SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File No.: 33-18385-LA
INTEGRATED CARBONICS CORP.
(Exact name of registrant as it appears in its charter)
NEVADA 43-1632170
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3360 West Sahara Ave., Suite 200
Las Vegas, NV 89102
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:
(702)-682-8445
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (b) of the Act:
Class A Common Stock $0.001 Par Value
Indicate by check mark whether the registrant (1) has filed all
reports to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months ( or 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 No X
At the end of the quarter ending March 31, 1999 there were
10,366,350 issued and outstanding shares of the registrants common
stock.
There is no active market for the registrant's securities.
Total number of pages, including cover page 4
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS Reference
Exhibit A
Balance Sheet
Statement of Operations
Statement of Stockholders Equity
Statement of Cash Flows
Notes to Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Results of Operations
During the quarter the Company continued with its program to
develop Integrated Carbonics Corp.(ICC) into an operating company.
For the 3 months ended March 31st, ICC had a net loss of $193,931
or 2 cents per share. This loss compares with a loss of $208,077
or 2 cents per share for the corresponding 3 month period last
year.
During the quarter, ICC focussed its attention on seeking
financing for its joint ventures in China. In this regard, the
Company engaged consultants to assist the Company concerning
structuring development plans, financing strategies, shareholder
communications, and creating awareness with the brokerage
community by electronic means.
While continuing with efforts to obtain financing for the
Company's China graphite projects, management implemented a
diversification strategy late in the quarter, in an attempt to
mitigate the risk of being unable to make progress in that
financing effort.
Subsequent to the end of the quarter, the Company entered into a
letter of intent to acquire the entire equity interest of
HomeNet100.com Enterprises, Inc. through its wholly owned Canadian
subsidiary, ICC Integrated Carbonics (Canada) Corp. Homenet100.com
is an e-commerce company established to tap the rapidly growing
market for home furnishings and accessories with an e-commerce
only brand and business model. The acquisition is subject to
formal agreement and shareholder's approval from both the Company
and Homenet100.com Enterprises, Inc.
Subsequent to March 31st the Company cancelled all outstanding
stock options previously granted to directors, officers, and
employees of the Company and has cancelled its 1998 revised stock
option plan.
Liquidity and Capital Resources
During the quarter the Company continued its status as a
development company. The Company is continuing to incur
development expenses, is deriving no revenues, and has experienced
an ongoing deficiency in working capital. The Company's continued
existence is dependent on its ability to obtain additional
financing to proceed with investment in its joint ventures and
ultimately to attain profitable operations from its joint
ventures.
At March 31st, 1999 the Company had a working capital deficiency
of $302,726. This compares with a working capital deficiency of
$283,305 at December 31, 1998.
At March 31st, the Company continues to have no commitments on
potential financing. The Company continues to restrict its ongoing
administration expenses to essential costs only, except for
obligations for outside consulting services related to financing
activities which have to date been paid for almost entirely
through the issuance of shares from treasury.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
None
Item 3. Default 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) The following documents are filed as part of this report:
(1) Financial Statements as of March 31, 1999 as prepared by the
Company
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.
Integrated Carbonics Corp.
Dated: May 15, 1999 By: /S/ Robert S. Tyson
Robert S. Tyson, Vice President
INTEGRATED CARBONICS CORP.
