As filed with the Securities and Exchange Commission on November 30, 2000.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
ICOA, INC.
(Name of Small Business Issuer in its Charter)
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<S> <C> <C>
NEVADA 7373 87-0403239
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
GEORGE STROUTHOPOULOS
CHIEF EXECUTIVE OFFICER AND PRESIDENT
111 AIRPORT ROAD
WARWICK, RI 02889
(401) 739-9205
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of communications to:
MELVIN WEINBERG, ESQ.
PARKER CHAPIN LLP
THE CHRYSLER BUILDING
405 LEXINGTON AVE.
NEW YORK, NEW YORK 10174
TELEPHONE NO.: (212) 704-6000
FACSIMILE NO.: (212) 704-6288
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO BE REGISTERED PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED (1) AGGREGATE OFFERING PRICE (2) REGISTRATION FEE
----------------------------------------------- ------------------------- ------------------------------ ------------------------
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Common Stock, par value $.0001 per share (3) 33,000,000 $2,491,500 $658
----------------------------------------------- ------------------------- ------------------------------ ------------------------
Common Stock, par value $.0001 per share (4) 12,000,000 $906,000 $240
----------------------------------------------- ------------------------- ------------------------------ ------------------------
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(1) Because the number of shares of common stock issuable upon the
conversion of notes issued and issuable and warrants issuable depends
on the market price of our common stock, the actual number of shares to
be sold under this registration statement cannot be determined at this
time. The number of shares registered is not intended to be a
prediction as to the future market price of our common stock upon
conversion of notes issued and issuable and warrants issuable. See
"Risk Factors - We have 57,900,000 shares of our common stock reserved
for further issuances which can substantially dilute the value of your
ICOA common stock". Under the terms of subscription agreements entered
into between ICOA and each of the investors referred to therein, dated
as of August 28, 2000, we are required to file a registration statement
registering not less than 45,000,000 shares of our common stock of
which (a) not less than 33,000,000 will be reserved for issuance upon
conversion of notes issued pursuant to the subscription agreements, and
upon exercise of warrants issuable in connection therewith, and (b) the
remaining shares will be reserved for issuance upon conversion of put
notes, and upon exercise of warrants issuable in connection therewith.
(2) Estimated pursuant to Rule 457(c) under the Securities Act of 1933
solely for the purpose of computing the amount of the registration fee.
The fee for the common stock was based on the average of the bid and
asked price of the common stock quoted in the National Quotation Bureau
"Pink Sheets" on November 27, 2000.
(3) Represents shares of common stock issuable upon conversion of notes
issued and warrants issuable in connection therewith to certain of the
selling stockholders.
(4) Represents shares of common stock issuable upon conversion of notes
issuable and warrants issuable in connection therewith to certain of
the selling stockholders.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED NOVEMBER 30, 2000
ICOA, INC.
45,000,000 SHARES OF COMMON STOCK
----------------------------------------
o Our selling stockholders are offering to sell 45,000,000 shares of our
common stock issuable:
- upon exercise of warrants, and
- upon conversion of notes.
---------------------------------------------------
National Quotation Bureau "Pink Sheets":
common stock "ICOA"
---------------------------------------------------
o On November 27, 2000 the closing sale price of our common stock on the
National Quotation Bureau "Pink Sheets" was $0.073.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------------------
The date of this prospectus is ________________, 2000
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TABLE OF CONTENTS
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RISK FACTORS......................................................................................................3
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS.........................................................12
USE OF PROCEEDS..................................................................................................12
MARKET PRICE OF OUR COMMON STOCK.................................................................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................................................13
BUSINESS - OUR COMPANY...........................................................................................17
MARKETING TO LOCATIONS...........................................................................................20
MARKETING TO END-USERS...........................................................................................20
ADVERTISING, PUBLICITY, TRADE SHOWS AND PROMOTIONS...............................................................20
INTERNATIONAL MARKETS............................................................................................20
MANAGEMENT.......................................................................................................22
PRINCIPAL STOCKHOLDERS...........................................................................................27
SELLING STOCKHOLDERS.............................................................................................30
PLAN OF DISTRIBUTION.............................................................................................30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................32
DESCRIPTION OF SECURITIES........................................................................................33
NEVADA BUSINESS COMBINATION PROVISIONS...........................................................................33
INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................................................35
WHERE YOU CAN FIND MORE INFORMATION..............................................................................35
TRANSFER AGENT...................................................................................................36
LEGAL MATTERS....................................................................................................36
EXPERTS..........................................................................................................36
INDEX TO FINANCIAL STATEMENTS...................................................................................F-1
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ABOUT OUR COMPANY
We are a development stage company in the process of building an
automated network of interactive pay station terminals with addressable video
advertising displays. We plan to own and operate a communications services and
electronic publishing network by deploying public access multimedia terminals
which will be centrally managed from our network and service-operating center.
