U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<P>
FORM 10-QSB
<P>
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
<P>
For the quarterly period ended June 30, 2000
<P>
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
<P>
For the transition period from to
<P>
Commission File No. 0-26951
<P>
I-INCUBATOR.COM, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<S> <C>
Florida 59-3442557
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
<P>
701 Brickell Avenue, Suite 3120, Miami, Florida 33131
(Address of Principal Executive Offices) (Zip Code)
<P>
(305) 358-3678
(Issuer's Telephone Number, Including Area Code)
<P>
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.
<P>
Yes No X
<P>
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date: As of August 25, 2000 the Company had
17,375,000 shares of Common Stock outstanding, $0.0001
par value.
<P>
I-INCUBATOR.COM, INC.
Form 10-QSB Quarterly Report
For the Period Ended June 30, 2000
<TABLE>
<S> <C>
Page
Part I - FINANCIAL INFORMATION
<P>
Item 1. Financial Statements 1
<P>
Unaudited Balance Sheet at June 30, 2000 and
December 31, 1999 for i-Incubator.com, Inc. 2-3
<P>
Unaudited Statements of Operations for the Six and
Three Months ended June 30, 2000 and 1999 and
from Inception (May 5, 1997) through June 30,
2000 for i-Incubator.com, Inc. 4-5
<P>
Unaudited Statement of Cash Flows for the Six and
Nine Months ended June 30, 2000 and 1999 and
from Inception (May 5, 1997) through June 30,
2000 for i-Incubator.com, Inc. 6-7
<P>
Unaudited Statement of Changes in Stockholders
Equity (Deficit) through June 30, 2000 for
i-Incubator.com, Inc. 8-9
<P>
Notes to Interim Financial Statements 10
<P>
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
<P>
PART II - OTHER INFORMATION
<P>
Item 1. Legal Proceedings
<P>
Item 2. Changes in Securities
<P>
Item 3. Defaults Upon Senior Securities
<P>
Item 4. Submission of Matters to a Vote of Security Holders
<P>
Item 5. Other Information
<P>
Signatures
</TABLE>
<P>
PART I - FINANCIAL INFORMATION
<P>
Item 1. Financial Statements
<P>
BASIS OF PRESENTATION
<P>
The accompanying reviewed financial statements are
presented in accordance with generally accepted
accounting principles for interim financial information
and the instructions to Form 10-QSB and item 310 under
subpart A of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. The accompanying statements should
be read in conjunction with the audited financial
statements for the years ended December 31, 1998 and
1999. In the opinion of management, all adjustments
(consisting only of normal occurring accruals) considered
necessary in order to make the financial statements not
misleading, have been included. Operating results for
the six months ended June, 2000 are not necessarily
indicative of results that may be expected for the year
ending December 31, 2000. The financial statements are
presented on the accrual basis.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
CONSOLIDATED BALANCE SHEET
<P>
ASSETS
<TABLE> <C> <C>
<S>
(UNAUDITED) (AUDITED)
June 30, December 31,
2000 1999
--------------------------------------
CURRENT ASSETS:
<P>
Cash $ 0 $ 16,384
Prepaid expenses 0 5,000
Notes receivable - related party 0 37,500
Accrued interest receivable - related party 0 713
-----------------------------------
TOTAL CURRENT ASSETS $ 0 $ 59,597
===================================
<P>
PROPERTY AND EQUIPMENT
<P>
Property and equipment net of,
less accumulated depreciation of $658 and $0 5,929 0
-----------------------------------
<P>
OTHER ASSETS:
<P>
Organizational costs, net of
Accumulated amortization of $0 and $109 0 3,645
Investments in unconsolidated
affiliated companies 2,000 2,000
Due from affiliates 150 0
-----------------------------------
TOTAL OTHER ASSETS 2,150 5,645
-----------------------------------
<P>
TOTAL ASSETS $ 8,079 $ 65,242
===================================
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<P>
CURRENT LIABILITIES:
Non-interest bearing related
party notes payable, net of unamortized
discounts - current portion $ 241,288 $ 237,576
Notes payable - current position $ 275,000 $ 95,000
Note payable - related party 43,000 0
Lease payable - current portion 1,776 0
Cash overdraft 2,330 0
Accounts payable 23,844 5,101
Accrued expenses payable 79,613 15,000
Accrued interest payable 14,322 2,250
Payroll taxes payable 18,856 1,412
Shareholders' loan 0 700
--------------------------------
Total Current Liabilities 700,029 357,039
<P>
LONG-TERM LIABILITIES
<P>
Note payable - related party,
non current portion 19,000 0
Non-interest bearing related party
notes payable, non-current portion 112,133 112,805
Lease payable, non-current portion 3,594 0
--------------------------------
Total Long-Term Liabilities 134,727 112,805
<P>
STOCKHOLDERS' EQUITY (DEFICIT):
<P>
Common Stock, $.0001 par value,
50,000,000 shares authorized,
17,375,000 shares and 16,580,000 post
Split shares issued and outstanding
respectfully 1,737 1,658
Additional paid-in-capital 443,313 85,642
Deficit accumulated during
the development stage (1,301,504) (522,386)
--------------------------------
(856,454) (435,086
<P>
Minority interest in subsidiary 30,500 30,500
Minority interest accumulated deficit
during development stage (723) (16)
--------------------------------
Total Stockholders' Equity (Deficit) (826,677) (404,602)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 8,079 $ 65,242
================================
<P>
See accompanying notes.
