U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB
Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of
1934 for the Quarterly Period Ended March 31, 2003
Commission File Number: 000-28481
Iconet, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 86-0891931
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 Gaucho Hills Drive, Rolling Hills Estates, California 90274
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(Address of Principal Executive Offices) (Zip Code)
(416) 682-9255
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed be 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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
There are 38,445,430 shares of common stock outstanding as of May 20, 2003.
The shares are traded on the OTC Bulletin Board, under the symbol "ICON".
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICONET, INC.
(A Company in the Development Stage)
BALANCE SHEETS
ASSETS
March 31, 2003
______________
CURRENT ASSETS
Cash $ 614
Prepaid expenses 90,667
______________
Total current assets 91,281
OTHER ASSETS
Mining rights 15,000
Deferred tax asset (net) -
______________
Total other assets 15,000
______________
Total assets $ 106,281
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 355,644
Note payable -
Related party payable 534,465
Officer advances -
Related party line of credit 28,796
Interest payable to a related party 150,458
Accrued expenses 19,731
Wages payable 68,327
Payroll tax payable 16,338
______________
Total current and total liabilities 1,173,759
______________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 100,000,000 shares
authorized, 46,307,115 shares issued and
outstanding at March 31, 2003 48,307
Additional paid-in capital 3,757,856
Deferred compensation costs (260,000)
Deficit accumulated during the development stage (4,113,641)
______________
Total stockholders' deficit (567,478)
______________
Total liabilities and stockholders' deficit $ 606,281
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See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS (Unaudited)
For the Period from Inception (August 1997) and the Three Months Ended March 31, 2003, and 2002
CUMULATIVE FROM INCEPTION MARCH 31, 2003 MARCH 31, 2002
REVENUE
ADMINISTRATIVE AND GENERAL COSTS
Consulting $ (2,281,399) (289,832) $ (88,750)
Research and development (179,027) - -
Marketing expense (159,394) - -
Deferred compensation expense (140,000) (20,000) (20,000)
Legal and accounting (402,134) - (7,000)
Operating and administrative expense (719,093) (8,576) (7,346)
Rent expense (84,835) (8,000) -
Depreciation expense (5,562) - -
Amortization expense (16,500) - -
____________ ___________ ___________
Total operating costs and expenses (3,987,944) (326,408) (123,096)
____________ ___________ ___________
NON-OPERATING INCOME
Dividend income 1,212 - -
Gain on cancellation of contracts 74,104 - -
Gain on cancellation of amortization 16,500 - -
Loss on disposal of assets (59,641) - -
____________ ___________ ___________
Total non-operating income 32,175 - -
____________ ___________ ___________
INTEREST EXPENSE (157,871) - (1,233)
____________ ___________ ___________
Net loss before income taxes (4,113,640) (326,408) (124,329)
____________ ___________ ___________
Provision for income taxes - - -
____________ ___________ ___________
Net loss $ (4,113,640) $(326,408) $(124,329)
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Loss per common share - basic $ (0.36) $ (0.01) $ (0.00)
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Weighted average common shares -basic 11,316,569 47,757,115 31,257,115
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Loss per common share - diluted $ (0.34) $ (0.01) $ (0.00)
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Weighted average common shares- diluted 12,053,411 48,493,957 32,162,478
============ =========== ===========
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENS OF CASH FLOWS (Unaudited)
For the Period from Inception (August 1997) and the Three Months Ended March 31, 2003, and 2002
CUMULATIVE FROM INCEPTION MARCH 31, 2003 MARCH 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,113,640) $ (326,408) $ (124,329)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation expense 22,062 - -
Deferred compensation expense 140,000 20,000 20,000
Gain on cancellation of amortization (16,500) - -
Loss on disposal of assets 59,641 - -
Decrease in deposits 14,925 - -
Decrease (increase) in prepaid expenses 705,583 261,333 -
Increase (decrease) in accounts payable 419,619 - -
Increase (decrease) in related party payable 550,865 34,800 3,000
Interest incurred on bank overdraft - - -
Increase in wages payable 68,327 - -
Increase in interest payable 158,197 - 1,233
Increase (decrease) in accrued expenses 44,068 5,784 (22,902)
Expenses paid by issuance of
stock subscription 45,000 - -
Expenses paid by issuance of
common stock 655,378 - 81,250
____________ __________ __________
Net cash used in operating activities (1,246,475) (4,491) (41,748)
____________ __________ __________
Cash Flows from Investing Activities
Deposit paid (14,925) - -
Purchase of mining rights (15,000) - -
Purchase of fixed assets (65,203) - -
____________ __________ __________
Net cash used in investing activities (95,128) - -
____________ __________ __________
Cash Flows from Financing Activities
Proceeds received from issuance of stock 454,635 - -
Proceeds received from officer advances 24,074 - 3,600
Proceeds from bank overdraft 30,519 - -
Payment on bank overdraft (9,462) -
Payment on related party line of credit (22,574) - -
Payment of officer advances (5,474) - -
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENS OF CASH FLOWS (Unaudited)
For the Period from Inception (August 1997) and the Three Months Ended March 31, 2003, and 2002
CUMULATIVE FROM INCEPTION MARCH 31, 2003 MARCH 31, 2002
Proceeds received from line of credit 847,925 - -
Proceeds received from related party line of credit 22,574 - 37,700
____________ __________ __________
Net cash provided by financing activities 1,342,217 - 41,300
____________ __________ __________
Net increase in cash 614 (4,491) (448)
Cash and cash equivalents at inception,
December 31, 2002, and 2001 - 5,105 1,068
____________ __________ __________
Cash and cash equivalents at
March 31, 2003, and 2002 $ 614 $ 614 $ 620
============ ========== ==========
Supplementary Information
During the thre months ended March 31, 2003 and 2002, the Company paid no
interest of income taxes.
