U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB/A
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for
the Quarterly Period Ended June 30, 2002
Commission File Number: 000-28481
Iconet, Inc.
------------
(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
----
(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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
There are 34,757,115 shares of common stock outstanding as of June 30,
2002. The shares are traded on the OTC Bulletin Board, under the symbol
"ICON".
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion of Operations and Financial Condition
PART II - OTHER INFORMATION
Signatures
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
ICONET, INC.
(A Company in the Development Stage)
BALANCE SHEETS
ASSETS
------
June
30, 2002 December
(Unaudited) 31, 2001
----------- -----------
Current Assets
Cash $ 199 $ 1,068
Prepaid expenses - 81,250
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Total current assets 199 82,318
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Deferred tax asset (net) - -
------------------------ ----------- -----------
Total Assets $ 199 $ 82,318
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
--------------------------------------
Current Liabilities
-------------------
Accounts payable $ 355,644 $ 363,679
Bank overdraft payable 30,519 30,519
Related party payable 498,565 522,164
Officer advances 10,600 -
Related party line of credit 117,924 22,574
Interest payable 148,347 143,644
Accrued expenses 24,727 57,132
Wages payable 68,327 68,327
Payroll tax payable 16,338 16,338
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Total current and total liabilities 1,270,991 1,224,377
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Commitments and Contingencies
-----------------------------
Stockholders' Deficit
Common stock, $.001 par value, 100,000,000 shares
authorized, 34,757,115 and 31,257,115 shares issued
and outstanding at June 30, 2002 and December 31, 2001 34,757 31,257
Common stock subscribed 8,000 -
Additional paid-in capital 2,785,406 2,221,906
Deferred compensation costs (340,000) (380,000)
Mining rights receivable (500,000) -
Deficit accumulated during the development stage (3,258,955) (3,015,222)
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Total Stockholders' Equity (1,270,792) (1,142,059)
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Total liabilities and stockholders' equity $ 199 $ 82,318
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See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
-----------------------
(Unaudited)
Cumulative
from August
Inception Six Six Three Three
(August 1997) Months Months Months Months
through Ended Ended Ended Ended
June June June June June
30, 2002 30, 2002 30, 2001 30, 2002 30, 2001
------------ ---------- ---------- ---------- ----------
Revenue
-------
Operating Costs
and Expenses
---------------
Consulting $ (1,608,396) $(158,915) $ (41,250) $ (70,165) $ -
Research and development (179,027) - - - -
Marketing expense (159,394) - (20,000) - -
Labor expense (60,000) (40,000) - (20,000) -
Legal and accounting (349,034) (24,451) (42,563) (17,451) -
Operating and
administrative expenses (674,198) (9,863) (1,671) (2,517) -
Rent expense (83,835) (5,800) (600) (5,800) (600)
Depreciation expense (5,562) - - - -
Amortization expense (16,500) - - - -
------------ ---------- ---------- ---------- ----------
Total operating costs
and expenses (3,135,946) (239,029) (106,084) (115,933) (600)
------------ ---------- ---------- ---------- ----------
Non-operating Income
--------------------
Dividend income 1,212 - - - -
Gain on cancellation of
contracts 90,604 - - - -
Loss on disposal of
assets (59,641) - (59,641) - (59,641)
------------ ---------- ---------- ---------- ----------
Total non-operating income 32,175 - (59,641) - (59,641)
------------ ---------- ---------- ---------- ----------
Interest expense (155,184) (4,704) (43,523) (3,471) (22,675)
------------ ---------- ---------- ---------- ----------
Net loss before
income taxes (3,258,955) (243,733) (209,248) (119,404) (82,916)
------------ ---------- ---------- ---------- ----------
Provision for
income taxes - - - - -
------------ ---------- ---------- ---------- ----------
Net loss $ (3,258,955) $(243,733) $(209,248) $(119,404) $ (82,916)
============ ========== ========== ========== ==========
Loss per common
share - basic $ (0.52) $ (0.01) $ (1.95) $ (0.00) $ (0.32)
============ ========== ========== ========== ==========