</TABLE>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
CONSOLIDATED STATEMENTS OF OPERATIONS
<P>
<TABLE>
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) For the period
For the Six For the Six For the Three For the Three From May 5, 1997
Months Ended Months Ended Months Ended Months Ended (Inception) to
06/30/2000 06/30/1999 06/30/2000 06/30/1999 06/30/2000
---------------------------------------------------------------------------
DEVELOPMENT
STAGE REVENUES $ 0 $ 0 $ 0 $ 0 $ 0
DEVELOPMENT STAGE EXPENSES:
<P>
Accounting 9,000 0 4,500 0 9,000
Advertising 516 0 0 0 516
Amortization 0 0 0 0 109
Bank Charges 411 95 154 55 151
Business promotion 7,221 0 5,247 0 11,381
Consulting fees 446,636 14,500 364,390 10,500 470,796
Courier 1,068 307 522 307 2,021
Depreciation 658 0 438 0 658
Dues and
subscriptions 1,450 0 1,450 0 1,747
Domain names 0 0 0 0 238,579
Equipment Rental 480 0 480 0 480
Insurance expense 2,127 0 850 0 2,127
Interest expense 27,207 0 14,290 0 29,457
Licenses and taxes 7,916 1,057 5,670 326 15,903
Management fees 0 0 0 0 4,000
Office expenses 37,167 7,000 22,942 4,000 56,575
Office Supplies 5,963 59 576 0 5,963
Officer's salaries 109,713 18,331 72,514 9,222 154,082
Online Services 0 0 0 0 140
Payroll taxes 10,332 1,797 6,562 705 14,113
Printing 2,093 12 2,007 0 2,595
Professional fees 39,802 9,910 11,606 7,960 103,054
Registration fees 0 0 0 0 3,627
Stock Related
Services 5,170 0 5,170 0 5,170
Telephone 2,946 601 1,756 228 4,375
Transfer agent fees 3,435 0 3,435 0 6,783
Travel 8,455 0 4,633 0 8,733
-----------------------------------------------------------------
Total Development
Stage Expenses 729,496 53,642 529,192 33,303 1,252,595
-----------------------------------------------------------------
LOSS BEFORE OTHER
INCOME (EXPENSE) (729,496) (53,642) (529,192) (33,303) (1,252,595)
<P>
OTHER INCOME
(EXPENSES):
<P>
INTEREST INCOME 378 0 0 0 1,091
LOSS ON INVESTMENTS 50,000 0 50,000 0 50,000
-----------------------------------------------------------------
NET DEVELOPMENT
STAGE LOSS $ (779,118) $(53,642) $ (579,192) $ (33,303) $(1,301,504)
=================================================================
<P>
NET LOSS PER SHARE
OF COMMON STOCK
BASIC $ (0.0470) $(0.0046) $ (0.0349) $ (0.0025) $ (0.1647)
=================================================================
DILUTED N/A N/A N/A N/A N/A
=================================================================
<P>
WEIGHTED AVERAGE
SHARES
OUTSTANDING 16,580,000 11,705,780 16,580,000 13,080,000 7,772,886
===================================================================
<P>
See accompanying notes.
</TABLE>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<P>
INCREASE (DECREASE IN CASH)
<TABLE>
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) For the period
For the Six For the Six For the Three For the Three From May 5, 1997
Months Ended Months Ended Months Ended Months Ended (Inception) to
06/30/2000 06/30/1999 06/30/2000 06/30/1999 06/30/2000
---------------------------------------------------------------------------
OPERATING ACTIVITIES:
<P>
Deficit accumulated
during the development
stage $ (779,826) $ (55,074) $ (570,385) $ (43,803) $ (1,302,228)
<P>
Adjustments to reconcile
net loss to
net cash used
by operations:
<P>
Amortization of
organizational
cost 0 0 0 0 109
Amortization of
loan discount 3,040 0 6,806 0 3,040
Depreciation 658 0 438 0 658
Write off of
organizational
costs 2,645 0 0 0 3,645
Loss on
investment 50,000 0 50,000 0 50,000
Common Stock issued
for legal services 0 0 0 0 500
Common stock issued
for consulting 357,750 0 357,750 0 362,250
(Increase) Decrease
in prepaid
expenses 5,000 0 0 0 0
(Increase) Decrease
in interest
receivable 713 0 0 0 0
Decrease in advance
receivable 0 0 0 300 0
Increase (Decrease)
in accrued interest
exp. 12,074 0 7,469 0 14,322
Increase (Decrease)
in accounts
payable 18,743 (265) 5,317 (784) 22,844
Increase (Decrease)
in payroll taxes
payable 17,444 309 12,174 (245) 18,856
Increase (Decrease) in
accrued expenses 64,612 (2,500) 35,112 (2,500) 79,612
--------------------------------------------------------------------
Net Cash Used by
Operating
Activities (246,147) (57,529) (104,419) (47,032) (745,392)
---------------------------------------------------------------------
<P>
INVESTING ACTIVITIES:
<P>
Acquisition of
organizational
costs 0 0 0 0 (3,754)
Acquisition of
office equipment (6,587) 0 0 0 (6,587)
Investments (50,000) 0 0 0 (50,000)
Due from
affiliates (150) (4,000) 0 (4,000) (150)
---------------------------------------------------------------------
Net Cash Used for
Investing
Activities (56,737) (4,000) 0 (4,000) (60,491)
---------------------------------------------------------------------
<P>
FINANCING ACTIVITIES:
<P>
Proceeds from sale
of common stock 0 54,500 0 54,500 108,500
Proceeds from the
issuance of
common stock to
related parties 0 300 0 0 300
Repayment of
shareholders' loan (700) 0 0 0 0
Proceeds from note
payable 0 0 150,000 0 0
Proceeds from note
receivable -
related parties 37,500 0 0 0 0
Proceeds from note
payable -
related parties 62,000 0 0 0 415,421
Proceeds from lease
obligations 6,587 0 0 0 6,587
Increase in notes
payable 180,000 0 0 0 275,000
Decrease in note
payable -
related party 0 0 (58,000) 0 0
Payments on lease
obligation (1,217) 0 (823) 0 (2,255)
----------------------------------------------------------------------
Net Cash Provided by
Financing
Activities 284,170 54,800 91,177 54,500 803,553
----------------------------------------------------------------------
<P>
INCREASE (DECREASE)
IN CASH (18,714) (6,729) (13,242) 3,468 (2,330)
<P>
CASH, BEGINNING
OF PERIOD 16,384 12,354 10,912 2,157 0
----------------------------------------------------------------------
CASH, END
OF PERIOD $ (2,330) $ 5,626 $ (2,330) $ 5,625 $ (2,330)
======================================================================
<P>
</TABLE>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<P>
FOR THE QUARTER ENDED JUNE 30, 2000 AND FOR THE
<P>
CUMULATIVE PERIOD MAY 5, 1997 (INCEPTION) TO
<P>
JUNE 30, 1999
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the quarter ended June 30, 2000 and for the
cumulative period May 5, 1997 (inception) to March 31,
2000, the Company paid $299 interest.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transactions:
<P>
During the quarter ended June 30, 2000, the Company
issued 795,000 shares of restricted common stock in
consideration for consulting and management services.