FINANCIAL STATEMENTS
(A Development Stage Company)
BALANCE SHEET
For the 3-month period ended March 31, 1999 (Prepared by
management and without audit)
March 31, December
1999 31, 1998
ASSETS
ASSETS:
Cash in hand and at Bank $ 78 $ 713
Prepaid expenses $ 256 $ 2,342
TOTAL CURRENT ASSETS $ 334 $ 3,055
Capital Assets
Fixed Assets $ 0 $ 0
Property, Plant and Equipment
(Note 4) $ 3,777 $ 4,784
Other Assets
Investment in graphite
processing joint venture $253,408 $253,408
Total Capital & Other assets $257,185 $258,192
Total Assets $257,519 $261,247
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable 149,614 156,360
Other Current Liabilities $ 23,446 $ 0
Current portion of long-term debt $130,000 $130,000
TOTAL CURRENT LIABILITIES 303,060 286,360
Long-term debt less
current portion $ 0 $ 0
TOTAL LIABILITIES $303,060 $286,360
STOCKHOLDERS' EQUITY:
Common Stock $ 10,366 $ 9,856
Subscription Received 0 0
Additional paid in Capital $846,582 $673,590
Deficit Accumulated During
The Development Stage ($902,490) ($708,559)
TOTAL STOCKHOLDERS' EQUITY ($ 45,541) ($ 25,113)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $257,519 $261,247
INTEGRATED CARBONICS CORP.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the 3-month period ended March 31, 1999 (Prepared by
management and without audit)
Three months Three months
Ended March Ended March
31, 1999 31, 1998
Operating Expense
Amortization $ 1,007 $ 0
Engineering Costs $0 $105,598
General & Administrative expenses $177,693 $47,004
Interest and bank Charges $73 $158
Legal and Accounting $3,702 $12,600
Transfer agent and filing
Fees $4,953 $1,604
Rent $6,502 $6,095
Salaries & Wages $0 $35,018
TOTAL $193,931 $208,077
Net Profit/Loss(-) ($193,931) ($208,077)
Net Profit/Loss(-) per
share basic ($0.02) ($0.02)
Weighted Average Number Of
Shares Of Common Stock
Outstanding 10,196,350 $9,021,700
INTEGRATED CARBONICS CORP.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE 3-MONTH PERIOD ENDED MARCH 31, 1999
(Prepared by management and without audit)
Common Stock Additional Accumulated
Shares Amount paid-in Deficit
capital
February 23, 1993
Issued for cash
105,000 $105 $2,895 $0
Net loss, period ended
December 31, 1993
($2,746)
Balance, December 31, 1993
105,000 $105 $2,895 ($2,746)
Net loss, year ended December
31, 1994
($61)
Balance, December 31, 1994
105,000 $105 $2,895 ($2,807)
Net loss, year ended December
31, 1995
($61)
Balance, December 31, 1995
105,000 $105 $2,895 ($2,868)
Net loss, year ended December
31, 1996
($861)
Balance, December 31, 1996
105,000 $105 $2,895 ($3,729)
Issued for an interest in a
mineral property (Note 6)
150,000 $150 $14,850 $0
Issued for Graphite Processing
Joint Venture agreement (Note
5(a))
6,000,000 $6,000 $0 $0
Issued for cash
540,000 $540 $53,460 $0
Net loss, year ended December
31, 1997
($37,229)
Balance, December 31, 1997
6,795,000 $6,795 $71,705 ($40,958)
Issued for Cash
3,061,350 $3,061 $602,385 $0
Net loss, year ended December
31, 1998
($667,601)
Balance, December 31, 1998
9,856,350 $9,856 $673,590 ($708,559)
Issued for consulting
services(Note 5(d))
510,000 $510 $172,992 $0
Net loss, 3-month ended March
31, 1999
($193,931)
Balance, March 31, 1999
10,366,350 $10,366 $846,582 ($902,490)
INTEGRATED CARBONICS CORP.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the 3-month period ended March 31, 1999 Prepared by management
and without audit)
Three Months Three Months
Ended March Ended March
31, 1999 31, 1998
Cash Flows from Operating
Activities:
Net Loss ($193,931) ($208,077)
Add (less)
Amortization $ 1,077 $0
Net Changes in working Capital $ 18,787 $64,283
Total ($174,137) ($143,794)
Financing Activities
Repayment of Long term debt
- ($55,000)
Issue Common Stock $173,502 $407,000
Subscription received $0 ($37,000)
Total $173,502 $315,000
Investing Activities
Purchase of Property, plant and
Equipment $0 (11,423)
Equipment $0 $0
Investment in a graphite processing
joint venture $0 ($2,420)
Total $0 ($13,843)
NET CASH INFLOW ($635) $157,363
CASH, BEGINNING OF PERIOD $713 $44,576
CASH, END OF PERIOD $78 $201,939
(See accompanying notes to financial statements)
INTEGRATED CARBONICS CORP.