The network will satisfy the tremendous demand for Internet access and business
services for people "on-the-go". This network will provide traditional
communication services, such as telephone, e-mail, facsimile, copy and print; it
will also provide e-commerce services, such as advertising, shopping, and other
transactional services, as well as a platform for publishing a wide variety of
information and electronic fulfillment services. Since 1990, we funded
development and distribution of several generations of public access fax
terminals known as GoFax.
HOW OUR COMPANY IS ORGANIZED
We were incorporated in Nevada in September, 1983 under the name
Quintonix, Inc. In March, 1989 we changed our name to ICOA, Inc. On February 15,
1999 we created WebCenter Technologies, Inc., a Nevada corporation and our
wholly-owned subsidiary.
WHERE YOU CAN FIND US
We are located at 111 Airport Road, Warwick, RI 02889. Our telephone
number is (401) 739-9205, our facsimile no. is (401) 739-9215, our e-mail
address is [email protected], and our homepage on the world-wide web is at
http://www.icoacorp.com.
SELECTED FINANCIAL DATA
The following summary of our financial information has been derived
from our financial statements that are included in this prospectus. The
information for the nine months ended September 30, 2000 and the years ended
December 31, 1999 and 1998 is derived from our audited financial statements. See
"Financial Statements" and "Management's Discussion and Analysis or Plan of
Operation".
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Year Ended December 31,
-----------------------
For the nine
months ended
September 30, 1999 1998
2000 ---- ----
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Revenues $ - $ - $ -
Operating expenses $ 467,269 $ 485,989 $ 139,522
Net (loss) $ (655,805) $ (630,327) $ (139,522)
Net (loss) per share $ (0.02) $ (0.02) $ (0.01)
September 30, 2000 December 31, 1999
------------------ -----------------
Working capital (deficit) $ (34,324) $ (389,771)
Total assets $ 375,857 $ 94,480
Current liabilities $ 397,265 $ 472,702
Stockholders' (deficit) $ (120,635) $ (378,222)
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RISK FACTORS
An investment in our common stock is highly speculative and involves a
high degree of risk. Therefore, you should consider all of the risk factors
discussed below, as well as the other information contained in this document.
You should not invest in our common stock unless you can afford to lose your
entire investment and you are not dependent on the funds you are investing.
Please note that throughout this prospectus, the words "we", "our" or
"us" refer to ICOA, Inc. and WebCenter Technologies, Inc. and not to the selling
stockholders.
WE REQUIRE ADDITIONAL FUNDS TO ACHIEVE OUR CURRENT BUSINESS STRATEGY
We need to raise additional funds through public or private debt or
sale of equity to:
o develop and establish our communications services, voice,
facsimile, data and electronic publishing network and the
service operating center;
o produce working terminals; and
o develop and fund contracts at airports, hotels and retail
locations in order to place our terminals in strategic
positions. (See "Business")
Such financing may not be available when needed. Even if such financing
is available, it may be on terms that are materially adverse to your interests
with respect to dilution of book value, dividend preferences, liquidation
preferences, or other terms.
If we are unable to obtain financing on reasonable terms, we could be
forced to delay, scale back or eliminate certain product and service development
programs. In addition, such inability to obtain financing on reasonable terms
could have a material adverse effect on our business, operating results, or
financial condition to such extent that we are forced to restructure, file for
bankruptcy, sell assets or cease operations, any of which could put your
investment dollars at significant risk. See "Management's Discussion and
Analysis or Plan of Operations."
We have entered into financing agreements that contain certain
restrictions on future financing, which could have a materially adverse effect
on our ability to raise the needed additional funds: for 180 days after the
effectiveness of the registration statement of which this prospectus is a part,
we are restricted from obtaining financing through the issuance of equity,
convertible debt or other securities which are or could be (by conversion or
registration) free-trading securities (See "The August 2000 Financing --
Subscription Agreements").
