U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 1O-QSB/A
(Mark One)
(b) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
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 NOVEMBER 17, 2000
----- -----------------
Common
Par value $. O01 per share 69,017,720
Transitional Small Business Disclosure Format (check one)
YES___ NO _X_
---
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC.
d/b/a IC ONE, INC
FORM 10-QSB/A
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
PART 1- FINANCIAL INFORMATION (Amended and Restated)
Page
Item 1. Consolidated Financial Statements (Unaudited):
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
<PAGE>
ITEM 1. FINANCIAL STATEMENTS.
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; 69,956,194 shares issued and outstanding. 69,956
Additional paid-in capital 12,811,575
Deficit accumulated during the development stage (14,539,475)
-------------------
TOTAL SHAREHOLDERS' DEFICIT (1,657,944)
-------------------
$ 686,780
===================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM.INC. D/B/A IC ONE, INC.
( A Development Stage Enterprise )
CONSOLIDATED STATEMENTS OF OPERATIONS
( Unaudited )
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED INCEPTION
JUNE 30, JUNE 30, (FEBRUARY 26,
--------------------------- ---------------------------- 1997) TO
2000 1999 2000 1999 JUNE 30, 2000
------------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES: $ - $ - $ - $ - $ -
COSTS AND EXPENSES:
Research and development 1,385,665 296,998 1,660,665 567,338 4,400,017
Selling, general and administrative 826,293 45,100 1,671,038 569,470 6,436,960
Interest expense 12,764 1,166 30,425 55,383 308,739
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 2,246,559 468,114 3,405,802 1,339,041 12,893,645
------------- ------------- -------------- ------------- ---------------
LOSS BEFORE EXTRAORDINARY ITEM (2,246,559) (468,114) (3,405,802) (1,339,041) (12,893,645)
EXTRAORDINARY ITEM-LOSS ON
EXTINGUISHMENT OF DEBT - - - - (300,000)
------------- ------------- -------------- ------------- ---------------
NET LOSS $(2,246,559) $(468,114) $(3,405,802) $ (1,339,041) $(13,193,645)
============= ============= ============== ============= ===============
NET LOSS PER SHARE - BASIC AND DILUTED:
LOSS BEFORE EXTRAORDINARY ITEM $ (0.03) $ (0.02) $ (0.05) $ (0.06) $ (0.81)
EXTRAORDINARY ITEM - - - - $ (0.02)
------------------------------------------------------------------------
NET LOSS AFTER EXTRAORDINARY ITEM
- BASIC AND DILUTED $ (0.03) $ (0.02) $ (0.05) $ (0.06) $ (0.83)
========================================================================
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
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM.INC. d/b/a IC ONE, Inc.
A Development Stage Enterprise
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Inception
June 30, (February 26, 1997)
--------------------------------------- to
2000 1999 June 30, 2000
------------------ ------------------ ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (3,405,802) $ (1,339,041) $(13,193,645)
Adjustments to reconcile net loss w/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
Compensation from Stock Option Issuance 1,279,670 1,279,670
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) (7,209,029)
------------------ ------------------ ------------------
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
Cash Deficit
Repayments of notes (68,000) - (318,000)
Sales of common stock 2,028,880 948,250 7,310,289
------------------ ------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,960,880 948,250 7,707,614
------------------ ------------------ ------------------
NET INCREASE (DECREASE) 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)
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 I O-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 $13,194,000 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 furhter discussions by
the Company with the holders of such shares.
The Company is seeking the return of a substantial protion 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 7,800,000 shares will be returned and
cancelled.
4. Settlement of Debtor Claim.
6
<PAGE>
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 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. The
financial statements of the Company reflect the full amount of the
settlement and the new capital investment.
5. Amendment of Financial Statements.
The financial statements included in this Amended Form 10-QSB/A have
been amended and restated to take into effect accounting for the
issuance by the Company of stock options related to its common stock
pursuant to its stock option plan.
In September 2000 the Company's board of directors ratified actions
taken by officers calling for the issuance of stock options related to
the Company's common stock pursuant to its Stock Option Plan. Certain
of these stock options were granted with effective dates and vesting
rights which accrued during the three months ended June 30, 2000. These
actions caused a total of 7,098,333 shares of common stock options to
be issued to officers and directors with exercise prices of $.48 per
share. Vesting of the right to exercise such stock options will occur
over periods until December 31, 2002. Of these options, 1,135,347
vested prior to June 30, 2000. The Company accounts for the costs of
stock options issued to employees based on APB 25. Accordingly, based
on the grant of the previously described options, the "in the money"
value of the options at the time of grant is recorded as compensation
expense ("Stock Option Expense") at the time or times when the
associated options become vested to the employee. As of June 30, 2000,
the Company recorded Stock Option Expense of $1,280,000 from the
partial vesting of the previously issued options with a corresponding
increase in Other Paid in Capital.
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/A 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.
7
<PAGE>
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. Without the
ability to raise the necessary additional capital, the Company would not be able
to continue its operations. 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
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 cummulative 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.
SIGFNIFICANT 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 predictict the outcome or timing
of furhter 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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
8
<PAGE>
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 the first quarter of 2000, as reported in its form 10-QSB, the Company's
transfer agent cancelled 12,664,239 shares of common stock according to
instructions from the Company. As of June 30, 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 protion 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.
In September 2000 the Company's board of directors ratified actions taken by
officers calling for the issuance of stock options related to the Company's
common stock pursuant to its Stock Option Plan. These actions caused a total of
7,098,333 shares of common stock options to be issued to officers and directors
with exercise prices of $.48 per share. Details of these options grants are set
forth in the following table:
Effective Shares Exercise Exemption
Options Issued To: Date Optioned Price (1)
----------------------- ------------ ------------ ---------- --------------
OFFICERS AND DIRECTORSGROUPED BY EFFECTIVE DATE:
1/13/00 900,000 $ 0.48 701 and.4(2)
3/1/00 2,250,000 $ 0.48 0.4(2)
4/4/00 500,000 $ 0.48 701 and 4(2)
5/1/00 1,500,000 $ 0.48 0.4(2)
9/7/00 1,020,000 $ 0.48 0.4(2)
OTHER EMPLOYEES GROUPED BY EFFECTIVE DATE:
9/6/00 250,000 $ 0.48 0.4(2)
3/9/00 24,000 $ 0.80 4(2)
5/24/00 104,333 $ 0.48 701 and.4(2)
1/13/00 550,000 $ 0.48 701 and.4(2)
------------
TOTAL OPTIONS GRANTED 7,098,333
============
NOTES:
The information provided indicates the basis for exemption from registration.
701 refers to Rule 701 of the Act, and 4(2) refers to private placements
pursuant to Rule 4(2) of the Act.
Item 6. EXHIBTS AND REPORTS ON FROM 8-K
(a) Exhibits
27. Financial Data Schedule
Reports on Form 8-K No reports on Form 8-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)
By: /s/ James Williams
----------------------------------
James Williams, President/CEO.
By /s/ Joe G. Coykendall
-----------------------------------
Joe G. Coykendall, Sr. Vice President and CFO