KonaTel, Inc. - Quarter Report: 2011 March (Form 10-Q)

westcott10qmar11.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 March 31, 2011

[ ] 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 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 April 28, 2011
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.

March 31, 2011

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

March 31, 2011 and September 30, 2010

	March 31,			September 30,
	2011			2010
	(Unaudited)			(Audited)
ASSETS

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

LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities
Current Liabilities:
Accrued Liabilities	$	-		$	-
Payable to Shareholders		63,497			58,053
Total Current Liabilities		63,497			58,053
Total Liabilities		63,497			58,053

Stockholders' Deficit
Preferred Stock 50,000,000 shares authorized having
a par value of $.01, $1.00 liquidation value;
zero issued and outstanding		-			-
Capital Stock 50,000,000 shares authorized having a
a par value of $.001 per share; 1,115,800 shares
issued and outstanding		1,116			1,116
Additional Paid-in Capital		2,815,697			2,815,697
Accumulated Deficit		(2,867,932	)		(2,867,932	)
Accumulated (deficit) earnings in development stage		(12,378	)		(6,934	)
Total Stockholders' Deficit		(63,497	)		(58,053	)
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 and Six Months Ended March 31, 2011 and 2010, and

For the Period from Reactivation (October 1999) through March 31, 2011

(Unaudited)

													For the
													Period from
	For the			For the			For the			For the			October 1999
	Three			Three			Six			Six			(date of
	Months			Months			Months			Months			reactivation)
	Ended			Ended			Ended			Ended			through
	March 31,			March 31,			March 31,			March 31,			March 31,
	2011			2010			2011			2010			2011


Revenues	$	-		$	-		$	-		$	-		$	-

General and Administrative Expenses		1,430			983			5,444			4,083			69,097
Operating Income (Loss)		(1,430	)		(983	)		(5,444	)		(4,083	)		(69,097	)
Other Income		-			-			-			-			56,719
Net (Loss) Before Income Taxes		(1,430	)		(983	)		(5,444	)		(4,083	)		(12,378	)
Current Year Provision for Income Taxes		-			-			-			-			-
Net Income (Loss)	$	(1,430	)	$	(983	)	$	(5,444	)	$	(4,083	)	$	(12,378	)
Basic Earnings (Loss) per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Basic Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			462,640
Diluted Earnings (Loss) per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Diluted Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			462,640

See accompanying notes to financial statements.

Westcott Products Corporation

(A Development Stage Company)

Condensed Statements of Cash Flows

For the Six Months Ended March 31, 2011 and 2010, and

For the Period from Reactivation (October 1999) through March 31, 2011

(Unaudited)

							For the
							Period from
							October 1999
	For the			For the			(date of
	Six Months			Six Months			reactivation)
	Ended			Ended			through
	March 31,			March 31,			March 31,
	2011			2010			2011


Cash Flows Used For Operating Activities
Net Income (Loss)	$	(5,444	)	$	(4,083	)	$	(12,378	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock Issued for Expenses		-			-			600
Increase (decrease) in accrued liabilities		-			3			-
Increase (decrease) in shareholder loans		5,444			4,080			63,497
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

March 31, 2011

(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, 2010. The results of operations for the period ended March 31, 2011, 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 $2,554 during the quarter. The balance due the shareholder is $63,497 as of March 31, 2011. The unsecured loan bears no interest and is due on demand.

NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS

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 March 31, 2011 Compared to Three Months Ended March 31, 2010

We had no operations during the quarterly period ended March 31, 2011, nor do we have operations as of the date of this filing. In the quarterly period ended March 31, 2011, we had sales of $0, compared to the quarterly period ended March 31, 2010, with sales of $0. General and administrative expenses were $1,430 for the March 31, 2011, period, compared to $983 for the March 31, 2010, period. General and administrative expenses for the three months ended March 31, 2011, were comprised mainly of accounting and other operating fees. The increased general and administrative expenses for the 2011 quarterly period over the 2010 quarterly period was limited to increased transfer fees. We had a net loss of $1,430 for the March 31, 2011, period compared to a net loss of $983 for the March 31, 2010, period.

Six Months Ended March 31, 2011 Compared to Six Months Ended March 31, 2010

We had no operations during the six month period ended March 31, 2011, nor do we have operations as of the date of this filing. General and administrative expenses were $5,444 for the March 31, 2011, period compared to $4,083 for the March 31, 2010, period. General and administrative expenses for the six months ended March 31, 2011, were comprised mainly of accounting and operating fees. We had a net loss of $5,444 for the March 31, 2011, period compared to a net loss of $4,083 for the March 31, 2010, period.

Liquidity and Capital Requirements

We had no cash or cash equivalents on hand at March 31, 2011. If additional funds are required, such funds may be advanced by management or shareholders as loans to us. During the quarterly period ended March 31, 2011, expenses and accounts payable were paid by a principal shareholder in the amount of $2,554, and during the quarterly period ended March 31, 2010, additional expenses paid by a principal shareholder totaled $3,155. The aggregate amount of $63,497 is outstanding as of March 31, 2011, 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, who are our only two executive officers, 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 Issuer has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WESTCOTT PRODUCTS CORPORATION

(Issuer)

Date:	04/28/11		By:	/s/Wayne Bassham
				Wayne Bassham, President and Director

Date:	04/28/11		By:	/s/Todd Albiston
				Todd Albiston, Vice President, Director and acting CFO