WE HAVE LOST, AND MAY CONTINUE TO LOSE, MONEY AND IF WE DO NOT ACHIEVE
PROFITABILITY WE MAY NOT BE ABLE TO CONTINUE OUR BUSINESS
Through September 30, 2000, we have generated no revenues from
operations, have incurred substantial expenses and have sustained losses. We
have incurred a net loss of $663,154 for the year
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ended December 31, 1999. Additionally, we have incurred a net loss of $591,691
for the nine-month period ended September 30, 2000. Losses have resulted
principally from costs incurred in connection with developing our public access
multimedia terminals and services aimed at developing our business activities
and from costs associated with our administrative activities. We expect to incur
additional losses for the remainder of this year and next year.
In addition, we expect to continue to incur significant operating
expenses. As a result, we will need to generate significant revenues to achieve
profitability, which may not occur. We expect our operating expenses to increase
significantly as a result of our planned expansion. Since we have not yet
completed developing our public access multimedia terminals and we have no
operating history of marketing our services to the public using our terminals,
we cannot assure you that our business will be profitable or that we will ever
generate sufficient revenues to meet our expenses and support our anticipated
activities. Even if we do achieve profitability, we may be unable to sustain or
increase profitability on a quarterly or annual basis in the future.
We expect to have quarter to quarter fluctuations in revenues,
expenses, losses and cash flow, some of which could be significant. Results of
operations will depend upon numerous factors, some of which are beyond our
control, including regulatory actions, market acceptance of our products and
services, new product and service introductions, and competition. These
conditions raise substantial doubt about our ability to continue as a going
concern. See "Selected Financial Data" and "Management's Discussion and Analysis
or Plan of Operations."
ASSUMING WE RAISE SUBSTANTIAL FUNDS, WE DON'T KNOW IF OUR NEW PUBLIC ACCESS
MULTIMEDIA TERMINALS WILL BE SUCCESSFULLY DEVELOPED BY US OR WILL BE PROFITABLE
We have completed the design phase for a central network and service
operations center, WebCentral(TM), and a multi-functional terminal device, the
"WebCenter3000(TM)." We plan to complete the development of WebCentral(TM) and
WebCenter3000(TM) by the third quarter of 2001. The WebCenter 3000(TM) is
expected to offer broadband connectivity taking advantage of Internet Protocol
technology to provide voice, fax and data services. WebCentral(TM) will
dynamically control the entire network of terminals, managing the delivery of
services and content throughout each session. We plan to establish ourselves as
the dominant brand by owning and operating 10,000 terminals in strategic
locations, hosting 250,000 user sessions daily. Revenue from our terminals
depend on placement of the terminals, usage and especially advertiser support.
Although we intend to devote, and are devoting, significant personnel
and financial resources to research and development activities, we cannot assure
you that we will successfully complete the development of WebCentral(TM)and the
WebCenter3000(TM) in our planned time frame, that we will be able to develop
WebCenter 3000(TM) at the cost forecast in our business plan, that we will be
able to place our terminals in strategic locations such as airports, malls, and
retail stores, that customers will use the terminals, or that we will receive
revenue from advertising. Consequently, we may never realize any benefits from
such research and development activities. Our ability to achieve and sustain
profitability depends on our ability to successfully develop commercially
profitable products.
OUR INDEPENDENT AUDITORS HAVE ISSUED A REPORT WHICH MAY HURT OUR ABILITY TO
RAISE ADDITIONAL FINANCING AND THE PRICE OF OUR COMMON STOCK
The report of our independent auditors on our financial statements for
the year ended December 31, 1999 and for the nine-month period ended September
30, 2000 contains an explanatory paragraph which indicates that we have incurred
losses and have a working capital deficiency. This report raises
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substantial doubt about our ability to continue as a going concern. This report
may make it more difficult for us to raise additional debt or equity financing
needed to run our business and is not viewed favorably by analysts or investors.
We urge potential investors to review this report before making a decision to
invest in our company.
