UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended December 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No fee required) for the transition period
from _____________ to _______________.
Commission file number: 011-16099
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WAVE POWER.NET, INC.
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(Name of Small Business Issuer in its Charter)
Delaware 43-1798970
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(State of Incorporation) (I. R. S. Employer
Identification No.)
1004 Depot Hill Rd. #1E
Broomfield, Colorado 80020
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(Address of principal executive offices)(Zip Code)
303-404-9904
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(Issuer's telephone number)
Check whether the issuer: (1)filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of Registrant's common stock ($0.001 par value)
as of the quarter ended December 31, 2002 is 35,462,900.
1
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS........................................ 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION... 7
PART II
ITEM 1. LEGAL PROCEEDINGS........................................... 8
ITEM 2. CHANGES IN SECURITIES....................................... 8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................. 8
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS.................... 8
ITEM 5. OTHER....................................................... 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 8
SIGNATURES.................................................. 10
-2-
PART I
ITEM 1. FINANCIAL STATEMENTS
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and,
therefore, do not include all information and footnotes required by generally
accepted accounting principals and should, therefore, be read in conjunction
with Company's Annual Report to Shareholders on Form 10-KSB for the fiscal year
ended December 31, 2001.
telcoBlue, Inc.
(formerly Better Call Home, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
As of December 31, 2002
ASSETS
Current asset
Cash $ 265
Distribution Agreement 926
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TOTAL ASSETS $ 1,191
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 55,605
Accounts payable to related parties 38,331
Accrued expenses 258
Notes payable 3,346
Notes payable to related parties 161,175
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Total Current Liabilities 258,715
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STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 75,000,000 shares
authorized, 36,949,400 issued and outstanding 36,949
Additional paid in capital 2,415,977
Deferred compensation ( 300,000)
Accumulated other comprehensive income ( 7,240)
Deficit accumulated during the development stage (2,403,210)
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Total Stockholders' Deficit ( 257,524)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,191
===========
See notes to financial statements.
3
telcoBlue, Inc.
(formerly Better Call Home, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF EXPENSES AND COMPREHENSIVE LOSS
For the Three Months ended December 31, 2002 and
the Period from August 2, 2002 (Inception)
Through December 31, 2002
3 Months Inception
Ended Through
Dec. 31 2002 Dec. 31 2002
------------ -----------
General and administrative $ 213,220 $ 2,389,552
Interest expense 421 13,658
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Net loss (213,641) (2,403,210)
Other Comprehensive Income (Expense)
Loss on foreign currency translation (7,457) (7,240)
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Total Comprehensive Loss $ (221,098) $(2,410,450)
=========== ===========
Basic and diluted net loss per
common share $(.01)
Weighted average common shares
Outstanding 35,462,900
See notes to financial statements.
4
telcoBlue, Inc.
(formerly Better Call Home, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months ended December 31, 2002 and
the period from August 2, 2002 (Inception)
Through December 31, 2002
3 Months Inception
Ended Through
Dec. 31 2002 Dec. 31 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (213,641) $(2,403,210)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services 106,428 2,240,431
Stock option and warrant expense 10,543 10,543
Intrinsic value of beneficial conversion
feature of convertible notes payable 13,176
Changes in:
Accounts payable 21,492 33,381
Accounts payable to related parties 21,114 38,331
Accrued expenses 197 258
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NET CASH USED IN OPERATING ACTIVITIES (53,867) (67,090)
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CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock 61,500 61,574
Proceeds from notes payable 3,346
Proceeds from notes payable to related parties 9,675
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NET CASH PROVIDED BY FINANCING ACTIVITIES 61,500 74,595
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Effect of exchange rate changes on cash (7,442) (7,240)
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NET CHANGE IN CASH 191 265
Cash balance, beginning 74
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Cash balance, ending $ 265 $ 265
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See notes to financial statements.
5
telcoBlue, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of telcoBlue, Inc.
("telcoBlue") have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission ("SEC"), and should be read in conjunction
with the audited financial statements and notes thereto contained in telcoBlue's
latest annual report filed with the SEC on Form 10KSB. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for fiscal year 2002, as reported in the 10KSB, have been
omitted.
NOTE 2 - COMMON STOCK
In the quarter ended December 31, 2002, telcoBlue issued 734,000 shares of
common stock valued at $106,428 for services.
