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 March 31, 2003. [ ] 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 --------- WAVE POWER.NET, INC. -------------------- (Name of Small Business Issuer in its Charter) Delaware 43-1798970 ------------ --------------- (State of Incorporation) (I. R. S. Employer Identification No.) 1004 Depot Hill Rd. #1E Broomfield, Colorado 80020 ------------------------- (Address of principal executive offices)(Zip Code) 303-404-9904 ------------ (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 March 31, 2003 is _________________ 1 TABLE OF CONTENTS PART I ITEM 1. FINANCIAL STATEMENTS........................................ 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION... 8 PART II ITEM 1. LEGAL PROCEEDINGS...........................................10 ITEM 2. CHANGES IN SECURITIES.......................................10 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.............................10 ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS....................10 ITEM 5. OTHER.......................................................10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................10 SIGNATURES..................................................10 2 telcoBlue, Inc. (A Development Stage Company) CONSOLIDATED BALANCE SHEET As of March 31, 2003 ASSETS Current asset Cash $ 2,161 Distribution Agreement 926 ----------- TOTAL ASSETS $ 3,087 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 57,963 Accounts payable to related parties 104,171 Accrued expenses 485 Notes payable 3,585 Notes payable to related parties 31,615 ----------- Total Current Liabilities 197,819 ----------- STOCKHOLDERS' DEFICIT Common stock, $.001 par value, 75,000,000 shares authorized, 39,949,400 issued and outstanding 39,949 Additional paid in capital 2,562,978 Deferred compensation (300,000) Accumulated other comprehensive income (13,893) Deficit accumulated during the development stage (2,483,766) ----------- Total Stockholders' Deficit (194,732) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 3,087 =========== The accompanying notes are an integral part of these financial statements. 3 telcoBlue, Inc. (A Development Stage Company) CONSOLIDATED STATEMENTS OF EXPENSES AND COMPREHENSIVE LOSS For the Three Months and Six Months ended March 31, 2003 and the Period from August 2, 2002 (Inception) Through March 31, 2003 3 Months 6 Months Inception Ended Ended Through Mar. 31 Mar. 31 Dec. 31 2003 2002 2003 ------------ ------------ ------------ General and administrative $ 80,360 $ 293,580 $ 2,469,912 Interest expense 196 617 13,854 ------------ ------------ ------------ Net loss (80,556) (294,197) (2,483,766) Other Comprehensive Expense Loss on foreign currency translation (6,653) (14,110) (13,893) ------------ ------------ ------------ Total Comprehensive Loss $ (87,209) $ (308,307) $ (2,497,659) ============ ============ ============ Basic and diluted net loss per common share $ (.00) $ (.01) Weighted average common shares Outstanding 39,199,400 37,331,150 The accompanying notes are an integral part of these financial statements. 4 telcoBlue, Inc. (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months ended March 31, 2003 and the period from August 2, 2002 (Inception) Through March 31, 2003 6 Months Inception Ended Through Mar. 31, Mar. 31, 2003 2003 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (294,197) $(2,483,765) Adjustments to reconcile net loss to net cash used in 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 23,849 35,738 Accounts payable to related parties 86,954 104,171 Accrued expenses 424 485 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES 65,999) (79,221) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Sale of stock 61,501 61,574 Proceeds from notes payable 3,346 Proceeds from notes payable to related parties 19,750 29,412 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 81,251 94,332 ----------- ----------- Effect of exchange rate changes on cash (13,165) (12,950) ----------- ----------- NET CHANGE IN CASH 2,087 2,161 Cash balance, beginning 74 -- ----------- ----------- Cash balance, ending $ 2,161 $ 2,161 =========== =========== NONCASH ACTIVITIES: Shares issued for notes payable $ 150,000 The accompanying notes are an integral part of these 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 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 ======= In the quarter ended March 31, 2003, telcoBlue issued 3,000,000 shares of common stock to pay off a $150,000 note payable. NOTE 3 - NOTES PAYABLE TO RELATED PARTIES Three shareholders loaned telcoBlue $19,750 during the quarter ending March 31, 2003. These loans are payable on demand, bear no interest and have no collateral. 6 NOTE 4 - SUBSEQUENT EVENTS For a 12 month consulting agreement signed in April 2003, telcoBlue agreed to issue four million shares of common stock, one million per quarter with the first million due upon signing. As part of the agreement, telcoBlue also agreed to issue two million 120 day warrants to purchase telcoBlue common stock at $.05 per share. If the two million warrants are exercised, the consultant will be granted four million additional 120 day warrants to purchase telcoBlue common stock at $.10 per share. If the four million warrants are exercised, the consultant will be granted four million additional 120 day warrants to purchase telcoBlue common stock at $.15 per share. In April 2003, telcoBlue issued 3,900,000 shares of telcoBlue to four consultants. In June 2003, telcoBlue's board approved the issuance of 4,250,000 shares of telcoBlue to Vocalscape Networks, Inc. ("Vocalscape") for payment of $75,000 owed under the management agreement, $30,868 of out of pocket expenses paid on behalf of telcoBlue and $64,233 of lost stock proceeds because of telcoBlue's failure to file an SB-2 within two months of the reorganization as required by the plan of reorganization. 7 Part II 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 19, 2003 and the Company's 10QSB filed March 21, 2003. Results for interim periods may not be indicative of the results for the full year. 8 RESULTS OF OPERATIONS General and Administrative expenses for the three months consist primarily of Management Fees of $75,125. General and Administrative expenses for the three months ended March 31, 2003 were $80,360. General and Administrative expenses for the six months ended March 31, 2003 were $$293,580. Interest for the three months ended March 31, 2003 was $196 consisting of accrued interest on the Company's convertible notes. Interest expenses for the six months ended March 31, 2003 were $617. Total Operating Expenses for the three months ended March 31, 2003 were $80,556 resulting in a total Comprehensive Loss of $87,209. Total Operating Expenses for the six months ended March 31, 2003 were $294,197 resulting in a total Comprehensive Loss of $308,307. Basic Net Loss per Share amounted to $.01 for the six months ended March 31, 2003. LIQUIDITY AND CAPITAL RESOURCES In three months ended March 31, 2003, the Company has financed operations principally through notes payable to related parties totaling $19,750. For the six months ended March 31, 2003 cash generated by the sale of stock and notes payable to related parties totaled $81,251. Net cash used in operating activities was $12,132 for the three months ended March 31, 2003 and consisted primarily of accounts payable and fees due to related third parties. Net cash used in operating activities was $$65,999 for 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 9 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. 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 (a) Exhibit 1. Financial Statements for the period ending March 31, 2002 (b) 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. telcoBlue, Inc. Dated: June 12, 2003 /s/ Ronald McIntyre ---------------------- Ronald McIntyr, CEO 10