IF WE ARE UNABLE TO BECOME ELIGIBLE FOR LISTING ON THE NASDAQ OTC BULLETIN BOARD
OR ANY OTHER PRINCIPAL TRADING EXCHANGE OR MARKET, THE MARKET PRICE OF OUR STOCK
COULD BE ADVERSELY AFFECTED
Our common stock is currently quoted in the National Quotation Bureau
"Pink Sheets." There can be no assurances that we will ever meet the
requirements needed to be listed on the NASDAQ OTC bulletin board or any other
principal trading exchange or market. Being listed on the NASDAQ OTC Bulletin
Board or any other principal trading exchange or market for our common stock is
a condition for exercising put options pursuant to our subscription agreement.
If we do not meet this requirement then we may not be able to exercise our put
options which could force us to delay, scale back or eliminate certain product
and service development programs, which could have a material adverse effect on
our business, operating results, or financial condition to such extent that we
are forced to restructure, file for bankruptcy, sell assets or cease operations,
any of which could put your investment dollars at significant risk.
IF WE DEFAULT ON THE PAYMENT OF CERTAIN NOTES, IT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, OPERATING RESULTS, OR FINANCIAL CONDITION
On August 28, 2000 we issued $500,000 worth of convertible notes to
certain investors. See "The August 2000 Financing -- Subscription Agreements".
All principal and interest due on the outstanding notes become immediately due
and payable on August 28, 2003 or earlier in the event of a default. Defaulting
on the notes could have a material adverse effect on our business, operating
results, or financial condition to such extent that we are forced to
restructure, file for bankruptcy, sell assets or cease operations, any of which
could put your investment dollars at significant risk. See "Management's
Discussion and Analysis or Plan of Operations".
WE HAVE 57,900,000 SHARES OF OUR COMMON STOCK RESERVED FOR FURTHER ISSUANCES
WHICH CAN SUBSTANTIALLY DILUTE THE VALUE OF YOUR ICOA COMMON STOCK
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our common stock. As of November 17, 2000, we had 50,400,000 shares of
common stock reserved for possible future issuances upon conversion of warrants
and notes. In addition, we have reserved an aggregate of 7,500,000 shares of
common stock for issuance to employees, officers, directors and consultants
pursuant to, and contingent upon the approval by our stockholders of, our 2000
Stock Option Plan. See - "2000 Stock Option Plan".
The exercise and conversion terms of our outstanding and issuable
options, warrants and notes may cause substantial dilution in the book value per
share of our common stock. Because of the conversion features in the notes and
the terms upon which related warrants will be issued, the note holders will
receive a greater number of shares of common stock after conversion if our
common stock price decreases. If the selling stockholders convert their notes or
exercise their warrants and then sell our common stock, the common stock price
may decrease due to the additional shares in the market. This could allow the
selling stockholders to convert their remaining notes into greater amounts of
common stock, the sales of which would further depress the stock price.
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The significant downward pressure on the price of the common stock
could encourage short sales, if short sales of our stock were permitted, and
consequently place further downward pressure on the price of our common stock
(See "Dilution").
"BUGS" IN OUR HARDWARE AND SOFTWARE AND THAT OF THIRD PARTIES, "VIRUSES", AND
OTHER DISRUPTIONS COULD BE COSTLY AND COULD DELAY OUR ENTRY INTO THE MARKET
The hardware and software that we expect to use in our terminals
commonly experience errors, or "bugs," during development and may experience
bugs subsequent to commercial introduction. We don't know if all the potential
problems will be identified, and that any bugs that are located can be corrected
on a timely basis. Any such errors could delay the commercial introduction or
use of our products. Remedying such errors could be costly and time consuming.
Furthermore, bugs involving the proprietary software of third parties could
require the redesign of our anticipated proprietary software. Delays in
debugging or modifying our products could delay our entry into the market and
affect our competitive edge with respect to existing and new technologies and
products offered by our competitors.
Despite the security measures, the core of the infrastructure of our
network is vulnerable to computer virus attacks and other disruptive problems.
In the past, we and our Internet access providers have experienced, and may in
the future experience, interruptions in service as a result of the accidental or
intentional actions of Internet users, employees or others. Eliminating computer
viruses may require interruptions, delays or cessation of service to our
customers which could have a material negative effect on our financial condition
and results of operations.
