<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 000-27603
i2corp.com
(Exact name of registrant as specified in its charter)
Nevada 84-1423373
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5392 S. Eastern Avenue, Building A - North, Las Vegas, Nevada 89119
(Address of principal executive offices (zip code))
(702) 597-3331
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at September 30, 2000
----- ---------------------------------
Common Stock, par value $0.001 30,000,000
<PAGE>
Item 1. Financial Statements
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Page
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<S> <C>
Condensed Consolidated Balance Sheets - September 30, 2000
and March 31, 2000 F-1
Condensed Consolidated Statements of Development Stage Operations and Deficit
for the three-month and six-month periods ended September 30, 2000 and 1999, and
the cumulative period, August 5, 1995 through September 30, 2000. F-2
Condensed Consolidated Statements of Cash Flows for the six-month periods ended
September 30, 2000 and 1999, and the cumulative period, August 5, 1995 through
September 30, 2000. F-3
Notes to Condensed Consolidated Financial Statements F-4
</TABLE>
Item 2. Plan of Operation
Recent Developments
On November 8, 2000, deedee Molnick resigned as our President and we
promoted Christopher P. Almida as our new President effective immediately and
Jesse D. Molnick was appointed to Mr. Almida's former position of Vice
President. deedee Molnick will remain Chief Executive Officer.
On November 6, 2000, we entered into a Letter of Intent with an
international entertainment organization located in Europe with a broad reach in
the areas of gambling, traditional media and publishing. If executed, a
definitive agreement will give this entity the ability to offer and license to
European-based operators our method of wagering, including the wagering of live
games and events to remote customers. There is no guarantee that we will
ultimately execute a definitive agreement with this European entity.
General
We have registered our common stock on a Form 10-SB registration
statement filed pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 12(g) thereof. We file with the Securities and Exchange
Commission periodic and episodic reports under Rule 13(a) of the Exchange Act,
including quarterly reports on Form 10-QSB and annual reports Form 10-KSB. As a
reporting company under the Exchange Act, we may register additional securities
on Form S-8 (provided that it is then in compliance with the reporting
requirements of the Exchange Act), Form S-1, S-4 or on Form S-3 (provided that
we have during the prior 12 month period timely filed all reports required under
the Exchange Act), and our class of common stock registered under the Exchange
Act may be traded in the United States securities markets provided that we are
in compliance with applicable laws, rules and regulations, including compliance
with its reporting requirements under the Exchange Act.
2
<PAGE>
Statements which are not historical facts, including statements about
our confidence and strategies and our expectations about our product,
technologies and opportunities, market and industry segment growth, demand and
acceptance of our products are forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties. These risks include, but are not limited to, product demand and
market acceptance risks; the impact of competitive products; the results of
financing raising activities; the effects of economic conditions and trade,
legal, social and economic risks, such as regulations, governmental licensing
issues, foreign qualifications and ability to conduct our method of business and
the results of our business plan.
Development Stage Entity
We are in the development stage, with immaterial revenues solely
generated from licenses. As of September 30, 2000, we had cumulative net losses
since inception of $1,049,569, and we expect to continue to incur substantial
losses and negative cash flows at least through the current fiscal year ending
March 31, 2001. We currently do not have any revenue generating licensing
agreements executed and we expect that we will continue to incur substantial
marketing, research and development expenses for further product enhancement and
development activities which will cause us to incur additional losses in the
near future.
Financing and Liquidity
We expect cash flows from operating activities to begin during the
current fiscal year. Factors that may contribute to this include the changing
legislative climate and legal entrance into the Internet gambling market of
gaming and wagering operators world-wide including those from the United States.
Depending on the success of our efforts to execute revenue generating licensing
agreements, our management believes that present working capital will need to be
supplemented to support our operations over the next 12 months. Additional
working capital may be sought through additional debt or equity private
placements, additional notes payable to banks or related parties (officers,
directors or shareholders), or from industry-available funding sources at market
rates of interest, or a combination of these. The ability to raise necessary
financing will depend on many factors, including the nature and prospects of any
business to be acquired and the economic and market conditions prevailing at the
time financing is sought. No assurances can be given that any necessary
financing can be obtained on terms favorable to us, or at all.