These shares were valued at $0.45 per share. Total value
of shares were $357,750.
<P>
During the year ended December 31, 1999, the Company
issued 1,500,000 shares of common stock in connection
with a stock for stock exchange agreement with Quentin
Road Productions, Inc. ( a related party) for common
stock of WealthHound.com, Inc. dated December 8, 1999.
The exchange was valued at $1,500.
<P>
During the year ended December 31, 1999, the Company
issued 2,000,000 shares of common stock in connection
with a stock for stock shares and exchange agreement
dated December 31, 1999 with i-Auction.com, Inc. The
exchange was valued at $2,000.
<P>
During the year ended December 31, 1999, the Company
issued 150,000 shares of common stock in consideration
for legal services. This transaction was valued at $500.
<P>
During the year ended December 31, 1999, the Company
issued 150,000 shares of common stock in consideration of
managerial services to a related party. This transaction
was valued at $500.
<P>
During the period May 5, 1997 (inception) through
December 31, 1998 the Company issued 300,000 shares of
common stock in consideration of management services
provided by the then acting President of the Company,
James Lee. This transaction was valued at $4,000.
<P>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD MAY 5, 1997 (INCEPTION)
THROUGH JUNE 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN- DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------------------------------------------------------------
Balance,
May 5, 1997
(inception) 0 $ 0 $ 0 $ 0 $ 0
Restricted Common
Stock issued to
related parties for
consulting fees 300,000 30 3,970 0 4,000
Restricted Common Stock issued to
related parties 1,125,000 112 14,888 0 15,000
Common Stock issued to
third parties 750,000 75 9,925 0 10,000
Deficit accumulated
during the development
stage for the period
May 5, 1997
(inception)through
December 31, 1997 0 0 0 ( 9,747) ( 9,747)
Balance,
December 31,1997 2,175,000 217 28,783 ( 9,747) 19,253
Deficit accumulated during the
development stage
for the year ended
December 31, 1998 0 0 0 (11,111) (11,111)
Balance,
December 31,1998 2,175,000 $ 217 $28,783 $ (20,858) $ 8,142
</TABLE>
<P>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD MAY 5, 1997 (INCEPTION)
THROUGH JUNE 30, 2000 (CONT'D)
<TABLE>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN- DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-------------------------------------------------------------------
Balance,
December 31,1998 2,175,000 $ 217 $28,783 $ (20,858) $ 8,142
Restricted Common Stock issued
to related parties-
private offering 9,000,000 900 (600) 0 300
Restricted Common stock issued
to a related party for
managerial services 150,000 15 485 0 500
Restricted Common stock issued
for legal services 150,000 15 15 0 500
Restricted Common stock issued to
related party 15,000 2 498 0 500
Common stock issued to
third parties 1,590,000 158 52,481 0 53,000
Restricted Common stock issued to
related parties in connection with
the acquisition of
i-Auction.com, Inc.
2,000 200 1,800 0 2,000
Subtotal balance,
forward
15,080,000 $1,507 $ 84,292 $( 20,858) $ 64,942
====================================================================
<P>
</TABLE>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD MAY 5, 1997 (INCEPTION)
THROUGH JUNE 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN- DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-----------------------------------------------------------------------
Balance, forward
15,080,000 $ 1,507 $ 84,292 $ (20,858) $ 64,942
Restricted Common Stock issued
to Quentin Road Productions, Inc.
( a related party) pursuant to a one
for one stock exchange agreement dated
December 1, 1999 for 1,500,000 common
shares of Wealthhound, Inc. ( a related party)
<P>
1,500,000 150 1,350 0 1,500
<P>
Minority interest equity
0 300 30,200 0 30,500
<P>
Deficit accumulated
during the development
stage for the year
ended December 31, 1999
0 0 0 (501,528) (501,528)
<P>
Minority interest loss during
the year ended December 31, 1999
0 0 0 (16) (16)
Balance,
December 31,
1999 16,580,000 $1,957 $ 115,842 $(522,402) $ (404,602)
<P>
</TABLE>
I-INCUBATOR.COM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD MAY 5, 1997 (INCEPTION)
THROUGH JUNE 30, 2000 (CONT'D)
<TABLE>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN- DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------------------------------------------------------------
Balance,
December 31,
1999 16,580,000 $ 1,957 $115,842 $ (522,402) $(404,602)
<P>
Deficit accumulated
during the development
stage for the quarter
ended March 31, 2000
0 0 0 (199,750) (199,750)
<P>
Minority interest loss during
the quarter ended
March 31, 2000 0 0 0 (648) (648)
<P>
Balance, March 31,
2000 16,580,000 1,957 115,842 (722,800) (605,000)
<P>
Restricted Common Stock issued
for consulting
services 795,000 79 357,671 0 357,750
<P>
Deficit accumulated during the
development stage for the quarter
ended June 30, 2000 0 0 0 (579,368) (579,368)
<P>
Minority interest loss during
the quarter ended
June 30, 2000 0 0 0 (59) (59)
<P>
Balance, June 30,
2000 17,375,000 2,036 473,513 (1,302,227) (826,677)
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------
<P>
ORGANIZATION
------------
<P>
i-Incubator.com, Inc.("the Company"), formerly Master
Communications Corp., was incorporated on May 5, 1997
under the laws of the State of Florida. The Company's
primary objective is to position itself as an internet
incubator. Similar to other incubators, it will provide
venture capital, technical expertise and marketing
assistance to development stage companies. The Company's
ticker symbol changed on December 7, 1999 to "INQU" to
better reflect its name change and direction.
