U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form IO-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
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
for @ transition period from..................... to.......................
Commission file number 0-30544
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC
d/b/a IC ONE, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 88-0415947
(State of other jurisdiction (IRS Employer
of incorporation or organization) identification No.)
205 West 700 South, Suite 200, Salt Lake City, Utah 84101
(Address of principal executive offices)
(801) 355-0066
(Issuer's telephone number)
(Former name,former address and former fiscal year,if changed since last report)
Check whether the issuer (1) filed all reports required to be filed 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. Yes [X] No []
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS AUGUST 30, 2000
----- ---------------
Common
Par value $. O01 per share 69,811,720
Transitional Small Business Disclosure Format (check one)
YES___ NO _X_
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SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. d/b/a IC ONE, INC
FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
PART 1- FINANCIAL INFORMATION
Page
Item 1. Consolidated Financial Statements :
Balance Sheet as of June 30, 2000 3
Statements of Operations for the three months and six months
ended June 30, 2000 and 1999 and from February 26, 1997
(inception) through June 30, 2000 4
Statements of Cash Flows for the six months ended June 30,
2000 and 1999 and from February 26, 1997
(inception) through June 30, 2000 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
PART I- OTHER INFORMATION
Item 1 - Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Securities Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM.INC.D/B/A IC ONE, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEET
June 30, 2000
( Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 45,733
Other Current Assets 1,955
-------------------
TOTAL CURRENT ASSETS 47,688
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization of $205,789 200,208
PATENTS, net of accumulated amortization of $7,970 38,884
INVESTMENT IN REAL ESTATE JOINT VENTURE 400,000
-------------------
$ 686,780
===================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 1,439,466
Accrued expenses and other liabilities 507,933
Notes payable 125,000
Loans payable - shareholders 272,325
-------------------
TOTAL CURRENT LIABILITIES 2,344,724
-------------------
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' DEFICIT:
Common stock -$.001 par value; 200,000,000 shares
authorized; 68,189,197 shares issued and outstanding. 68,189
Additional paid-in capital 11,533,672
Deficit accumulated during the development stage (13,259,806)
-------------------
TOTAL SHAREHOLDERS' DEFICIT (1,657,945)
-------------------
$ 686,780
===================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
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SCHIMATIC CASH TRANSACTIONS NETWORK.COM.INC. D/B/A IC ONE, INC.
( A Development Stage Enterprise )
CONSOLIDATED STATEMENTS OF OPERATIONS
( Unaudited )
<TABLE>
<CAPTION>
INCEPTION
THREE MONTHS ENDED SIX MONTHS ENDED (FEBRUARY 26,
JUNE 30, JUNE 30,1997) TO
--------------------------- ----------------------------
2000 1999 2000 1999 JUNE 30, 2000
------------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES: $ - $ - $ - $ - $ -
COSTS AND EXPENSES:
Research and development 745,829 296,998 1,020,829 567,338 4,035,181
Selling, general and administrative 186,459 45,100 1,031,204 569,470 5,522,126
Interest expense 12,765 1,166 30,426 55,383 313,740
Depreciation and amortization 21,837 124,850 43,674 146,850 214,596
Loss on settlement of vendor liability - - - - 1,533,333
------------- ------------- -------------- ------------- ---------------
TOTAL COSTS AND EXPENSES 966,889 468,114 2,126,133 1,339,041 11,618,976
------------- ------------- -------------- ------------- ---------------
LOSS BEFORE EXTRAORDINARY ITEM (966,889) (468,114) (2,126,133) (1,339,041) (11,618,976)
EXTRAORDINARY ITEM-LOSS ON
EXTINGUISHMENT OF DEBT - - - - (300,000)
------------- ------------- -------------- ------------- ---------------
NET LOSS $ (966,889) $(468,114) $(2,126,133) $(1,339,041) $(11,918,976)
============= ============= ============== ============= ===============
NET LOSS PER SHARE - BASIC AND DILUTED:
LOSS BEFORE EXTRAORDINARY ITEM $ (0.01) $ (0.02) $ (0.03) $ (0.06) $ (0.73)
EXTRAORDINARY ITEM - - - - (0.02)
------------- ------------- -------------- ------------- ---------------
NET LOSS - BASIC AND DILUTED $ (0.01) $ (0.02) $ (0.03) $ (0.06) $ (0.75)
============= ============= ============== ============= ===============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 67,798,032 23,336,132 66,099,778 21,214,665 15,922,446
============= ============= ============== ============= ===============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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SCHIMATIC CASH TRANSACTIONS NETWORK.COM.INC. D/B/A IC ONE, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
INCEPTION
SIX MONTHS ENDED (FEBRUARY 26, 1997)
JUNE 30, TO
----------------------------------
2000 1999 JUNE 30, 2000
--------------- ---------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,126,133) $ (1,339,041) $ (11,918,976)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 42,837 146,850 214,596
Stock issued for services 360,745 166,500 711,572
Loss on extinguishment of debt - - 300,000
Loss on settlement of vendor liability - - 1,533,333
Changes in assets and liabilities:
Decrease (Increase) in other assets (1,955) 28,944 (1,955)
Increase(Decrease) in accounts payable
and accrued expenses (133,285) 140,518 1,947,399
--------------- ---------------- -----------------
NET CASH USED IN OPERATING ACTIVITIES (1,857,790) (856,229) (7,214,030)
--------------- ---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (63,359) (51,747) (405,997)
Acquisition of patents - (10,069) (46,854)
--------------- ---------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (63,359) (61,816) (452,851)
--------------- ---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes and loans - 715,325
Repayments of notes (68,000) - (318,000)
Sales of common stock 2,028,880 948,250 7,315,290
--------------- ---------------- -----------------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 1,960,880 948,250 7,712,615
--------------- ---------------- -----------------
NET INCREASE IN CASH 39,731 30,205 45,733
CASH AT BEGINNING OF PERIOD 6,002 30,837 -
--------------- ---------------- -----------------
CASH AT END OF PERIOD $ 45,733 $ 61,042 $ 45,733
=============== ================ =================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. D/B/A IC ONE, INC
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance generally accepted accounting principles for
interim financial information and the instructions to Form 10-QSB.
