
Loss on investment - (12,867)
Exchange gain or loss - 1
Gain on disposal of assets - -
Other expenses - (632)
Interest expense - (216)
Total Other Income & (Expenses)
- (13,413)
NET INCOME (LOSS) $ (136,059) $ 21,436
BASIC EARNINGS (LOSS) PER SHARE
$ (0.03) $ 0.00
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,776,149 32,475,549
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Statement of Changes in Stockholders' Equity
From May 4, 1987(Inception) through June 30, 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
Receivable 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
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 11,645,592
Stock
Subscription Retained
Receivable 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
Common Additional
Common Stock Paid in
stocj 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 year 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 income for the period ended
June 30, 2002 - - -
Balance, June 30, 2002 2,036,149 203 12,427,937
Stock
Subscription Retained
Receivable 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 year 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 income for the period ended
June 30, 2002 - 502,610 502,610
Balance, June 30, 2002 - (12,768,364) 201,797
VoIP TELECOM, INC.
(Formerly Presidents Telecom, Inc.)
Statements of Cash Flows
For the Six and Three Months Ended June 30, 2002 and 2001
Six Months Three Months
Ended Ended
June 30, March 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 502,610 $ (421,914)
Depreciation &
amortization expense 28,928 53,515
(Increase) decrease in
accounts receivable 298,372 (235,851)
(Increase) decrease in
loans receivable (198,246) -
(Increase) decrease in
officers advances - -
(Increase) decrease in
accrued expenses - 34,026
(Increase) decrease in
deposits 55,354 -
Increase (decrease) in
accounts payable (894,288) (387,427)
Increase (decrease) in
accrued accounts payable (47,211) -
Increase (decrease) in
interest payable - 3,266
Common stock issued
for services 542,021 282,378
287,540 (672,007)
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 1,050,156
Net cash provided (used)
by investing activities
285,543 744,156
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in
loans payable (581,826) (89,941)
Net cash provided (used)
by financing activities
(581,826) (89,941)
Net increase (decrease)
in cash
(8,743) (17,792)
Cash at beginning of
period
8,743 50,392
Cash at end of period
$ - $ 32,600
Supplemental Cash Flow Disclosures
Cash paid during year for interest $ 37 $ 63,066
Schedule of
Non-Cash Activities
Common stock issued
for services $ 542,021 $ 282,469
Common stock issued
for acquisition of subsidiaries $ -
$ - $
Common stock retired in
ICE recission $ -
- $ (300,000)
Gain on disposal of
assets $
1,229,809 $ -
Three months Three months
ended ended
June 30 June 30
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
$(136,059) $ 21,436
Depreciation &
amortization expense 1,060 26,762
(Increase) decrease in
accounts receivable - (202,567)
(Increase) decrease in
loans receivable - -
(Increase) decrease in
officers advances - -
(Increase) decrease in
accrued expenses - 34,026
(Increase) decrease in
deposits - -
Increase (decrease) in
accounts payable 2,100 156,220
Increase (decrease) in
accrued accounts payable 113,371 -
Increase (decrease)
in interest payable - 3,266
Common stock issued
for services - 2,500
Net cash provided (used)
by operating activities
(19,528) 41,643
CASH FLOWS FROM INVESTING ACTIVITIES
Net purchase of fixed assets - -
Common stock retired in
ICE recission - -
Disposal of equipment - (3,440)
Net cash provided (used)
by investing activities
- (3,440)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in
loans payable 19,528 (45,960)
Net cash provided (used) by
financing activities
19,528 (45,960)
Net increase (decrease)
in cash
- (7,758)
Cash at beginning
of period
- 40,358
Cash at end of
period
$ - $ 32,600
Supplemental Cash
Flow Disclosures
Cash paid during year
for interest $ - $ 216
Schedule of Non-Cash
Activities
Common stock issued for
services - $ 2,591
Common stock issued for
acquisition of subsidiaries
$ - -
Gain on disposal of assets $ - $ -
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. Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
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. 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.
e. 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.
f. 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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. 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 six months ended June 30, 2002 is $28,928.