<P>
On November 22, 1999 the Company formed i-
RealtyAuction.com, Inc. ("RealtyAuction"). In connection
therewith, it received 700,000 common shares,
representing a 70% ownership interest. The shares were
issued in consideration for services rendered relating to
RealtyAuction's formation. Global Realty Management
Group, Inc. ("Global") (a related company) was issued
300,000 common shares of RealtyAuction, representing a
30% interest. The shares were issued in exchange for
$30,000 and 500,000 common shares of Global.
RealtyAuction has the authority to issue 100,000,000
shares of common stock at .001 par value. RealtyAuction
is a development stage company that has had limited
activity.
<P>
On December 1, 1999 the Company entered into a stock
exchange agreement with i-AuctionTech.com, Inc.
("AuctionTech") (Note 10). The agreement provides for
the acquisition of 100% of the outstanding shares of
AuctionTech. In connection therewith, the Company issued
2,000,000 restricted common shares to AuctionTech's
shareholders.
<P>
AuctionTech was incorporated on November 3, 1999 under
the laws of the state of Delaware and has the authority
to issue 50,000,000 shares of common stock. AuctionTech
intends to develop internet auction technology.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
----------------------------------------
<P>
On December 17, 1998 the Company formed i-Teleco.com,
Inc. ("Teleco"), formerly Mastertel Communications Corp.,
under the laws of the state of Florida. Teleco has the
authority to issue 50,000,000 shares of common stock and
intends to position itself to take advantage of
opportunities available in the telecommunications
industry. Teleco is a development stage company that has
had limited activity.
<P>
On December 23, 1999 the company formed i-Aerobids.com,
Inc. ("Aerobids") under the laws of the state of
Delaware. Aerobids has the authority to issue 50,000,000
shares of common stock and intends to develop an auction
website devoted entirely to aviation related parts and
accessories. Aerobids is a development stage company
that has had limited activity.
<P>
On December 23, 1999 the Company formed i-CarAuction.com,
Inc. ("CarAuction") under the laws of the state of
Delaware. CarAuction has the authority to issue
50,000,000 shares of common stock and intends to develop
an auction website devoted entirely to automobiles and
related accessories. CarAuction is a development stage
company that has had limited activity.
<P>
On December 23, 1999 the company formed i-
AntiqueAuction.com, Inc. ("AntiqueAuction") under the
laws of the state of Delaware. AntiqueAuction has the
authority to issue 50,000,000 shares of common stock and
intends to develop an auction website devoted entirely to
antiques and related accessories. AntiqueAuction is a
development stage company that has had limited activity.
<P>
PRINCIPLES OF CONSOLIDATION
---------------------------
<P>
The accompanying consolidated financial statements
include the accounts of the Company and its majority
owned subsidiaries. All significant inter-company
accounts have been eliminated.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
----------------------------------------
<P>
USE OF ESTIMATES
----------------
<P>
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of
the date of the financial statements and reporting
period. Accordingly, actual results could differ from
those estimates.
<P>
CASH AND CASH EQUIVALENTS
-------------------------
<P>
For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an
original maturity of three months or less to be cash
equivalents.
<P>
CARRYING VALUES
----------------
<P>
The Company reviews the carrying values of its long-lived
and identifiable intangible assets for possible
impairment. Whenever events or changes in circumstances
indicate that the carrying amount of assets may not be
recoverable, the Company will reduce the carrying value
of the assets and charge operations in the period the
impairment occurs.
<P>
PROPERTY AND EQUIPMENT/DEPRECIATION
-----------------------------------
<P>
Property and equipment are recorded at cost. Minor
additions and renewals are expensed in the year incurred.
Major additions and renewals are capitalized and
depreciated over their estimated useful lives.
Depreciation is calculated using the straight-line
method. Total depreciation for the six months ended
June 30, 2000, was $658.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
----------------------------------------
<P>
INCOME TAXES
------------
<P>
The Company utilizes Statement of Financial Standards
SFAS No. 109, "Accounting for Income Taxes", which
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
events that have been included in financial statements or
tax returns. Under this method, deferred income taxes
are recognized for the tax consequences in future years
of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each
period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation
allowances are established when necessary to reduce
deferred tax assets to the amount expected to be
realized. The accompanying financial statements have no
provisions for deferred tax assets or liabilities because
the deferred tax allowance offsets the deferred tax asset
in its entirety.
<P>
NET LOSS PER SHARE
-------------------
<P>
The Company has adopted SFAS No. 128 "Earnings Per
Share". Basic loss per share is computed by dividing the
loss available to common shareholders by the weighted-
average number of common shares outstanding. Diluted
loss per share is computed in a manner similar to the
basic loss per share, except that the weighted-average
number of shares outstanding is increased to include all
common shares, including those with the0 potential to be
issued by virtue of warrants, options, convertible debt
and other such convertible instruments. Diluted earnings
per share contemplates a complete conversion to common
shares of all convertible instruments, only if they are
dilutive in nature with regards to earnings per share.