Weighted average common
shares - basic 6,212,391 31,257,115 107,115 31,257,115 257,115
============ ========== ========== ========== ==========
Loss per common shares
- diluted $ (0.46) $ (0.01) $ (0.05) $ (0.00) $ (0.01)
============ ========== ========== ========== ==========
Weighted average common
shares - diluted 7,049,348 836,957 4,561,660 31,668,880 9,257,115
============ ========== ========== ========== ==========
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
Cumulative From
Inception (August Six Months Six Months
1997) through Ended June Ended June
June 30, 2002 30, 2002 30, 2001
------------ ------------ ------------
Cash Flows from Operating Activities
------------------------------------
Net loss $(3,258,955) $ (243,733) $ (209,248)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation expenses 22,062 - -
Deferred compensation expense 60,000 40,000 -
Gain on cancellation of amortization (16,500) - -
Loss on disposal of assets 59,641 - 59,641
Decrease in deposits 14,925 - 600
Deposit paid (14,925) - -
Increase in deferred tax asset (1,135,670) (82,870) (74,543)
Increase (decrease) in accounts payable 419,619 (8,035) (105,360)
Increase (decrease) in related party
payable 498,565 (23,599) 67,500
Increase in wages payable 68,327 - -
Increase in interest payable 148,347 4,703 43,523
Increase in deferred tax valuation
allowance 1,135,670 82,870 74,543
Increase (decrease) in accrued expenses 116,065 42,595 -
Expenses paid by issuance of common stock 736,628 81,250 -
------------ ------------ ------------
Net cash used in operating activities (1,146,201) (106,819) (143,344)
Cash Flows from Investing Activities
------------------------------------
Purchase of fixed assets (65,203) - -
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Net cash used in investing activities (65,203) - -
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Cash Flows from Financing Activities
------------------------------------
Proceeds received from issuance of stock 204,635 - -
Proceeds received from officer advances 16,074 10,600 -
Proceeds from bank overdraft 30,519 - -
Payment of officer advances (5,474) - -
Proceeds received from line of credit 847,925 - 143,344
Proceeds received from related party line
of credit 117,924 95,350 -
------------ ------------ ------------
Net cash provided by financing activities 1,211,603 105,950 143,344
------------ ------------ ------------
Net increase in cash 199 (869) -
Cash and cash equivalents at
June 30, 2002 and 2001 - 1,068 -
------------ ------------ ------------
Cash and cash equivalents at
June 30, 2002 and 2001 $ 199 $ 199 $ -
============ ============ ============
Supplementary Information
-------------------------
During the six months ended June 30, 2002 and 2001, no amounts were actually paid for
either interest or income taxes.
In June 2002 the Company issued 1,500,000 shares of its common stock for consulting
services valued at $75,000.
Also in June 2002 the Company issued 2,000,000 shares of its common stock as a partial
payment for mining rights.
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
-----------------------------------------
June 30, 2002
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 May 2002 the Financial Accounting Standards Board ('FASB')
issued Statement of Financial Accounting Standards ('SFAS') 145
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections". This
pronouncement requires that gains or losses arising from early
extinguishments of debt that are part of a company's recurring
operations (i.e., a risk management strategy) would not be
reported as extraordinary items. The statement also provides that
modifications to a capital lease that make it an operating lease
be accounted for as a sale-leaseback. Management feels that the
early adoption of SFAS No. 145 has not had a material effect on
the financial results.
ICONET, INC.
(A Company in the Development Stage)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
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June 30, 2002
1. Basis of Presentation (continued)
---------------------------------
Statement Presentation
----------------------
The June 30, 2001, Financial Statements have been reclassified to
conform to the June 30, 2002, presentation. Rent expense and loss
on disposal of assets have been stated separately from operating
and administrative expense.
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 3). Management is attempting to raise
additional capital.
