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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
JUNE 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
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(Address of principal executive offices (zip code))
702 564-2240
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(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 No X
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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 JUNE 30, 2000
-------------------------------- ----------------------------
1
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Common Stock, par value $0.001 30,000,000
Item 1. Financial Statements
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<CAPTION>
PAGE
<S> <C>
Condensed Consolidated Balance Sheet - June 30 and March 31, 2000 F-1
Condensed Consolidated Statements of Development State Operations and Deficit for the
three months ended June 30, 2000 and 1999, and the cumulative period from
August 5, 1995 through June 30, 2000. F-2
Condensed Consolidated Statements of Cash Flows for the three months ended
June 30, 2000 and 1999, and the cumulative period from August 5, 1995
through June 30, 2000. F-3
Notes to the Consolidated Financial Statements F-4
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Item 2. Management's Discussion and Analysis or Plan of Operation
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 limited revenues solely generated
from licenses. As of June 30, 2000, we had cumulative net losses since inception
of $654,682 and we expect to continue to incur substantial losses and negative
cash flow at least through fiscal year ended 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.
General Financial Condition
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. Depending
2
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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 June 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 from the capital contribution receivable, the balance
of which, as of August 15, 2000 was $1,950,000. We are currently seeking
additional financing from various sources, including funds from various venture
capitalist organizations. Our current cash on hand is not sufficient to meet
ongoing operating expenses and there can be no assurances that financing in the
amount and on terms acceptable to us will be available within the time frame
required.
Revenues
For the three months ended June 30, 2000, our revenues consisted of a
non-refundable payment received in connection with a licensing agreement. For
the three months ended June 30, 1999, our revenues consisted of non-refundable
payments received in connection with a licensing agreement that was subsequently
cancelled, and the full amount of the payments received was recognized as
income.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
On December 11, 1998, we commenced a patent infringement action in
the United States District Court, District of Nevada, against Interactive
Television Services, Inc., a Georgia corporation ("Interactive") (Case
#CV-S-98-01755-JBR). The Defendants counterclaimed for declaratory relief and
a trial date was set for August 2000. On August 14, 2000, we entered into a
Stipulated Order of Dismissal with Interactive in which Interactive
specifically admitted that the our Patent was valid and that Interactive's
systems and methods do not infringe on our Patent.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
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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
None
(b) Reports on Form 8-K
There were no reports of Form 8-K filed by the Company during
the quarter ended June 30, 2000.
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/ dee dee molnick
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dee dee Molnick, President
Dated: August 17, 2000
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I2CORP.COM AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCED SHEETS
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<CAPTION>
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JUNE 30 MARCH 31
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(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 126,085 $ 113,634
Due from shareholders 70,587
Capital contribution receivable 200,000
Other assets 25,730 15,023
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422,402 128,657
FURNITURE, FIXTURES, AND EQUIPMENT, NET 90,898 75,856
PATENT 86,370 83,032
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$ 599,670 $ 287,545
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accrued expenses and other $ 17,606 $ 53,220
Accounts payable 85,746 42,397
Note payable 500,000
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103,352 595,617
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STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, 50,000,000 shares authorized,
30,000,000 and outstanding, $.001 par value 30,000 30,000
Additional paid-in-capital 3,071,000 3,071,000
Less capital contribution receivable (1,950,000) (3,100,000)
Deficit accumulated in the development stage (654,682) (309,072)
---------------- ---------------
496,318 (308,072)
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$ 599,670 $ 287,545
================ ===============
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. F-1
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I2CORP.COM AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF DEVELOPMENT STAGE OPERATIONS AND DEFICIT
CONDENSED CONSOLIDATED STATEMENTS OF DEVELOPMENT STATE OPERATIONS AND DEFICIT
FOR THE THREE-MONTHS ENDED JUNE 30, 2000 AND 1999, AND THE
CUMULATIVE PERIOD FROM AUGUST 5, 1995, THROUGH JUNE 30, 2000
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<CAPTION>
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(UNAUDITED)
AUGUST 5, 1995,
THREE-MONTHS ENDED JUNE 30, THROUGH
2000 1999 JUNE 30, 2000
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
Selling, general and administrative expenses $ 338,327 $ 30,602 $ 643,445
Interest expense 8,284 1,574 25,907
Less revenue (1,000) (7,500) (14,670)
-------------------- -------------------- ---------------------
NET LOSS 345,611 24,676 654,682
DEFICIT ACCUMULATED IN THE DEVELOPMENT STAGE:
Beginning of period 309,071 55,867
-------------------- -------------------- ---------------------
End of period $ 654,682 $ 80,543 $ 654,682
==================== ==================== =====================
Net loss per common share $ 0.012 $ 0.025 $ 0.655
==================== ==================== =====================
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-2
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I2CORP.COM AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTHS ENDED JUNE 30, 2000 AND 1999, AND THE
CUMULATIVE PERIOD FROM AUGUST 5, 1995, THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
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(UNAUDITED)
AUGUST 5, 1995,
THROUGH
2000 1999 JUNE 30, 2000
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<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ (413,635) $ 7,406 $ (581,521)
------------------ ----------------- ----------------------
INVESTING ACTIVITIES:
Purchases of furniture, fixtures, and equipment (20,576) (95,092)
Payments of patent costs (3,338) (33,667)
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(23,914) (128,759)
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FINANCING ACTIVITIES:
Receipt of captial contribution receivable 450,000 450,000
Proceeds from notes payable 500,000
Proceeds from shareholder advances 1,000 1,000
Repayments to shareholders (114,635)
------------------ ----------------- ----------------------
Net cash provided by financing activities 450,000 1,000 836,365
------------------ ----------------- ----------------------
NET INCREASE IN CASH 12,451 8,406 126,085
CASH, BEGINNING 113,634
------------------ ----------------- ----------------------
CASH, ENDING $ 126,085 $ 8,406 $ 126,085
================== ================= ======================
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-3
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I2CORP.COM AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES.
The interim condensed 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 necessary for a fair statement of the interim
results presented 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.
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 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
400,000 shares of the Company's common stock. Based on the available evidence,
management believes these claims are inconsistent with the Company's records and
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 1.33% 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.
However, because of substantial uncertainty as to its realizability, no
accounting recognition was given thereto in the Company's previously issued
financial statements until this understanding was formalized in August 2000.
Subsequent to June 30, 2000, $200,000 was received in cash, and a $560,000 note
payable to the minority stockholder was applied against this obligation.
Retroactive effect has been given in the accompanying balance sheet to the
formalization of this understanding by recording the capital contribution
receivable as a reduction of stockholders' equity as of the date of the original
transaction and by offsetting the note payable against the capital contribution
receivable pursuant to Financial Accounting Standards Board Statement No. 6,
CLASSIFICATION OF SHORT-TERM OBLIGATIONS EXPECTED TO BE REFINANCED. The
remaining receivable may be paid off in whole or in part at any time without
premium or discount.
F-4