Since the Company has incurred net losses for all
periods, basic loss per share and diluted loss per share
are the same.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
----------------------------------------
<P>
FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
<P>
SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" requires the disclosure of the fair value of
financial instruments. The Company's management, using
available market information and other valuation methods,
has determined the estimated fair value amounts. However,
considerable judgment is required to interpret market
data in developing estimates of fair value. Accordingly,
the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a
current market exchange.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
-----------------------------------------
<P>
In June, 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income". This statement requires companies to classify
items of other comprehensive income by their nature in a
financial statement and display the accumulated balance
of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS No.
130 is effective for financial statements issued for
fiscal years beginning after December 15, 1997.
Management believes that SFAS No. 130 has no material
effect on the Company's financial statements.
<P>
In June, 1997, FASB issued SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information".
This statement establishes additional standards for
segment reporting in financial statements and is
effective for financial statements issued for fiscal
years beginning after December 15, 1997. Management
believes that SFAS No. 131 does not have a material
effect on the Company's financial statements.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
------------------------------------------
<P>
In April, 1998, the American Institute of Certified
Public Accountants issued Statement of Position No. 98-5,
"Reporting for Costs of Start-Up Activities", ("SOP 98-
5"). The Company is required to expense all start-up
costs related to new operations as incurred. In
addition, all start-up costs that were capitalized in the
past must be written off when SOP 98-5 is adopted. The
Company's adoption did not have a material impact on the
Company's financial position or results of operations.
<P>
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", is effective for financial
statements issued for fiscal years beginning after June
15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including
certain derivative instruments embedded in other
contracts, and for hedging activities. Management does
not believe that SFAS No. 133 will have a material effect
on its financial position or results of operations.
<P>
SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held
for Sale by Mortgage Banking Enterprises", is effective
for financial statements issued in the first fiscal
quarter beginning after December 15, 1998. This
statement is not applicable to the Company.
<P>
SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections", is effective for financial
statements issued for fiscal years beginning February,
1999. This statement is not applicable to the Company.
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN
MATTERS
----------------------------------------------
<P>
The Company's initial activities have been devoted to
developing a business plan, negotiating contracts and
raising capital for future operations and administrative
functions.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN
MATTERS (CONT'D)
----------------------------------------------
<P>
The ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until such time as adequate revenues
are realized from operations.
<P>
The accompanying financial statements have been prepared
on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities
in the normal course of business. As shown in the
financial statements, development stage losses from May
5, 1997 (inception) to June 30, 2000 amounted to
$1,301,504. The Company's cash flow requirements during
this period have been met by contributions of capital and
debt financing. No assurance can be given that these
sources of financing will continue to be available. If
the Company is unable to generate profits, or unable to
obtain additional funds for its working capital needs, it
may have to cease operations.
<P>
The financial statements do not include any adjustments
relating to the recoverability and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its
obligations on a timely basis, to retain additional paid-
in capital, and to ultimately attain profitability.
<P>
NOTE 4 - OTHER ASSETS
------------
<P>
On December 8, 1999, the Company entered into an
agreement with Quentin Road Productions, Inc. ("Quentin")
(a related company) for the exchange of 1,500,000
restricted common shares of WealthHound that were owned
by Quentin for 1,500,000 restricted common shares of the
Company's common shares. The shares acquired in the
exchange represent an approximate 3% interest in
WealthHound (Note 10).
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 4 - OTHER ASSETS (CONT'D)
---------------------
<P>
Management intends to hold WealthHound on a long-term
basis and is carrying the investment on the equity
method.
<P>
Management estimated the value of this transaction by
using available market information and applying discounts
that account for the restricted nature of the shares,
lack of marketability and its low trading volume.
However, considerable judgment is required to interpret
market data in developing fair value. Accordingly, the
estimates presented herein are not necessarily indicative
of amounts the Company could realize in a current market
exchange.
<P>
NOTE 5 - DEFERRED INCOME TAXES
---------------------
<P>
As of December 31, 1999, the Company has a carryforward
loss for income tax purposes of $183,819 that may be
offset against future taxable income. The Company
incurred $338,581 of expenses for the purchases of
various domain names from related parties. Pursuant to
Internal Revenue Code 267(a)(2) these expenses may not
be deducted by the Company until the related parties
recognize the income and accordingly, have not been
included in the carryforward loss. The carryforward loss
expires at various years through 2019. Due to the
uncertainty regarding the success of future operations,
management has not recognized any future income tax
benefits that may arise from the utilization of the loss
carryforward.
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
---------------------------
Deferred tax assets arising
from net operating losses $149,800 $ 33,000
(149,800) $ 33,000
Less valuation allowance
Net Deferred Tax Assets $ 0 $ 0
<P>
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 6 - ACCRUED EXPENSES
----------------
<P>
Accrued expenses as of June 30, 2000 are as follows:
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
---------------------------
Accrued accounting fees $ 21,500 $ 15,000
Accrued legal fees 58,113 0
<P>
Total accrued fees $ 79,613 $ 15,000
</TABLE>
<P>
NOTE 7 - NOTES PAYABLE
-------------
<P>
Notes payable as of June 30, 2000 were as follows:
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
----------------------
Note payable to Atlas Equity
Group, Inc. (a related party),
12% per annum dated December 22, 1999,
unsecured. Due on demand no later
than June 22, 2000. The note
has been renegotiated and has been
extended to December 22, 2000. $ 10,000 $ 10,000
<P>
Note payable to the Farkas Group,
Inc. (a related party), 12% per
annum dated November 19, 1999,
unsecured. Due on demand no
later than December 19, 2000. 0 1,800
<P>
Note payable to Sharei Chesed,
11 1/2% per annum, dated December 30,
1999, unsecured. Due on demand
no later than December 29, 2000. 30,000 30,000
<P>
Note payable to Titan Corporation
Limited (f/k/a SeaBank Corp.),
12% per annum, dated August 2, 1999,
unsecured. Due on demand no later
than February 2, 2000. The note
has been renegotiated and has been
extended to February 1, 2001. 20,000 20,000
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 7 - NOTES PAYABLE (CONT'D)
----------------------
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
------------------------
Note payable to Titan Corporation
Limited (f/k/a SeaBank Corp.),
12% per annum, dated October 15, 1999,
unsecured. Due on demand no later
than April 15, 2000. The note
has been renegotiated and has been
extended to October 15, 2000. $ 20,000 $ 20,000
<P>
Note payable to Titan Corporation
Limited (f/k/a SeaBank Corp.),
12% per annum, dated October 5, 1999,
unsecured. Due on demand no later
than April 5, 2000. The note
has been renegotiated and has been
extended to October 5, 2000. 25,000 25,000
<P>
Non-interest bearing note dated
December 7, 1999 to Rebecca Brock
("Brock") (a related party) in
connection with the acquisition of
a domain name. $10,000 due monthly
for 10 months. The note has been
discounted based on an imputed
interest rate of 10%. 120,000 120,000
Less discount ( 1,711) ( 6,255)
<P>
Non-interest bearing note dated
December 28, 1999 to Michael D.