As of September 30, 2000, we have depleted most of our cash resources
and do not possess the collateral to borrow from traditional lending sources. We
are dependent on collections on the capital contribution receivable, the balance
of which, as of September 30, 2000 was $1,913,196. We are currently seeking
additional financing from various sources, including venture capitalists. Our
current cash on hand is not sufficient to meet ongoing operating expenses,
however, there can be no assurances that financing in the amount and on terms
acceptable to us will be available within the time frame required.
3
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings against us and we are unaware of any
proceedings contemplated against us.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Press Release dated November 13, 2000.
(b) Reports on Form 8-K
There were no reports of Form 8-K filed by the Company during the
quarter ended September 30, 2000.
4
<PAGE>
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.
I2CORP.COM
By: /s/ Christopher P. Almida
--------------------------
Christopher P. Almida, President
Dated: November 13, 2000
5
<PAGE>
i2CORP.COM AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, AND MARCH 31, 2000
<TABLE>
<CAPTION>
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September 30 March 31
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 52,537 $ 113,634
Due from shareholders 81,303
Capital contribution receivable 125,000
Other assets 30,539 15,023
----------- -----------
289,379 128,657
FURNITURE, FIXTURES, AND EQUIPMENT, NET 89,147 75,856
PATENT 96,549 83,032
----------- -----------
$ 475,075 $ 287,545
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accrued expenses and other $ 23,307 $ 53,220
Accounts payable 188,533 42,397
Note payable 500,000
----------- -----------
211,840 595,617
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, 50,000,000 shares authorized,
30,000,000 issued and outstanding, $.001 par value 30,000 30,000
Additional paid-in-capital 3,071,000 3,071,000
Less capital contribution receivable (1,788,196) (3,100,000)
Deficit accumulated in the development stage (1,049,569) (309,072)
----------- -----------
263,235 (308,072)
----------- -----------
$ 475,075 $ 287,545
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. F-1
<PAGE>
i2CORP.COM AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF DEVELOPMENT STAGE
OPERATIONS AND DEFICIT
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED SEPTEMBER 30,
2000 AND 1999, AND THE CUMULATIVE PERIOD, AUGUST 5, 1995, THROUGH
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
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(UNAUDITED)
THREE-MONTH PERIODS SIX-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ---------------------------- CUMULATIVE
2000 1999 2000 1999 PERIOD
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Selling, general and
administrative expenses $ 397,219 $ 16,215 $ 735,545 $ 46,817 $ 1,040,722
Interest expense 1,862 8,284 3,436 25,849
Less revenue (2,332) (5,800) (3,332) (13,300) (17,002)
------------ ------------ ------------ ------------ ------------
NET LOSS $ 394,887 $ 12,277 740,497 36,953 1,049,569
============ ============
DEFICIT ACCUMULATED IN THE DEVELOPMENT STAGE:
Beginning of period 309,072 55,867
------------ ------------ ------------
End of period $ 1,049,569 $ 92,820 $ 1,049,569
============ ============ ============
NET LOSS PER COMMON SHARE $ 0.013 $ 0.000 $ 0.025 $ 0.001 $ 0.039
============ ============ ============ ============ ============
Weighted average number of
shares outstanding 30,000,000 29,981,522 30,000,000 29,965,847 26,877,731
============ ============ ============ ============ ============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. F-2
<PAGE>
i2CORP.COM AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2000 and 1999, AND THE
CUMULATIVE PERIOD, AUGUST 5, 1995, THROUGH SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
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(UNAUDITED)
SIX-MONTH PERIOD ENDED
SEPTEMBER 30,
---------------------- CUMULATIVE
2000 1999 PERIOD
--------- --------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net cash used in operating activities $(709,814) $ (481) $ (877,700)
--------- --------- -----------
INVESTING ACTIVITIES:
Purchases of furniture, fixtures, and equipment (24,570) (99,086)
Payments of patent costs (13,517) (43,846)
--------- -----------
Net cash used in investing activities (38,087) (142,932)
--------- -----------
FINANCING ACTIVITIES:
Receipt of captial contribution receivable 686,804 1,186,804
Proceeds from shareholder advances
1,000 1,000
Repayments to shareholders (114,635)
--------- --------- -----------
Net cash provided by financing activities 686,804 1,000 1,073,169
--------- --------- -----------
NET INCREASE (DECREASE) IN CASH (61,097) 519 52,537
CASH, BEGINNING 113,634
--------- --------- -----------
CASH, ENDING $ 52,537 $ 519 $ 52,537
========= ========= ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. F-3
<PAGE>
i2CORP.COM AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED SEPTEMBER 30,
2000 AND 1999 AND THE CUMULATIVE PERIOD FROM AUGUST 5, 1995,
THROUGH SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
(UNAUDITED)
