KonaTel, Inc. - Quarter Report: 2010 June (Form 10-Q)

westcott10jun1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

______________

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission File No. 001-10171

WESTCOTT PRODUCTS CORPORATION

(Exact name of the issuer as specified in its charter)

Delaware	80-0000245
(State or Other Jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

8867 South Capella Way

Sandy, Utah 84093

(Address of Principal Executive Offices)

(801) 631-7969

(Registrant’s Telephone Number)

Indicate by check mark 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), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:


Class		Outstanding as of July 29, 2010
Common Capital Voting Stock, $0.001 par value per share		1,115,800 shares

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements.

June 30, 2010

C O N T E N T S

Condensed Balance Sheets	3
Condensed Statements of Operations	4
Condensed Statements of Cash Flows	5
Notes to Condensed Financial Statements	6

Westcott Products Corporation

(A Development Stage Company)

Condensed Balance Sheets

June 30, 2010 and September 30, 2009

	June 30,			September 30,
	2010			2009
	(Unaudited)			(Audited)
ASSETS

Assets
Current Assets
Cash	$	-		$	-
Total Current Assets		-			-
Total Assets	$	-		$	-

LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities
Current Liabilities:
Accrued Liabilities	$	-		$	-
Payable to Shareholders		56,803			50,987
Total Current Liabilities		56,803			50,987
Total Liabilities		56,803			50,987

Stockholders' Deficit
Preferred Stock 50,000,000 shares authorized having
a par value of $.01, $1.00 liquidation value; none
issued and outstanding as of March 31, 2010
and September 30, 2009, respectively.		-			-
Capital Stock 50,000,000 shares authorized having a
par value of $.001 per share; 1,115,800 shares
issued and outstanding as of March 31, 2010
and September 30, 2009, respectively.		1,116			1,116
Additional Paid-in Capital		2,815,697			2,815,697
Accumulated Deficit		(2,867,932	)		(2,867,932	)
Accumulated earnings (deficit) in development stage		(5,684	)		132
Total Stockholders' Deficit		(56,803	)		(50,987	)
Total Liabilities and Stockholders' Deficit	$	-		$	-

See accompanying notes to financial statements.

Westcott Products Corporation

(A Development Stage Company)

Condensed Statements of Operations

For the Three Months and Nine Months Ended June 30, 2010 and 2009, and

For the Period from Reactivation (October 1999) through June 30, 2010

(Unaudited)

													For the
													Period from
	For the			For the			For the			For the			October 1999
	Three			Three			Nine			Nine			(date of
	Months			Months			Months			Months			reactivation)
	Ended			Ended			Ended			Ended			through
	June 30,			June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			2009			2010


Revenues	$	-		$	-		$	-		$	-		$	-

General and Administrative Expenses		1,733			1,300			5,816			5,469			62,403
Operating Income (Loss)		(1,733	)		(1,300	)		(5,816	)		(5,469	)		(62,403	)
Other Income		-			-			-			-			56,719
Net (Loss) Before Income Taxes		(1,733	)		(1,300	)		(5,816	)		(5,469	)		(5,684	)
Current Year Provision for Income Taxes		-			-			-			-			-
Net Income (Loss)	$	(1,733	)	$	(1,300	)	$	(5,816	)	$	(5,469	)	$	(5,684	)
Basic Earnings (Loss) per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	0.01
Basic Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			417,044
Diluted Earnings (Loss) per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	-
Diluted Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			417,044

See accompanying notes to financial statements.

Westcott Products Corporation

(A Development Stage Company)

Condensed Statements of Cash Flows

For the Nine Months Ended June 30, 2010 and 2009, and

For the Period from Reactivation (October 1999) through June 30, 2010

(Unaudited)

							For the
							Period from
							October 1999
	For the			For the			(date of
	Nine Months			Nine Months			reactivation)
	Ended			Ended			through
	June 30,			June 30,			June 30,
	2010			2009			2010


Cash Flows Used For Operating Activities
Net Income (Loss)	$	(5,816	)	$	(5,469	)	$	(5,684	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock Issued for Expenses		-			-			600
Increase (decrease) in accrued liabilities		-			-			-
Increase (decrease) in shareholder loans		5,816			5,469			56,803
Increase (decrease) in taxes payable		-			-			(56,719	)
Net Cash (used in) Operating Activities		-			-			(5,000	)

Cash Flows from Financing Activity
Proceeds from issuance of common stock		-			-			15,000
Principal payments on loans		-			-			(10,000	)
Net Cash Provided by Financing Activities		-			-			5,000
Net Increase/(Decrease) in Cash		-			-			-
Beginning Cash Balance		-			-			-
Ending Cash Balance	$	-		$	-		$	-

Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest	$	-		$	-		$	-
Cash paid during the year for income taxes		-			-			-
Stock issued in exchange for accrued liability/expense		-			-			600

See accompanying notes to financial statements.