Farkas ("Farkas) (a related
party) in connection with the
acquisition of domain names.
$10,000 due monthly for 24
months. The note has been
discounted based on an imputed
interest rate of 10%. 250,000 250,000
Less discount ( 14,863) ( 25,165)
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 7 - NOTES PAYABLE (CONT'D)
----------------------
<P>
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
----------------------
Note payable to Chasdai Yitzchok,
11 1/2 per annum, dated January 14,
2000, unsecured. Due on demand
no later than January 13, 2001. $ 30,000 $ 0
<P>
Note payable to Scott Cohen,
8% per annum, dated January 31,
2000, unsecured. Due on demand
no later than January 30, 2001. 50,000 0
<P>
Note payable Romano Limited, 10% per
annum, dated March 24, 2000,
unsecured. Due on demand no later
than March 24, 2001. 60,000 0
<P>
Note payable Romano Limited, 10% per
annum, dated April 5, 2000,
unsecured. Due on demand no later
than March 24, 2001. 40,000 0
<P>
Note payable Atlas Equity Group, Inc.,
(a related party) 10% per annum,
dated May 1, 2000, unsecured. Due
on demand no later than May 31, 2000.
The note has been renegotiated and
has been extended to August 31, 2000. 16,000 0
<P>
Note payable Atlas Equity Group, Inc.,
(a related party) 12% per annum,
dated May 18, 2000, unsecured. Due
on demand no later than November 17,
2001. 19,000 0
<P>
Note payable Atlas Equity Group, Inc.,
(a related party) 12% per annum,
dated June 14, 2000, unsecured. Due
on demand no later than December 13,
2000. 12,500 0
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 7 - NOTES PAYABLE (CONT'D)
----------------------
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
----------------------
Note payable Atlas Equity Group, Inc.,
(a related party) 12% per annum,
dated June 29, 2000, unsecured. Due
on demand no later than December 28,
2000. $ 4,500 $ 0
<P>
Current portion- related parties 284,288 227,657
<P>
Current portion - unrelated parties 275,000 95,000
<P>
Long-term portion - related parties $131,133 $112,805
<P>
</TABLE>
<P>
NOTE 8 - CAPITAL LEASE NOTE
------------------
<P>
The Company is a lessee under a capital lease agreement
for computer equipment from Dell Corp., expiring on
January 16, 2003. The lease agreement calls for 36 equal
monthly payments of $274.58, with a final fixed purchase
price of $1 at the end of the lease. This asset is being
depreciated over its estimated useful life of 5 years.
Depreciation of $658 was included in depreciation expense
for the quarter ended June 30, 2000.
<P>
The future minimum lease payments due under capital lease
is as follows at June 30, 2000:
<TABLE>
<S> <C>
Total capital lease payable $ 5,370
Less current portion (1,776)
-----------
Total capital lease payable $ 3,594
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 8 - CAPITAL LEASE NOTE (CONT'D)
---------------------------
<P>
The present value of the capital lease payments for the
periods subsequent to June 30, 2000 are as follows:
<TABLE>
<S> <C> <C>
2000 $ 340
2001 2,024
2002 2,738
2003 268
---------
Total capital lease payable $ 5,370
---------
</TABLE>
NOTE 9 - COMMITMENTS AND CONTINGENCIES
-----------------------------
<P>
On November 24, 1999 the Company agreed to
engage Kulat Communications, Inc., ("Kulat") on a month-
to-month basis. Kulat provides public relations
consultation and various marketing programs. Through June
30, 2000 the Company has incurred fees of approximately
$10,640 in connection with this arrangement.
<P>
NOTE 10 - STOCKHOLDERS' EQUITY
--------------------
<P>
On November 11, 1999 the Board of Directors approved a
3:1 forward stock split. The statement of changes in
stockholders' equity and the following notes have been
adjusted to give affect to the split. In addition, due to
change in the marital status of certain shareholders,
prior transactions deemed to have been unrelated have
become related party transactions. The statement of
changes in stockholders' equity has been adjusted to
affect these changes.
<P>
The Company issued 300,000 common shares to James F. Lee,
former President, and the Company's sole officer and
director, in consideration for management services valued
at $4,000. These individuals are deemed to be founders
and affiliates of the Company. Concurrently, the Company
entered into a private offering of securities pursuant to
Regulation D, Rule 504,
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 10 - STOCKHOLDERS' EQUITY (CONT'D)
-----------------------------
<P>
promulgated under the Securities Act of 1933. Common
Shares were offered to non-accredited investors for cash
consideration of 1.334 cents per share. 1,125,000 shares
were issued to related parties and 750,000 shares issued
to unrelated parties.