1. ACCOUNTING POLICIES.
The interim condensed consolidated financial statements of i2corp.com and its
subsidiaries, Home Gambling Network, Inc. (HGN), i2consult.com, and
i2develop.com (collectively, the Company), are unaudited. It is the opinion of
the Company's management that all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the interim results
have been reflected therein. Operating revenues and net earnings for any interim
period are not necessarily indicative of results that may be expected for the
entire year.
These statements should be read in conjunction with the financial statements and
related notes that appear in the Company's Annual Report on Form 10-KSB/A for
the period ended March 31, 2000. The balance sheet at March 31, 2000, was
derived from the audited financial statements included in that report.
RECLASSIFICATIONS. Certain items in the cumulative financial statements have
been reclassified to conform to the current period's presentation.
2. COMMITMENTS AND CONTINGENCIES:
GOING CONCERN. The accompanying financial statements have been prepared assuming
that the company will continue as a going concern. Its ability to do so is
dependent on obtaining sufficient operating revenues or other cash inflows to
continue its activities. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
It is management's plan to finance its operations for the foreseeable future
primarily with proceeds from the capital contribution receivable from a minority
shareholder and to explore other financing options in the investment community.
Management is also in the process of negotiating licensing agreements that, if
consummated, would generate operating revenues. However, there can be no
assurance that these sources will provide sufficient cash inflows to enable the
Company to achieve its operational objectives.
OTHER. The Company has been presented with claims asserting that certain
individuals and/or entities are entitled to an aggregate of approximately
750,000 shares of the Company's common stock. Based on the available evidence,
these claims are inconsistent with the Company's records, and management
believes they are invalid. There may be other similar claims asserted in the
future. However, based, in part, upon the advice of counsel, management believes
that such matters will not have a significant effect on the Company even if the
Company would be required to issue some or all of the shares that are claimed by
these individuals or entities, but there would be up to 2.5% dilution of
interests of its stockholders, based on claims presently known.
In connection with, and as an incentive for HGN to enter into, a reverse
acquisition in February 2000, the minority stockholder (then of PCG) agreed
informally to make a capital contribution to the Company of $3.1 million.
Subsequent to September 30, 2000, $125,000 was received in cash and, therefore,
has been classified in the accompanying balance sheet as a current asset as of
that date. The remaining receivable may be paid off in whole or in part at any
time without premium or discount.
3. INCOME TAXES:
Because, as of September 30, 2000, the Company has engaged in extensive
development stage activities and generated limited revenues over a period of
five years, it has incurred substantial losses, and the potential income tax
benefits of such losses have been effectively offset by a 100% valuation
allowance and, therefore are not reflected in the accompanying financial
statements.
4. SUBSEQUENT EVENT:
The Company adopted a stock option plan providing for qualified and
non-qualified options for up to 3,000,000 shares to be awarded to employees,
officers, directors, consultants and independent contractors. In October 2000,
the Company also granted options under the plan for 102,000 shares, including
2,000 exercisable at $.85 per share immediately and the balance becoming
exercisable at the same price periodically beginning April 2001 through April
2005.
F-4
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EXHIBIT LIST
Exhibit Number Item
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27 Financial Data Schedule
99.1 Press Release dated November 13, 2000