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
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March 31, 2003
1. Basis of Presentation
The accompanying unaudited interim financial statements of Iconet, Inc.
(the "Company") have been prepared by the Company in accordance with
accounting principles generally accepted in the United States of
America, pursuant to the Securities and Exchange Commission rules and
regulations. In management's opinion all adjustments necessary for a
fair presentation of the results for the interim periods have been
reflected in the interim financial statements. The results of
operations for any interim period are not necessarily indicative of the
results for a full year. All adjustments to the financial statements
are of a normal recurring nature.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Such disclosures
are those that would substantially duplicate information contained in
the most recent audited financial statements of the Company, such as
significant accounting policies and stock options. Management presumes
that users of the interim statements have read or have access to the
audited financial statements and notes thereto included in the
Company's most recent annual report on Form 10-KSB.
New Pronouncements
In February 2003 the FASB issued SFAS No. 149, "Accounting for Certain
Financial Instruments with Characteristics of Liabilities and Equity,"
which is effective at the beginning of the first interim period
beginning after March 15, 2003. SFAS No. 149 establishes standards for
the Company's classification of liabilities in the financial statements
that have characteristics of both liabilities and equity. The Company
believes the adoption of SFAS No. 149 will not have a material effect
on the Company's consolidated financial position or results of
operations.
Going Concern
These financial statements have been prepared assuming that the Company
will continue as a going concern. The Company is currently in the
development stage, and existing cash, other material assets, and
available credit are insufficient to fund the Company's cash flow needs
for the next year. In October 2001 a related party extended the Company
a line of credit for $150,000 (see Note 2). Management is attempting to
raise additional capital.
2. Related Party Transactions
The company rents office space on a month-to-month basis in order to
perform administrative functions. The rent is due to an officer of the
Company. At September 30, 2002, rent expense of $8,500 was payable as
part of officer advances. For the three months ended march 31, 2003,
rent of $1,500 was expensed, respectively.
The President of Iconet, Inc. has advanced the Company funds to pay
expenses. The advance is due upon demand and carries no interest. As
of March 31, 2003, the outstanding advance balance was $30,900.
During the three months ended March 31, 2003, the company incurred
expense for consulting to officers and shareholders. The total expense
for the three months ended March 31, 2003 was $22,500. The total
related party payable as of March 31, 2003, was $503,565.
The Company has a $150,000 line of credit from a shareholder, as of
March 31, 2003, the line of credit was not used.
3. Subsequent Events
In April 2003 the Company and Sea Emerald Development Corp., rescinded
their agreement for the purchase and sale of the mining claims situated
in Porcupine Mining Division, Canada. The 10,000,000 shares of the
Company's restricted Common Stock issued to Sea Emerald will be
returned to the Company's treasury.
Item 2. Management's Discussion of Operations and Financial Condition
PART II - OTHER INFORMATION
PART II. OTHER INFORMATION
March 31, 2003 Management Discussion and Analysis
MD&A Mar/31/03
The Company, has reviewed, and continues to review, its corporate files,
books and records, and based thereon, it has not been able to conclusively
identify a basis for a certain undetermined amount of its current Accounts
Payable and for the Related Parties payable to previous management. We have been
unable, at this point, to locate back up documentation or back up invoices for
some of such payables. Our review continues in this regard.
On April 3, 2003, based on further due diligence by the parties, the
Company and Sea Emerald Development Corp., a Canadian corporation ("Sea
Emerald"), mutually agreed to rescind their agreement for the purchase and sale
of 100% interest in 21 mining claims situated in Langmuir Township, Porcupine
Mining Division, Ontario, Canada. The 10,000,000 shares of the Company's
restricted Common Stock issued to Sea Emerald have been returned to the
Company's treasury for cancellation.
The company has entered into two option agreements with Starfire Minerals
for various mining claims that it has not, nor does it intend to complete on.
Dr. Stewart Jackson has resigned from the Board of Directors in April 2003.
Mr. Ron Shorr has resigned from the Board of Directors in April 2003.
The Company has also adopted an Option Plan for Directors, Officers and
Employees, subject to shareholder approval.
The Company has defaulted on settlement agreement for the lawsuit with JP
Morgan after having made three payments totalling $9962.37.
The Company has attained a Berlin Stock Exchange listing.
Item 7. Signatures
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ICONET, INC.
May 20, 2003 /S/ Randy Miller
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Randy Miller
SECTION 302 CERTIFICATION
I, Randy Miller, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Iconet,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d- 14) for the
registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 20, 2003 /s/ Randy Miller
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Randy Miller
Chairman and CEO