<P>
On March 20, 1998, Mr. Lee sold his ownership interest in
the Company to the Farkas Group, Inc. in a private
transaction subject to Section 4(2) of the Securities Act
of 1933. The Farkas Group, Inc. is a privately held
company owned by Farkas.
<P>
In January, 1999 the Company issued 3,000,000 post split
common shares each to The Farkas Group, Inc., Atlas
Equity Group, Inc., and GSM, all of which are owned by
Farkas and are deemed to be related parties. These common
shares were issued for a cash consideration of $300.
<P>
In January, 1999 the Company engaged legal counsel for
services relating to SEC filings and related
documentation. In connection therewith, the Company
issued 150,000 post split shares of common stock (valued
at $500) as additional payment for the services
performed.
<P>
In January 1999, the Company issued 150,000 post split
shares of common stock to Jamee Freeman, President, in
consideration for managerial services rendered valued at
$500.
<P>
On December 1, 1999, the Company entered into a stock
exchange agreement with AuctionTech (Note 1). The
agreement provided for the acquisition of all of the
outstanding shares of AuctionTech. In connection
therewith, the Company issued 2,000,000 restricted common
shares to AuctionTech's shareholders. Management
estimated the value of this transaction to be $2,000.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 10 - STOCKHOLDERS' EQUITY (CONT'D)
-----------------------------
<P>
On December 8, 1999 the Company entered into a stock
exchange agreement with Quentin (a related company) to
transfer 1,500,000 of restricted common shares of
WealthHound owned by Quentin for 1,500,000 restricted
shares of the Company's common stock (Note 4). The
common shares exchanged represent approximately 3%
interest in WealthHound. Management estimated the fair
market value of this transaction to be $1,500.
<P>
NOTE 11 - OFFICERS AND BOARD OF DIRECTORS
-------------------------------
<P>
EMPLOYMENT AGREEMENT
--------------------
<P>
The Company agreed in principle to an employment
agreement for its President. The term of the agreement
is one year, automatically renewable for a period of one
year for each consecutive year thereafter, unless prior
notice is given by either the Company or Ms. Freeman 90
days prior to the expiration of the contract term.
Initial compensation will be at an annual rate of
approximately $45,000.
<P>
NOTE 12 - WARRANTS
--------
<P>
During the six months ended June 30, 2000 the Company
issued 290,930 warrants. The warrants exercise price and
date of expiration are as follows:
<TABLE>
<S> <C> <C> <C> <C>
WARRANT TO PRICE PER
DATE DESCRIPTION SUBSCRIBE SHARE EXPIRES
------------------------------------------------------------------------
02/02/00 Titan Corporation 8,000 $2.50/Share 02/02/02
03/24/00 Romano Limited 120,000 $2.00/Share 03/24/02
04/05/00 Romano Limited 80,000 $2.00/Share 04/05/02
04/05/00 Titan Corporation 15,380 $1.25/Share 04/05/02
04/15/00 Titan Corporation 35,550 $0.5625/Share 04/15/02
05/01/00 Atlas Equity Group 32,000 $0.50/Share 05/01/02
---------
Total Warrants Issued 290,930
</TABLE>
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 12 - WARRANTS (CONT'D)
-----------------
<P>
No warrants have been exercised as of June 30, 2000. The
warrants have not been included in the computation of
earnings per share. SFAS No. 128 "Earnings Per Share"
contemplates a complete conversion to common shares of
all convertible instruments, only if they are dilutive in
nature with regards to earnings per share. Since the
Company has incurred net losses for all periods, warrants
have not been included in the weighted average
computation of common shares outstanding. See footnote
No. 1 Net Loss Per Share.
<P>
NOTE 13 - RELATED PARTY TRANSACTIONS
--------------------------
<P>
In January, 1999 the Company agreed to reimburse Atlas
Equity Group, Inc., a related party, $1,000 per month (on
a month- to-month basis) for operating and administrative
expenses.
<P>
Atlas Equity Group, Inc. is owned by Farkas. On November
30, 1999 the Company agreed to increase the
reimbursements to $6,000 per month, commencing December
1999.
<P>
The Company paid the Farkas Group, Inc. $5,000 for
assisting in creating a private placement offering
document. The Farkas Group, Inc. owns 3,300,000 shares
of the Company and is deemed to be a related party. The
Farkas Group, Inc. is owned by Farkas.
<P>
The Company engaged Berger and Associates for various
consulting services. Berger & Associates is owned by a
family member of Farkas and is deemed to be a related
party.
<P>
On December 28, 1999, the Company entered into an
agreement with Farkas. In connection therewith, the
Company agreed to pay $250,000 to Farkas, $10,000 upon
the execution of the agreement and $10,000 per month for
a period of 24 months commencing January 1, 2000. No
payments have been made as of the date of this financial
statement. The note was discounted pursuant to APB 21
"Interest on Receivables and Payables" which requires the
imputation of interest on non-interest bearing
obligations. The imputed interest rate used for this
purpose was 10%.
<P>
i-INCUBATOR.COM, INC. AND SUBSIDIARIES
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
NOTE 13 - RELATED PARTY TRANSACTIONS (CONT'D)
----------------------------------
<P>
On December 7, 1999, the Company entered into an
agreement with Brock. In connection therewith, the
Company agreed to pay $120,000 to Brock, $20,000 upon the
execution of the agreement and $10,000 per month for a
period of 10 months commencing January 1, 2000. No
payments have been made as of the date of this financial
statement. The note was discounted on the same basis as
the Farkas note.
<P>
On December 6, 1999 AuctionTech paid $5,000 to Scott
Mager (a shareholder and related party) for consulting
services.