Westcott Products Corporation

(A Development Stage Company)

Notes to Condensed Financial Statements

June 30, 2010

(Unaudited)

NOTE 1 BASIS OF PRESENTATION

The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2009. The results of operations for the period ended June 30, 2010, are not necessarily indicative of the operating results for the full year.

NOTE 2 LIQUIDITY/GOING CONCERN

The Company does not have significant assets, nor has it established operations, and has accumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. It is the intent of the Company to seek a merger with an existing, well-capitalized operating company. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 RELATED PARTY TRANSACTIONS

The Company had expenses and accounts payable paid in its behalf by a shareholder in the amount of $1,736 during the quarter. The balance due the shareholder is $56,803 as of June 30, 2010. The unsecured loan bears no interest and is due on demand.

NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”), which was formerly known as SFAS 168. ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the Securities and Exchange Commission (the “SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards and all other non-grandfathered, non-SEC accounting literature not included in the Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases of conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141R”), which was primarily codified into Topic 805 “Business Combinations” in the ASC, and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51(“SFAS 160”), which was primarily codified into Topic 810 “Consolidations” in the ASC. SFAS No. 141R requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable

assets acquired. SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141R and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS No. 141R will impact the valuation of business acquisitions made in 2009 and forward. The Company adopted SFAS No. 160 on October 1, 2009. As a result, implementation of SFAS No. 160 had no impact on the Company’s condensed consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-13 for Revenue Recognition – Multiple Deliverable Revenue Arrangements (Subtopic 605-25) “Subtopic”. This accounting standard update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue – generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic. This Statement is effective for fiscal years beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity’s fiscal year. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Currently, Management believes this Statement will have no impact on the financial statements of the Company once adopted.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Plan of Operations

Our Company’s plan of operation for the next 12 months is to: (i) consider guidelines of industries in which our Company may have an interest; (ii) adopt a business plan regarding engaging in business in any selected industry; and (iii) to commence such operations through funding and/or the acquisition of a going concern engaged in any industry selected.

During the next 12 months, our only foreseeable cash requirements will relate to maintaining our good standing; the payment of our Securities and Exchange Commission and the Exchange Act reporting filing expenses, including associated legal and accounting fees; costs incident to reviewing or investigating any potential business venture; and maintaining our good standing as a corporation in our state of organization. Because a principal shareholder has been paying all of the operating expenses, management does not anticipate that we will have to raise additional funds during the next 12 months.

Our common stock currently trades on the Over-the-Counter Bulletin Board (OTCBB) under the symbol WSPD.

Results of Operations

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009

We had no operations during the quarterly period ended June 30, 2010, nor do we have operations as of the date of this filing. In the quarterly period ended June 30, 2010, we had sales of $0, compared to the quarterly period ended June 30, 2009, with sales of $0. General and administrative expenses were $1,733 for the June 30, 2010, period, compared to $1,300 for the June 30, 2009, period. General and administrative expenses for the three months ended June 30, 2010, were comprised mainly of accounting fees. We had a net loss of $1,733 for the June 30, 2010, period compared to a net loss of $1,300 for the June 30, 2009, period.

Nine Months Ended June 30, 2010 Compared to Nine Months Ended June 30, 2009

We had no operations during the nine month period ended June 31, 2010, nor do we have operations as of the date of this filing. General and administrative expenses were $5,816 for the June 30, 2010, period compared to $5,469 for the June 30, 2009, period. General and administrative expenses for the nine months ended June 30, 2010, were comprised mainly of accounting and operating fees. We had a net loss of $5,816 for the June 30, 2010, period compared to a net loss of $5,469 for the June 30, 2009, period.

Liquidity and Capital Requirements

We had no cash or cash equivalents on hand at June 30, 2010. If additional funds are required, such funds may be advanced by management or shareholders as loans to us. During the quarterly period ended June 30, 2010, expenses and accounts payable were paid by a principal shareholder in the amount of $1,736, and during the quarterly period ended June 30, 2009, additional expenses paid by a principal shareholder totaled $1,300. The aggregate amount of $56,803 is outstanding as of June 30, 2010, is non-interest bearing, unsecured and due on demand. Because we have not identified any acquisition or venture, it is impossible to predict the amount of any such loan.

Off-balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4(T). Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Vice President, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our President and Vice President, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our President and Vice President concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Not required.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None; not applicable.

Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits

All Sarbanes-Oxley Certifications follow the signature line at the end of this Quarterly Report.

(b) Reports on Form 8-K

None.

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.

WESTCOTT PRODUCTS CORPORATION

(Issuer)

Date:	07/29/10		By:	/s/Wayne Bassham
				Wayne Bassham, President and Director

Date:	07/29/10		By:	/s/Todd Albiston
				Todd Albiston, Vice President, Director and acting CFO