NOTE 3 - INCOME TAXES
As of June 30, As of December 31,
2002 2001
Deferred tax assets:
Net operating loss carryforwards $ 4,368,927 $ 4,544,840
Other -0- -0-
Valuation allowance (4,368,927) (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. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
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. RELATED PARTY TRANSACTION
At June 30, 2002 the corporation was indebted to a majority shareholder in the
amount of $43,398. As of June 30, 2002 no interest has been accrued.
NOTE 6 - GOING CONCERN
As shown in the accompanying financial statements the Company has incurred a
deficit of $12,768,364 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 7 - 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 (3,871)
---------------------------------
---------------------------------
Net Property and Equipment $ 8,857
=================================
NOTE 8 - 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 8 - STOCK TRANSACTIONS (CONTINUED)
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 8 - STOCK TRANSACTIONS (CONTINUED)
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 8 - STOCK TRANSACTIONS (CONTINUED)
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 1, 2002 the Company issued 420,000 shares of common stock for services
valued at $0.50 per share. As of June 30, 2002 the Company had 4,776,149 shares
of common stock outstanding.
NOTE 9 - 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 six months ended June 2002.
NOTE 10 SUBSEQUENT EVENT
In compliance with a board meeting held in May 2002, the Company on July 1, 2002
issued 15 million shares of common stock to aquire Global Holding , Inc.
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 $12,768,364 since
inception through June 30, 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 June 30, 2002 the Company has $0 in current assets compared to
current liabilities of $206,117. This is compared to current assets of $507,938
and current liabilities of $1,729,443 as of December 31, 2001. Management
recognizes there is a severe impairment to the Companys financial statements.
The current liabilities are comprised of $206,117 in accounts and notes payable.
Of this amount $43,398 is due to B. Grant Hunter, the Companys President for
cash he advanced for Company expenses.
Results of Operations
For the three months ended June 30, 2002 the Company had revenues of $0 and
operating expenses including costs of revenues of $136,059 compared to revenues
of $256,070 and operating expenses including costs of revenues of $221,221 as of
June 30, 2001. General and Administrative costs decreased $59,376 for the three
months ended June 30, 2002 due to the Company changing direction to enter the
refractory services business. Depreciation and Amortization also decreased by
$25,702 due to the fact all of the telecom equipment no longer being present on
the Companys financial statements. For the three months ended June 30, 2002 the
Company had a net loss of $136,059 compared to a net gain of $21,436 for the
same period the year before.
For the six months ended June 30, 2002 the Company had revenues of $18,700
and operating expenses including costs of revenues of $744,687 compared to
revenues of $440,699 and operating expenses including costs of revenues of
$648,979 as of June 30, 2001. General and Administrative expenses increased by
$102,526 for the six months ended June 30, 2002. This can be attributed to the
company ridding itself of the telecom assets in the first quarter of 2002.
Depreciation and Amortization decreased by $24,587 mostly due to the same
reason. Interest expense decreased by approximately $63,000 due to the Company
not having to finance any telecom equipment. The Company did have a gain of
$1,229,809 on the disposition of the Access Communications subsidiary. For the
six months ended June 30, 2002 the Company had net income of $502,610 compared
to a net loss of $421,914 for the same period the year before.
Net Operating Loss
The Company has accumulated approximately $12,768,364 of net operating
losses caryforwards as of June 30, 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 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
None.
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 May 31, 2002 the security
holders were asked to vote on the following:
The acquisition of Global Holdings, Inc.:
For Against Abstain
2,811,626
After the acquisition of Global Holdings, Inc. was ratified a motion was
made to change the Companys name to Diversified Thermal Solutions, Inc..
For Against Abstain
2,811,626
All motions at the Special Meeting of Shareholders were approved.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
4.1 Amendment of Articles - name change
8K filed by reference on September 20, 2002
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: July 31, 2002
By:__________________
B. Grant Hunter
President
S-1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Voip Telecom, Inc, (the Company)
on Form 10-Q(SB) for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, Grant
Hunter, Chief Executive Officer (or Chief Financial Officer) of the Company,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Grant Hunter
Chief Executive Officer (Chief Financial Officer)
Date July 31, 2002