(A development stage company)
Notes to Financial Statements
For the 3-month period ended March 31, 1999(Prepared by management
and without audit)
1. DESCRIPTION OF BUSINESS
The Company was organized on February 23, 1993 under the laws of
the State of Delaware as PLR, Inc. On October 3, 1997, it changed
its name to Integrated Carbonics Corp. and on October 30, 1997,
changed its jurisdiction of incorporation to Nevada.
The Company has signed joint venture agreements for the
construction and operation of two graphite processing plants in
the People's Republic of China.
2. CONTINUING OPERATIONS
The financial statements have been prepared on the basis of
accounting principles applicable to a going concern which
contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company is a
development stage enterprise and as such has no significant
revenue and is incurring substantial costs in connection with its
investment in a graphite processing joint venture as described in
Note 5. In addition the Company incurred a loss of $193,931 for
the three months ended March 31, 1999 and has a working capital
deficiency of $302,726 at March 31, 1999. The Company's continued
existence is dependent on its ability to obtain additional
financing to proceed with the joint venture and ultimately to
attain profitable operations.
If the going concern assumption is not appropriate in the
preparation of these financial statements, adjustments would be
necessary to the carrying values of assets and liabilities, the
reported loss and the balance sheet classifications used.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements are expressed in US dollars, have been
prepared in accordance with accounting principles generally
accepted in the United States and include the following
significant accounting policies:
(a) Investment in joint ventures
The Company records its investment in joint ventures at cost until
such date as the venturers make their initial capital contribution
at which time they are recorded on the equity basis.
(b) Interest in mineral property
The Company follows the method of accounting for its interest in
mineral property whereby initial costs related to the acquisition
of mineral properties are capitalized by property. Exploration and
development costs are expensed as incurred.
The interest in mineral property will be written down on a
property by property basis when a significant decline in value
that is other than temporary has occurred and will be written off
when a property is abandoned.
(c) Property, plant and equipment
Property, plant and equipment are recorded at cost. Depreciation
is charged to operations over the estimated useful lives of the
assets as follows:
Computer software Straight line over 12 months
Computer hardware Straight line over 24 months
Furniture and office equipment Straight line over 60 months
The carrying value of property, plant and equipment is reviewed on
a regular basis for any permanent impairment in value. Where such
impairment is indicated, property, plant and equipment are written
down to estimated net realizable value.
(d) Accounting estimates
Preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during
the period. Actual results could differ from those estimates.
(e) Net loss per share
Net loss per share is computed using the weighted average number
of common shares outstanding during the period. Diluted loss per
share has not been disclosed as the effect of common shares
issuable upon the exercise of options or warrants would be anti-
dilutive.
In February 1997, the FASB issued Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share".
SFAS 128 is effective for the fiscal year ending after
December 15, 1997. SFAS 128 redefines earnings per share under
U.S. GAAP and replaces primary earnings per share with basic
earnings per share and fully diluted earnings per share with
diluted earnings per share. Net loss per share, as reported, is
equal to the net loss per share based on SFAS 128 for all periods
presented.
(f) Recent accounting policies
In June 1998, the FASB issued Statement No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities".
SFAS 133 establishes standards for accounting for derivative
instruments. SFAS 133 is effective for fiscal years beginning
after June 15, 1999. The Company does not expect that adoption of
SFAS 133 will have a material effect on the Company's financial
statements.
4. PROPERTY, PLANT AND EQUIPMENT
March 31, 1999 December 31, 1998
Computer Software $1,692 $1,692
Computer hardware $1,520 $1,520
Furniture and
office equipment $5,011 $5,011
$8,223 $8,223
Less: accumulated
Depreciation $3,777 $4,784
5. INVESTMENTS IN GRAPHITE PROCESSING JOINT VENTURES
(a) Liumao
On October 7, 1997, the Company entered into an agreement with Da-
Jung Resource Corp., a company controlled by certain directors of
the Company, to acquire 100% of its rights and obligations
pursuant to an "Agreement on Establishment of a Sino Foreign
Equity Joint Venture" with Jixi Liumao Graphite Mine, of
Heilongjiang Province, the People's Republic of China.