Accordingly they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal accruals) considered necessary for a fair
presentation have been included. Operating results for the six months
ended June 30, 2000 are not necessarily indicative of the results that
may be expected for the full fiscal year ended December 31, 2000. For
further information, refer to the financial statements and footnotes
included on Form 10-SB for the year ended December 31, 1999.
2. Going Concern
The accompanying financial statements have been prepared assuming That
The Company will continue as a going concern. The Company incurred
losses of $11,919,000 since inception. Additionally, the Company had a
deficiency in working capital and total capital of $2,297,000 and $
1,658,000, respectively, at June 30, 2000. These conditions raise
substantial doubt about the Company's ability to continue as a going
concern.
Management's plans with respect to these matters include restructuring
its existing debt, raising additional capital through future issuances
of stock and or debentures and ultimately developing a viable business.
The Company has been able to raise capital through the issuance of its
common stock to finance its costs of operations. In the first six
months of 2000, the Company raised $2,029,000 of cash through such
issuances and paid for services and debt reduction totaling $675,000
through issuance of stock.
The accompanying financial statements do not include any adjustments
that might be necessary should the Company be unable to continue as a
going concern.
3. Stockholders Equity
During the six months ended June 30, 2000, the Company issued 4,798,919
shares of common stock. Of these shares, 3,386,337 shares were issued
for cash with proceeds of $2,028,879, 554,933 shares were issued for
services valued at $360,745 and 857,649 shares were issued to cancel
outstanding debt obligations of $314,417.
In June 2000, the Company reinstated 12,317,258 shares of the
Company's common stock, which shares had been cancelled in the first
quarter of 2000. Such shares have been reinstated, pending further
discussions by the Company with the holders of such shares.
6
<PAGE>
The Company is seeking the return of a substantial portion of the
shares as agreed to informally by the shareholders as part of the
acquisition agreement of IC One, Inc. in September, 1999. Based on
preliminary discussions with the largest holder of the subject shares,
the Company anticipates that a minimum of 7,800,000 shares will be
returned and cancelled.
4. Settlement of Creditor Claim.
On April 13, 2000, a judgement against the Company was entered by the
third judicial court of Salt Lake City County, State of Utah (the
"Court"). The judgement related to a claim for payment of a defaulted
note agreement with the Canopy Group, Inc. pursuant to which The Canopy
Group lent to the Company $250,000 under an interest bearing note. On
May 31, 2000, the Court entered a Satisfaction of judgement based on a
settlement agreement reached between the Company and The Canopy Group.
The Company issued 857,649 shares of its common stock in full
settlement of $314,417 owed to the Canopy Group. Also in connection
with the settlement agreement, The Canopy Group invested an additional
$250,000 in exchange for 681,936 shares of the Company's common stock.
The financial statements of the Company, reflect the full amount of the
settlement and the new capital investment.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
financial condition. This discussion should be read in conjunction with the
financial Statements and notes thereto appearing elsewhere herein.
GENERAL. Statements in this form 10QSB that are not Statements of historical or
current fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other unknown
factors that could cause the actual results of the company to be materially
different from the historical results or from any future results expressed or
implied by such forward-looking statements. In addition to statements that
explicitly describe such -risks and uncertainties, readers are urged to consider
statements labeled with The Terms "believes," "belief," "expects"," intends",
anticipates" or "plans" to be uncertain and forward-looking. The forward looking
statements contained herein are also subject generally to other risks and
uncertainties that are described from time to time in the Company's reports and
registration statements filed with the Securities and Exchange Commission.
The Company's financial condition and results of operations reflect that it is a
development-stage company, with no operating revenue to date. Accordingly, the
discussion below follows the guidelines of Reg. 228.303, part (a) regarding Plan
of operation.
