KonaTel, Inc. - Quarter Report: 2012 June (Form 10-Q)

westcott10q63012.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, 2012

[ ] 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 incorporation or organization)		(I.R.S. Employer I.D. No.)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [X] No [ ] (The Registrant does not maintain a website.)

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 31, 2012
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, 2012

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, 2012 and September 30, 2011

(Unaudited)

	June 30,			September 30,
	2012			2011

ASSETS

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

LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities
Current Liabilities:
Accounts Payable	$	-		$	625
Payable to Shareholders		77,547			67,611
Accrued Interest - Related Party		5,767			-
Total Current Liabilities		83,314			68,236
Total Liabilities		83,314			68,236

Stockholders' Deficit
Preferred Stock 50,000,000 shares authorized having
a par value of $.01, $1.00 liquidation value;
zero issued and outstanding		-			-
Common 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 in development stage		(32,195	)		(17,117	)
Total Stockholders' Deficit		(83,314	)		(68,236	)
Total Liabilities and Stockholders' Deficit	$	-		$	-

See accompanying notes to condensed financial statements.

Westcott Products Corporation

(A Development Stage Company)

Condensed Statements of Operations

For the Three and Nine Months Ended June 30, 2012 and 2011, and

For the Period from Reactivation (October 1999) through June 30, 2012

(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,
	2012			2011			2012			2011			2012


Revenues	$	-		$	-		$	-		$	-		$	-
General and Administrative Expenses		1,800			2,351			9,311			7,795			83,147
Operating Loss		(1,800	)		(2,351	)		(9,311	)		(7,795	)		(83,147	)
Other Income (Expense)
Other Income		-			-			-			-			56,719
Interest Expense - Related Party		(2,132	)		-			(5,767	)		-			(5,767	)
Total Other Income (Expense)		(2,132	)		-			(5,767	)		-			50,952
Net Loss Before Income Taxes		(3,932	)		(2,351	)		(15,078	)		(7,795	)		(32,195	)
Provision for Income Taxes		-			-			-			-			-
Net Loss	$	(3,932	)	$	(2,351	)	$	(15,078	)	$	(7,795	)	$	(32,195	)
Basic Loss per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.06	)
Basic Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			526,750
Diluted Loss per Common Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.06	)
Diluted Weighted Average Shares Outstanding		1,115,800			1,115,800			1,115,800			1,115,800			526,750

See accompanying notes to condensed financial statements.

Westcott Products Corporation

(A Development Stage Company)

Condensed Statements of Cash Flows

For the Nine Months Ended June 30, 2012 and 2011, and

For the Period from Reactivation (October 1999) through June 30, 2012

(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,
	2012			2011			2012


Cash Flows Used For Operating Activities
Net Loss	$	(15,078	)	$	(7,795	)	$	(32,195	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock issued for expenses		-			-			600
Increase (decrease) in accounts payable		(625	)		300			-
Increase (decrease) in shareholder loans		9,936			7,495			77,547
Increase (decrease) in taxes payable		-			-			(56,719	)
Increase in accrued interest - related party		5,767			-			5,767
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 condensed financial statements.

Westcott Products Corporation

(A Development Stage Company)

Notes to Condensed Financial Statements

June 30, 2012

(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, 2011. The results of operations for the period ended June 30, 2012, are not necessarily indicative of the operating results for the full year.

NOTE 2 LIQUIDITY/GOING CONCERN

The Company does not have any 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 $1,800 during the quarter. The balance due the shareholder is $77,547 as of June 30, 2012. The unsecured loan bears no interest and is due on demand. However, the Company imputes interest on the loan at 10% per annum. Imputed interest expense on related party loans for the three-month periods ended June 30, 2012 and 2011 totaled $2,132 and $0, respectively. Imputed interest expense on related party loans for the nine-month periods ended June 30, 2012 and 2011 totaled $5,767 and $0, respectively.

NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its 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 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, 2012 Compared to Three Months Ended June 30, 2011

We had no operations during the quarterly period ended June 30, 2012, nor do we have operations as of the date of this filing. General and administrative expenses were $1,800 for the June 30, 2012, period, compared to $2,351 for the June 30, 2011, period. General and administrative expenses for the three months ended June 30, 2012, were comprised mainly of accounting and other operating fees. The decreased general and administrative expenses for the 2012 quarterly period over the 2011 quarterly period was limited to decreased legal fees and a decrease in other office expenses. We had a net loss of $3,932 for the June 30, 2012, period compared to a net loss of $2,351 for the June 30, 2011, period. The increase in the net loss for the June 30, 2012, period over the 2011 period is due to the imputed interest expense on the related party loan, as discussed in Note 3 on page 6.

Nine Months Ended June 30, 2012 Compared to Nine Months Ended June 30, 2011

We had no operations during the nine month period ended June 30, 2012, nor do we have operations as of the date of this filing. General and administrative expenses were $9,311 for the June 30, 2012, period compared to $7,795 for the June 30, 2011, period. General and administrative expenses for the nine months ended June 30, 2012, were comprised mainly of accounting and operating fees. We had a net loss of $15,078 for the June 30, 2012, period compared to a net loss of $7,795 for the June 30, 2011, period. The increase in the net loss for the nine month period for 2012 over the nine month period for 2011 is due to the imputed interest expense on the related party loan, as discussed in Note 3 on page 6.

Liquidity and Capital Requirements

We had no cash or cash equivalents on hand at June 30, 2012. 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, 2012, expenses and accounts payable were paid by a principal shareholder in the amount of $1,800, and during the quarterly period ended June 30, 2011, additional expenses paid by a principal shareholder totaled $2,351. The aggregate amount of $77,547 is outstanding as of June 30, 2012, is non-interest bearing, unsecured and due on demand. However, the Company imputes interest on the loan at 10% per annum. Imputed interest expense on related party loans for the three-month periods ended June 30, 2012, and 2011, totaled $2,132 and $0, respectively. 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. 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

Exhibit No.	Identification of Exhibit
31.1	Certification of Wayne Bassham Pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Todd Albiston Pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification of Wayne Bassham and Todd Albiston Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

(b) Reports on Form 8-K

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

Date:	July 31, 2012	By:	/s/Wayne Bassham
			Wayne Bassham
			President and Director
			Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

WESTCOTT PRODUCTS CORPORATION

Date:	July 31, 2012	By:	/s/Wayne Bassham
			Wayne Bassham
			President and Director
			Principal Executive Officer

Date:	July 31, 2012	By:	/s/Todd Albiston
			Todd Albiston
			Vice President and Director
			Principal Financial Officer