Consideration for this agreement was 6,000,000 shares of the
Company's post split common stock, plus $70,000 on the completion
of the offering which has been paid, $50,000 on the exercise of
all related warrants and $80,000 one year from the date of the
offering or upon completion of additional financing, whichever
comes first. At December 31, 1998, $130,000 was still payable in
connection with this agreement and the repayment date was extended
to July 31, 1999 (Note 7).
On November 10, 1997, the Company entered into a formal agreement
with the Liumao Graphite Mine to form a joint venture company
named ICC Liumao Graphite Products, Ltd. The purpose of the joint
venture company is to establish value added graphite processing
facilities at the Liumao Mine in China to produce high purity
graphite, expandable graphite, graphite sheet or other graphite
products.
The total investment of the Company in the joint venture company
is stipulated as 80% of anticipated joint venture construction
costs of $28 million, and the Company will obtain an 80% share of
the profits over a thirty year period. Further investment in the
joint venture by the Company is contingent on the completion of
additional financing arrangements with shareholders or third
parties. The joint venture company has received regulatory
approval.
The investment in the graphite processing joint venture is valued
at the cost to acquire the rights to enter into the joint venture
plus legal and other costs incurred by the Company to negotiate
the formal joint venture agreement. No capital investment in the
joint venture has been made to date.
(b) YiChang
On September 21, 1998, the Company entered into an interim
agreement with YiChang Heng Da Graphite Group Company Ltd.
("YiChang") to obtain a 55% interest in a joint venture between
YiChang and the Company. Under this joint venture agreement,
YiChang will sell, at net book value, to the joint
venture one of its operating divisions consisting of a new mine
and mineral processing plant and a graphite sheet manufacturing
plant. The Company will contribute RMB 28.6 million ($3.84
million) according to a contribution schedule to be negotiated.
The joint venture will then proceed to construct additional
graphite sheet manufacturing capacity and, at its option,
construct a fluorographite and lithium ion battery manufacturing
facility. As of December 31, 1998, no costs have been incurred and
the joint venture agreement has not yet been signed.
6. INTEREST IN MINERAL PROPERTY
On September 22, 1997, the Company entered into an agreement with
Da-Jung Resource Corp., a company controlled by certain directors
of the Company, to acquire 100% of its interest in the Yue-
jinshan-Zianfengbei mineral property, in the Wandashan
mineralization zone of Heilongjiang Province, the People's
Republic of China in exchange for 150,000 shares of the Company's
common stock valued at $0.10 per share. During 1998, the interest
in mineral property was written off.
LONG-TERM DEBT
March 31, 1999 December 31, 1998
Amount payable to
Da-Jung Resource Corp.
on acquisition of its
interest in the graphite
processing joint venture
(Note 5(a)) $130,000 $130,000
Current portion ($130,000) ($130,000)
Total $- $-
The long-term debt is unsecured and non-interest bearing and as a
result was recorded on a present-value basis to December 31, 1998
with imputed interest recognized at 8%. During 1998, the lender
extended the repayment terms to July 1, 1999.
8. SHARE CAPITAL
The company has given retroactive effect and restated share
numbers to give effect to the following capital transactions:
On March 15, 1996, at a meeting of the Board of Directors, the
Board approved amending its Articles of Incorporation. These
amendments were approved by a majority vote of the stockholders.
The Company authorized changing its authorized common stock of
15,000 shares with $5.00 par value, to 50,000,000 common shares
with par value $.001 and 10,000,000 preferred shares with a par
value $.001. The Company also approved a forward stock split on
the basis of 3,500:1, increasing the number of outstanding shares
from 600 shares to 2,100,000 shares.
a) On January 17, 1997, at a special meeting of the Shareholders, the
Shareholders approved, effective January 4, 1997, a forward stock
split of 5:1, increasing the number of common shares outstanding
from 2,100,000 common shares to 10,500,000 common shares
outstanding.
b) On October 31, 1997, at a special meeting of the Shareholders, the
Shareholders approved a reverse stock split of 1:100 thus reducing
the number of common shares outstanding from 25,500,000 shares to
255,000 shares of common stock.
c) On October 31, 1997, at a special meeting of the Shareholders, the
Shareholders authorized a Regulation D Rule 504 offering of a
maximum of 2,300,000 units at $.10 per unit consisting of one
common share and one warrant exercisable at $.33 per share for six
months.
d) In January 1999, the Company entered into a one-year
corporate finance advisory agreement, cancellable at any time on
30 days written notice, with a third party and agreed to issue, as
partial consideration, 350,000 common shares at predetermined
dates over the course of the contract. The common shares are
subject to registration and, to March 31, 1999, 150,000 common
shares have been delivered at a deemed value of $39,780.