IF OUR EXISTING TECHNICAL AND OPERATIONAL SYSTEMS FAIL, WE COULD EXPERIENCE
INTERRUPTIONS OR DELAYS IN OUR SERVICE OR DATA LOSS WHICH COULD NEGATIVELY
AFFECT OUR BUSINESS
Our systems and operations are vulnerable to damage or interruption
from telecommunications failure, power loss, break-ins, vandalism, fire, flood,
earthquakes and similar events. Despite the precautions we take, the occurrence
of a natural disaster or other unanticipated problems at our network operations
center or terminals could cause interruptions in the services we provide. In
addition, there could be interruptions in the services we provide if our
telecommunications providers fail to provide the data communications capacity we
require as a result of a natural disaster, operational disruption or for any
other reason. Any damage or failure that causes interruptions in our operations
could have a material negative effect on our business, financial condition and
results of operations which could negatively affect our business.
WE COULD BE LIABLE FOR THE UNAUTHORIZED USE OF OUR INFORMATION AND INJURIES TO
TERMINAL USERS AND COULD LOSE BUSINESS WHILE TRYING TO REMEDY THE PROBLEMS
Unauthorized use could jeopardize the security of confidential
information stored in our computer systems and in the computer systems of our
customers, which may result in us being liable to our customers and also may
deter potential users. Although we intend to continue to implement
industry-standard security measures, such measures have been circumvented in the
past, and we cannot assure you that measures we implement will not be
circumvented in the future. Alleviating other security problems may require
interruptions, delays or cessation of service to our customers which could have
a material negative effect on our financial condition and results of operations.
Although we believe it is unlikely, users of our terminals may seek to hold us
liable for injuries allegedly incurred in connection with using them.
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WE HAVE MANY COMPETITORS WHICH HAVE SIGNIFICANTLY GREATER FINANCIAL, TECHNICAL,
SALES AND MARKETING RESOURCES THAN WE DO AND THESE COMPETITORS MAY NEGATIVELY
AFFECT OUR BUSINESS
Once we introduce our products and services into the market place, we
anticipate experiencing significant competition from different sources for our
different services. We compete with companies that offer terminals that provide
e-mail and Internet services or pay station terminals with standard phone and
fax features. For example, our Internet terminal business may compete with
numerous companies, including TelWeb Inc. (recently purchased by Schlumberger),
Aerzone (formerly Laptop Lane which was recently purchased by SoftNet Systems,
Inc.) and CAIS Internet, which have been in the business far longer than us. Our
potential customers, namely airports, telephone companies, hotels, convention
centers, malls, and retail food and drug stores, may also become our competitors
by developing their own products or offering themselves the services that we
intend to provide. Many of such competitors have resources far greater than
ours.
Although we believe that our terminals, WebCentral(TM), and
WebCenter3000, will be competitive products, we cannot assure you that these or
other companies with far greater resources than ours might enter the field
sooner than we do and negatively affect our business prospects in this market.
THE MARKETS ARE CONTINUOUSLY AND RAPIDLY CHANGING AND IF WE DON'T KEEP UP, IT
WOULD ADVERSELY AFFECT OUR BUSINESS
The markets we serve experience rapid technological change, changing
customer requirements, frequent new product introductions and evolving industry
standards that may render existing products and services obsolete. If we do not
introduce our product into the market within 6 months, within 18 months our
window of opportunity to dominate the market may significantly diminish and more
advanced products produced by our competitors could erode our position in our
markets.
Additionally, it is difficult to estimate the life cycles of our
products and services. Our future success will depend, in part, upon our ability
to develop new products and services on a timely basis. Also, our products and
services must keep pace with technological developments, and conform to evolving
industry standards, particularly client/server and Internet communication and
security protocols and publishing formats. We also must address increasingly
sophisticated customer needs. We might experience difficulties that could delay
or prevent the successful development, introduction and marketing of our
products and services. If this happens, it would materially and negatively
affect our financial condition and results of operations.
PROBLEMS WITH THE INTERNET MAY ADVERSELY AFFECT OUR INTERNET-RELATED PRODUCT
Sales of our Internet-related products and services will depend in
large part upon the growth of the Internet industry. We depend on a robust
Internet industry and infrastructure for providing commercial Internet access
and carrying Internet traffic, and we depend on increased commercial use of the
Internet.