In the quarter ended December 31, 2002, telcoBlue issued 5,600,000 shares of
common stock for $300,000 of deferred compensation.
In the quarter ended December 31, 2002, telcoBlue sold 615,000 shares of common
stock for $61,500.
In the quarter ended December 31, 2002, telcoBlue issued 150,000 three year
options to purchase 150,000 shares of telcoBlue common stock. $10,543 in expense
has been recorded for the quarter ended December 31, 2002. The exercise prices
are as follows:
Exercise
Options Price
------- --------
50,000 $ .50
50,000 1.00
50,000 1.50
-------
150,000
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Part II
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Nature of Business. telcoBlue, Inc. ("telcoBlue") formerly Better Call Home,
Inc. ("BCH"), a development stage company, was formed in Nevada on August 2,
2002 to operate an Internet-based long distance telephony network using
state-of-the-art Voice over Internet Protocol (VoIP). Its long distance services
will be marketed mainly by third parties to end users in the form of pre-paid
phone cards or other media, including direct personal computer (PC) access and
Internet-based long distance telephony network using state-of-the-art Voice over
Internet Protocol. The name was changed to telcoBlue, Inc. on August 29, 2002.
The Company is in its development stage and to date its activities have been
limited to capital formation and the development of its Voice over Internet
Protocol (VoIP) long distance business.
telcoBlue products and services will enable customers to make low-cost, high
quality phone calls over the Internet using their personal computers or
traditional telephones. telcoBlue's PC to Phone pre-paid long distance service
is targeted at specific markets throughout North America and offers amongst the
lowest long distance rates available today.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and segment data and in conjunction with the
Company's 10KSB/A filed March 21, 2003. Results for interim periods may not be
indicative of the results for the full year.
RESULTS OF OPERATIONS
General and Administrative expenses consist primarily of the value of stock
issued for services totaling $106, 428, a stock warrant expense of $10,543,
management fees of $75,000 and technical consulting of $12,000. General and
Administrative expenses for the three months ended December 31, 2002 were
$231,220
Interest for the three months ended December 31, 2002 was $421 consisting of
accrued interest on the Company's convertible notes.
Total Operating Expenses for the three months ended December 31, 2002 were
$221,098, resulting in a total Comprehensive Loss of $221,098. Basic Net Loss
per Share amounted to $.01 for the three months ended December 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
In three months ended December 31, 2002, the Company has financed operations
principally through cash generated by the sale of stock. For the period ended
December 31, 2002, the Company raised a total of $61,500.
Net cash used in operating activities was $53,867 for the three months ended
December 31, 2002 and consisted primarily of accounts payable and fees due to
related third parties.
The Company anticipates that its current cash and cash equivalents and cash
generated from operations, if any, will not be sufficient to satisfy its
liquidity requirements for at least the next 12 months. The Company will require
additional funds prior to such time and will seek to sell additional equity or
debt securities or seek alternative sources of financing. If the Company is
unable to obtain this additional financing, it may be required to reduce the
scope of its planned sales and marketing and product development efforts, which
could harm its business, financial condition and operating results. In addition,
the Company may require additional funds in order to fund more rapid expansion,
to develop new or enhanced services or products or to invest in complementary
businesses, technologies, services or products. Additional funding may not be
available on favorable terms, if at all.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed the following reports on Form 8-K during the three months
ended December 31, 2002.
(1) Filed on September 25, 2002 ACQUISITION OR DISPOSITION OF ASSETS On August
7, 2002, Wave Power.net, Inc. ("the Company"), entered into a conditional
Agreement and Plan of Reorganization ("Agreement") with Better Call Home, Inc.
("BCH"), a Nevada corporation.
As set forth in the Agreement, which is attached hereto as Exhibit "10.1", the
Company and BCH desire to effect a Type B reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, on the terms and
conditions set forth below, whereby the Company will acquire all of the issued
and outstanding shares of BCH's common stock by issuing solely in exchange
therefore to BCH's shareholders, pro-rata, the Sixteen Million Restricted Common
Shares (16,000,000) (the "Shares") after a 1:5 reverse split of the shares.