Also in January 1999, the Company entered into a marketing
agreement with another third party and issued, as partial
consideration, 360,000 common shares, at a deemed value of
$133,722 which are subject to registration.
9. STOCK OPTIONS
In 1998, the Company adopted a Stock Option Plan to provide
options to purchase common shares of the Company for its
employees, officers and directors. The options granted pursuant
to the Stock Option Plan are exercisable at a price of $2.00 which
is equal to the fair value of the common shares at the time the
options were granted. The maximum number of common shares
reserved for issuance under the Stock Option Plan, including
current options outstanding, is 2,000,000 common shares.
Information regarding the Company's stock options is as follows:
Number of Shares Share Price
Outstanding at
December 31, 1997 $ - $ -
Granted 1,640,000 $2.00
Outstanding at
March 31,1999 1,640,000 $2.00
The following table summarizes information concerning options
outstanding at December 31, 1998(see also note 12):
Number Price Expiry Date
1,640,000 $2.00 January 13, 2001
10. RELATED PARTY TRANSACTIONS
(a) As of March 31, 1999, liabilities include $23,381
(1998 - $20,197) due to companies controlled by certain directors
of the Company. The amounts are unsecured, interest-free, and do
not have fixed repayment terms.
(b) The Company entered into the following transactions with
companies
controlled by certain directors of the Company:
Three Months Ended March 31, 1999 1998
Rent $4,877 $5,306
Office expenses and travel $4,243 $2,273
Management fees $7,394
Consultancy fees $9,668
The Company has entered into an agreement to lease premises from a
company controlled by certain directors as described in Note 11.
11. COMMITMENTS
On December 8, 1997, the Company entered into a one year lease
commitment effective January 1, 1998 for $6,600 plus applicable
operating costs. During 1998, this lease was extended to
December 31, 1999.
12. SUBSEQUENT EVENTS
Subsequent to March 31st the Company entered into a Letter of
Intent to acquire the entire equity interest of HomeNet100.com
Enterprises, Inc. through its wholly owned Canadian subsidiary,
ICC Integrated Carbonics (Canada) Corp. The acquisition is
subject to formal agreement and shareholder's approval from both
the Company and Homenet100.com Enterprises, Inc.
Subsequent to March 31st the Company cancelled all outstanding
stock options previously granted to directors, officers, and
employees of the Company and has cancelled its 1998 revised stock
option plan.
13. PRIOR YEARS' AMOUNT
Certain of prior years' amounts have been reclassified where
applicable, to conform with the current year's presentation.
DIRECTORY
Board of Directors Mario Carmine Aiello
President
H. Frank Foster
Chief Financial Officer
Robert Hoegler
Treasurer
Robert Tyson
Vice President,
Corporate Communications
James Dade Fawcett
Director
Registered Office 3360 W. Sahara Ave., Suite 200,
Las Vegas, NV 89102, USA
Corporate Head Quarters Integrated Carbonics Corp.
Suite 804 - 750 West Pender Street
Vancouver, British Columbia
Canada V6C 2T
Tel. (604) 682 8445
Fax. (604) 682 4380
Auditors Deloitte & Touche
Suite 2100 - 1055 Dunsmuir Street
Four Bentall Centre
Vancouver, British Columbia
Canada V7X 1P4
Bank Bank of Nova Scotia
Vancouver, B.C.
Transfer Agent American Securities Transfer & Trust Inc.
1825 Lawrence Street, Suite 444
Denver, CO 80202, USA
Trading Symbol ICCN OTC: BB (USA)