2. Mining rights
-------------
In June 2002 the Company entered into an option to purchase 21
mining claims in Ontario, Canada with Sea Emerald Development
Corp. (Sea Emerald) in exchange for payment of a nominal sum. A
total of 10,000,000 shares of restricted common stock (valued at
$500,000 on the date that the agreement was signed) to be issued
in 2,000,000 share increments every six months is due for a 100%
interest in the mining claims. In June 2002 the Company issued
the first 2,000,000 shares to Sea Emerald. The full 10,000,000
shares must be issued in order for the Company to obtain any
interest in the mining claims. The Company is also obligated to
pay 5% of net smelter returns from production as a royalty to Sea
Emerald. The Company also has the rights to purchase back 2% of
net smelter returns from production for $1,000,000 Cdn. for each
percentage point.
3. Related Party Line of Credit
----------------------------
In October 2001 the Company obtained an unsecured line of credit
from a shareholder for $150,000 at 12% per annum. The line of
credit is due on demand on or after December 31, 2002. At June
30, 2002, the outstanding balance on this line of credit was $
117,924.
4. Commitments and Contingencies
-----------------------------
There are various claims and lawsuits pending against the Company
arising in the normal course of the Company's business. Although
the amount of liability at June 30, 2002, cannot be ascertained,
management is of the opinion that any resulting liability will
not materially affect the Company's financial position.
Merrill Lynch Canada Inc., has filed suit against the Company
regarding a dispute related to the sale of its restricted common
stock by an unrelated third party to Merrill Lynch. The case is
still in its early stages and the Company is trying to reach a
settlement with Merrill Lynch. At this time the Company does not
know if it will sustain a loss, or the amount of the loss.
ICONET, INC.
(A Company in the Development Stage)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
------------------------------------------
June 30, 2002
4. Commitments and Contingencies continued
-----------------------------
The Company is a defendant in an action by a bank regarding an
overdraft. The bank is seeking to recover $30, 519, which has
been accrued by the Company.
5. Capital Stock
-------------
In June 2002 the Company issued 1,500,000 shares of common stock
to an unrelated third party for consulting. The value of the
consulting received was $75,000.
Also in June 2002 the Company issued 2,000,000 shares of common
stock as the first payment for mining rights. (See Note 2)
6. Subsequent Events
-----------------
In July 2002 the Company issued 1,000,000 shares in a private
placement to an unrelated third party at $0.25 per share.
Item 2. Management Discussion and Analysis
Since the end of the last quarter the company has put its Internet
kiosk business into an inactive status, pending further business
developments. The Company, through its new personnel and resources,
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.
The Company has withdrawn its registration statement that was
previously filed on Form SB-2.
The Company has acquired the option to buy 21 mining claims in The
Porcupine Mining Division in the Northern Ontario, Canada. The Claims
are in the Shaw Dome region in the Timmins, Canada area. This area
has a history of producing major mining activity. We are looking
forward to exploration and drilling of this property to try and
achieve greater shareholder value. During July 2002, the Company
raised US $250,000.00 through a private placement to accredited
investors and issued 1,000,000 shares of its restricted common stock,
at a price of US $0.25 per share. The proceeds from this offering are
currently being used to do exploration work on our newly-acquired
claims and for general working capital.
Mr. Stewart Jackson joined the Board of Directors in July 2002.
The Company has filed this amendment to its 10Q to properly reflect
the transaction of its mining claims. The Company also expects to
issue the balance of the stock required to complete the transaction of
the mineral claims in the third quarter.
The Company has also adopted an Option Plan for Directors, Officers
and Employees, subject to shareholder approval.
PART II. OTHER INFORMATION
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.
August 26, 2002 /S/ Randy Miller
-------------------------
Randy Miller
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY OF 2002
In connection with the Quarterly Report of Iconet, Inc. on Form
10-QSB for the period ended June 30, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), each of the
undersigned, in the capacities and on the dates indicated below,
hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbannes-Oxley Act of 2002, that to
the best of his knowledge:
1. The Report fully complies with the requirements of Section 13 (a)
pr 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operation of the Company.
August 26, 2002 /S/ Randy Miller
--------------------------
Randy Miller
Chairman and CEO