Prior to reorganization, the Company's authorized capitalization presently
consists of 75,000,000 shares of capital stock, .001 par value, of which as of
June 30, 2002, 20,065,000 pre-reverse split shares were issued and outstanding
and 9,987,400 post- reverse split common shares have been reserved for future
issuance based upon consummation of the Agreement, expenses advanced and certain
specified contingencies. Upon payment of all reserved shares, management shares
(minimum) and shares issued pursuant to this Agreement there will be 30,000,000
common stock shares issued and outstanding. All issued and outstanding shares
have been duly authorized, validly issued and fully paid and non-assessable and
the Company's Common Shares to be issued and delivered on the Closing Date to
the BCH Shareholders pursuant to the Agreement will be, when so delivered, duly
authorized and validly issued and subject to no preemptive rights of any
Shareholder.
8
On August 29, 2002, the Company effectuated its 1:5 reverse split and changed
its name from Wave Power.net, Inc. to Telco Blue, Inc.
(2) Filed October 7, 2002 Item 7. FINANCIAL STATEMENTS
(a) Financial Statements of Wave Power.net, Inc.
(b) Audited Financial Statements for Better Call Home, Inc.
(e) Pro Forma Financial Information.
The pro forma financial information required to be filed as
part of this Current Report on Form 8-K will be filed no later
than 75 days from the date of the merger as an amendment to
this Report.
(3) Filed on November 15, 2002 ITEM 8. CHANGE IN FISCAL YEAR
Pursuant to the acquisition of Better Call Home Inc. and Plan of
Reorganization, the Company today determined to change its fiscal year from that
used in its most recent filing with the Commission on Form 10KSB, filed April
10, 2002, to September 30. The Company's September 30 2002 fiscal year will be
reported on Form 10KSB by December 31, 2002.
(4) Filed on November 25, 2002 Item 7. FINANCIAL STATEMENTS
(b) Pro Forma Financial Information.
Pursuant to the Company's 8-K filed September 24, 2002 with the
Securities and Exchange Commission, wherein the Company announced
it entered into an Agreement and Plan of Reorganization with
Better Call Home, Inc. a Nevada corporation, the following pro
forma financial is provided.
Pro Forma Consolidated Condensed Balance Sheet
The following pro forma balance sheet has been derived from the balance sheet of
Telco Blue, Inc. ("Telco Blue") at December 31, 2001 and adjusts such
information to give effect to the acquisition of Better Call Home, Inc. ("Better
Call"), as if the acquisition had occurred at August 31, 2002. The pro forma
balance sheet is presented for informational purposes only and does not purport
to be indicative of the financial condition that would have resulted if the
9
acquisition had been consummated at August 31, 2002. The pro forma balance sheet
should be read in conjunction with the notes thereto and the Company's financial
statements and related notes thereto contained elsewhere in this filing. A
pro-forma consolidated balance sheet is presented below.
Telco Blue Better Call
12/31/01 8/31/02 Adjustments Pro Forma
--------- --------- ---------- ---------
Cash $ -- $ 75 -- $ 75
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$ -- $ 75 -- $ 75
========= ========= ==========
Accounts payable $ 20,225 $ 5,689 -- $ 25,914
Shareholder notes payable 148,005 -- -- 148,005
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168,230 5,689 -- 173,919
Stockholders' Equity (Deficit)
Common stock, $.001 par value,
75,000,000 shares authorized,
30,000,000 shares issued
and outstanding 17,780 1,000 11,220 30,000
Additional paid in capital 95,220 -- (95,220) --
Accumulated deficit (281,230) (6,614) 84,000 (203,844)
--------- --------- ----------
$ -- $ 75 $ 75
========= ========= =========
Notes to Pro Forma Consolidated Condensed Balance Sheet
(1) Issuance of 16,000,000 shares of common stock of Telco Blue for all of the
outstanding stock of Better Call.
(2) Prior to the reorganization, Telco Blue issued 2,285,000 common shares of
pre 1 for 5 reverse stock split for compensation and 9,987,000 common shares of
post 1 for 5 reverse stock split.
(3) In August 2002, Telco Blue authorized a 1 for 5 reverse split of Telco
Blue's common stock.
After the reorganization and stock purchase there will be 30,000,000 shares of
common stock outstanding of the combined entity.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
telcoBlue, Inc.
Dated: March 19, 2003 /s/ Ronald McIntyre
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Ronald McIntyre
Chief Executive Officer
10