PLAN OF OPERATION. Details of the Company's Plan of Operation are more fully
described in its Form 10SB filed with the Commission. Without raising additional
funds through debt and/or equity investments, SCTN will be unable to meet its
cash requirements for the next twelve, months. The Company does not expect to
earn significant revenue before the first quarter of 2001. The Company estimates
that it will require as much as $10 million of additional capital in order to
meet operating cash needs, including research and development expenses and other
operating expenses as contemplated by its Plan of Operation. The Company
estimates that continuation of operations at their current level, without the
expansion and further development contemplated by the plan of operation, would
require approximately $3.0 million over the next twelve months. See "Sources of
Liquidity and new Capital" below and Note 2, of Notes to Financial Statements
for a discussion of sources of funds.
DEVELOPMENT PROGRAM. The Company believes its software and systems technology
are developed to the point where they are readily adaptable to market
applications. Further development, with the exception of the integration of
loyalty with payments processing, has been held pending further definition by
market and process alliances. The Development program as it continues is
7
<PAGE>
anticipated to be co-funded by venture partners based on carefully defined
cost/revenue sharing models. The Company is continuing its development program,
in particular for the integration of loyalty with payments processing. Of the
$10 million of additional capital referred to above, approximately $4.7 million
is anticipated to be allocated for development. To the extent that such
development can be funded in part by venture or alliance partners, this
development budget would be reduced.
Through June 30, 2000, the Company estimates that approximately $10 million of
its cumulative expenditures including research and development and general and
administrative expenses, inception to date, have been expended for development
of its patents and software intellectual property.
The Company expects to add up to twenty new employees in the year 2000 to meet
its business and software development needs. The Company's ability to obtain
such people depends on its ability to obtain necessary capital. The Company
expects to purchase or sell no material plant or equipment in the foreseeable
future.
SIGNIFICANT DEVELOPMENT. The Company has been informed by IBM that IBM is
interested in discussing an arrangement under which IBM might license the
patented technology and software owned or developed by the Company. In addition,
the discussions will also consider the contribution by IBM of development
services which might be used to defray required development costs for the
Company (see Development Program above). (Refer to the Form 10SB for information
about the Company's relationship with IBM.) None of this dialog is in writing at
the current time, and the Company is unable to predict the outcome or timing of
further discussions. The Company intends to actively pursue an expanded business
arrangement with IBM.
SOURCES OF LIQUIDITY AND NEW CAPITAL. Internal sources of liquidity would
include cash flow resulting from business developed through current or future
marketing agreements and through the licensing of the Company's Patents. The
Company cannot predict the date at which such business revenues will commence or
be sufficient to meet its working capital needs. The Company expects to raise
funds through the sale of additional securities in order to meet such needs and
the expansion program described in the previous paragraph. There is no assurance
that the Company will be able to complete such sales of securities; however, the
Company has to date successfully financed its operations through the issuance of
additional common stock. During the period since December 31, 1999 and until
June 30, 2000, the Company has raised $2,704,040 of funds from such issuance.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On April 13, 2000, a judgement against the Company was entered by the third
judicial court of Salt Lake City County, State of Utah (the "Court"). The
judgement related to a claim for enforcement of a defaulted note agreement with
the Canopy Group, Inc. pursuant to which The Canopy Group lent to the Company
$250,000 under an interest bearing note. On May 31, 2000, the Court entered a
Satisfaction of judgement based on a settlement agreement reached between the
Company and The Canopy Group. The settlement agreement called for the Company to
pay the full amount of principal and interest due under the note by the issuance
of 857,649 shares of its common stock. Under the settlement agreement the
Company issued 857,649 shares of its common stock in full settlement of $314,417
owed to the Canopy Group. Also in connection with the settlement agreement, The
Canopy Group invested an additional $250,000 in exchange for 681,936 shares of
the Company's common stock
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the six months ended June 30, 2000, the Company issued 4,798,919 shares
of common stock. Of these shares, 3,386,337 shares were issued for cash with
proceeds of $2,028,879, 554,933 shares were issued for services valued at
$360,745 and 857,649 shares were issued to cancel outstanding debt obligations
of $314,417.
8
<PAGE>
In June 2000, the Company reinstated 12,317,258 shares of the Company's common
stock, which shares had been cancelled in the first quarter of 2000. Such shares
had been reinstated, pending further discussions by the Company with the holders
of such shares. The Company is seeking the return of a substantial portion of
the shares as agreed informally by the shareholders as part of the acquisition
agreement of IC One, Inc. in September, 1999. Based on preliminary discussions
with the largest holder of the subject shares, the Company anticipates that a
minimum of 7,800,000 shares will be returned and cancelled.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Item 5. OTHER INFORMATION
Not Applicable.
Item 6. EXHMITS AND REPORTS ON FROM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K No reports on Form S-K were filed 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 hereunto duly authorized.
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC (Registrant)
/S/ JAMES WILLIAMS
---------------
James Williams, President/CEO.