<P>
On January 6, 2000 the Company paid Scott Mager (a
related party) $50,000 for consulting services rendered
to AuctionTech.
<P>
On January 6, 2000 the Company agreed to pay Mathew Sher
(a related party) $25,000 for consulting services
rendered to AuctionTech.
<P>
NOTE 14 - SUBSEQUENT EVENT
----------------
<P>
On July 17, 2000, the Company agreed to issue 795,000
restricted shares of the Company's common stock in
exchange for various consulting and management services.
The shares were valued at $0.45 per share. The financial
statements have been adjusted to give effect to this
transaction as of June 30, 2000. Management estimated
the value of this transaction by using available market
information and applying discounts that account for the
restricted nature of the shares, lack of marketability
and its low trading volume. However, considerable
judgment is required to interpret market data in
developing fair value. See Note 1 (Use of Estimates).
<P>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS.
<P>
The following discussion and analysis should by read in
conjunction with the financial statements of the Company
and the accompanying notes appearing subsequently under
the caption "Financial Statements."
<P>
The following discussion and analysis contains forward-
looking statements, which involve risks and
uncertainties. The Company's actual results may differ
significantly from the results, expectations and plans
discussed in these forward-looking statements.
<P>
During the past two years, the Company, has spent
considerable time and capital resources defining and
developing its strategic plan for delivering and
operating on-line sales and auction technology.
<P>
The Company, as discussed in note one of the financial
statements, has formed several subsidiaries all of which
are in the development stage. There has been limited
activity in these subsidiaries to date. The Company has
incurred substantial development stage losses in
connection with developing its web-site and the
acquisition of various domain names, as well as,
developing auction technology and securing portal
agreements. Because of uncertainties surrounding the
development and completion of its auction technology, the
Company anticipates incurring significant development
stage losses in the foreseeable future. The ability of
the Company to achieve its business objectives is
contingent upon its success in raising additional capital
until adequate revenues are realized from operations.
<P>
Quarter Ended June 30, 2000 Compared with six month Ended
June 30, 1999.
<P>
Development stage expenses during the six months Ended
June 30, 2000 were significantly greater than during the
comparable period Ended June 30, 1999, increasing from
$53,642 to $729,495 or a 1,360% increase. Development
stage expenses during the quarter ended June 30, 2000 and
June 30, 1999 were also significantly greater increasing
from $33,303 to $579,192 or 1,739% increase. These
increases were in part the result of the addition of
officer's salaries, consulting (including the
compensation expense resulting from shares of the
Company's stock issued to new and on-going management)
professional fees necessitated by operating in a public
environment, the acquisition of Domain names (from
Michael D. Farkas and Rebecca Brock both or which are
related parties to the Company) and an agreement between
the Company and Atlas Equity Group, Inc. (Owned by
Michael D. Farkas, a related party) for shared office and
rent expenses. On-going increases to development stage
expenses are anticipated during Year 2000.
<P>
Liquidity and Capital Resources
<P>
Despite Capital Contributions and both related party and
third party loan commitments, the Company from time to
time experienced, and continues to experience cash flow
shortages that have slowed the Company's growth. During
the six months Ended June 30, 2000 the consequence of
those cash flow shortages has been an increase of $18,743
in accounts payable and an increase of $(64,612) in
accrued expenses bringing those figures to $23,844 and
$79,612 respectively at June 30, 2000 in comparison to
December 31, 1999.
The Company has primarily financed its activities from
sales of capital stock of the Company and from loans from
related and third parties. A significant portion of the
funds raised from the sale of capital stock has been used
to cover working capital needs such as salaries, office
expense and various consulting fees.
<P>
The Company continues to experience cash flow shortages,
and anticipates this continuing through the foreseeable
future. Management believes that additional funding will
be necessary in order for it to continue as a going
concern.
The Company is investigating several forms of private
debt and/or equity financing, although there can be no
assurances that the Company will be successful in
procuring such financing or that it will be available on
terms acceptable to the Company.
<P>
The Company has committed itself to pay Michael D. Farkas
(a related party) $250,000 for the acquisition of various
domain names over a period of 24 months commencing in
January, 2000. No payments have been made to date.
The Company has committed itself to pay Rebecca Brock (a
related party) $120,000 for the acquisition of a domain
name over a period of 12 months commencing in January,
2000. No payments have been made to date.
<P>
Year 2000 Impact Statement
<P>
The Company believes that it has analyzed it information
technology systems to determine the existence of any
effect, if any, of year 2000 issues. The Company has
entered into hardware and software support agreements in
the normal course of its business and believes those
arrangements are sufficient to handle any minor issues
that may arise as a result of the year 2000, if any. The
Company also intends to create hard copy of all year-end
accounting and management reports, in the ordinary course
of business, which will serve as a back up of such data
if needed. Further, because the Company's Internet plan
is still under development, it is not currently dependent
on the Internet for either e-commerce, the dissemination
of information, or data management, and therefore does
not anticipate any material impact from year 2000 issues
that may affect the Internet.
<P>
PART II - OTHER INFORMATION
<P>
Item 1. Legal Proceedings. Not applicable
<P>
Item 2. Changes in Securities. None
<P>
Item 3. Defaults Upon Senior Securities. Not Applicable
<P>
Item 4. Submission of Matters to a Vote of Security
Holders. None.
<P>
Item 5. Other Information. None
<P>
Item 6. Exhibits and Reports of Form 8-K. None
<P>
Exhibit 27 - Financial Date Schedule - Electronic Filing
Only
<P>
SIGNATURES
<P>
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 in its behalf by the
undersigned, thereunto duly authorized, on August 29,
2000.
<P>
I-Incubator.com, Inc.
(Registrant)
Date: August 29, 2000 /s/ Jamee Freeman
--------------------------
Jamee Freeman
Chairman, Chief
Executive Officer,
President, Secretary
and Treasurer
<P>