SINCE WE DEPEND UPON COMMON CARRIERS AND INTERNET ACCESS PROVIDERS, OUR
PROFITABILITY MAY BE NEGATIVELY AFFECTED IF THEIR FEES EXCEED OUR BUSINESS MODEL
PROJECTIONS OR IF THEY FAIL TO PROVIDE THE REQUIRED SERVICE
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We will depend on various regulated common carriers and unregulated
Internet access providers, to provide services including telephone lines, and
Internet lines. Our service or profitability could be materially and negatively
affected if such carriers or providers:
o charge fees that exceed our business model projections;
o cannot timely respond to our requirements for service, or
o fail to provide reliable service.
SINCE OUR SUCCESS DEPENDS UPON THE EFFORTS OF KEY MEMBERS OF OUR MANAGEMENT AND
OUR EMPLOYEES, OUR FAILURE TO RETAIN MANAGEMENT MEMBERS OR EMPLOYEES WILL
NEGATIVELY AFFECT OUR BUSINESS
Our business is greatly dependent on the efforts of our executive
officers and key employees, and on our ability to attract key personnel. In
particular, our future success is dependent upon the personal efforts of our
founder, George Strouthopoulos, Chief Executive Officer.
Also, success will depend in large part upon our ability to attract,
develop, motivate and retain highly skilled technical employees. Competition for
qualified personnel is intense and we may not be able to hire or retain
qualified personnel. The loss of some or all of our project managers and other
senior personnel could have a materially adverse impact on us. As of the date of
this prospectus, we have not entered into employment agreements with any of our
officers or employees.
OUR QUARTERLY OPERATING RESULTS MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND
OUR STOCK PRICE MAY BE VOLATILE
Our quarterly revenues and operating results are difficult to predict
and may fluctuate significantly from quarter to quarter. At our current level of
operations, most of our expenses are relatively fixed. As a result, any
shortfall in revenues relative to our expectations could cause a significant
decline in our quarterly operating results. If we do not meet the expectations
of investors and analysts in a given quarter, our common stock price could
decline. Fluctuations in our common stock price may be exaggerated if the
trading volume of our common stock is low. In addition, due to the
technology-intensive nature of our business, the market price of our common
stock may fall, or rise, in response to:
o announcements of technological or competitive developments;
o acquisitions or strategic alliances by us or our competitors;
o the gain or loss of a significant percentage of market share ;
o our ability to obtain supplies of sole or limited source
components;
o our ability to make changes in our network infrastructure
costs, as a result of demand variation or otherwise; and
o and the lengthening of our sales cycle due to expansion and
the timing of the expansion of our network infrastructure.
Variations in the timing and amounts of revenues and costs could have a
materially negative effect on our quarterly operating results.
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IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY ADEQUATELY, WE COULD LOSE
OUR COMPETITIVE ADVANTAGE
Our success and ability to compete is dependent on our proprietary
technology. We regard our technology as proprietary and we rely primarily on
U.S. patent, trademark, copyright, trade secret laws, third-party non-disclosure
agreements and other methods to protect our proprietary rights.
We intend applying for copyright, or other forms of, protection for our
proprietary technology. There can be no assurance that such applications will be
allowed or even if such applications are allowed that others will not develop
technologies that are similar or superior to our technology. The steps we intend
taking to protect our other proprietary rights may not be adequate and third
parties may infringe or misappropriate our copyrights, trade marks, and similar
proprietary rights. Additionally, effective trademark, patent, copyright and
trade secret protection may not be available in every country in which our
products and media will be distributed or made available through the Internet.
Litigation may be necessary in the future to enforce our proprietary
rights, or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material negative effect on our business, operating results or
financial condition.
Certain technology used in our products or services is licensed or
leased from third parties, generally on a nonexclusive basis. While the licenses
involved are primarily "shrink wrap licenses" - that is, licenses available to
anyone who purchases publicly available software programs in the event any of
these licenses or leases is terminated or in the event the underlying programs
are discontinued, our operations may be materially negatively affected.
Replacement of certain technologies which we license or lease could be costly
and could result in product delays which would materially and negatively affect
our operating results.
WE FACE POTENTIAL RISK OF LIABILITY DUE TO FUTURE REGULATION OF THE INTERNET
ACCESS INDUSTRY
We are currently not subject to direct regulation by the Federal
Communications Commission or any other agency, other than regulations applicable
to businesses generally and businesses doing business with governmental
agencies.
Changes in the regulatory environment relating to the Internet access
industry could have a negative effect on our business. Due to the increase in
Internet use and publicity, it is possible that laws and regulations may be
adopted with respect to the Internet, including with respect to privacy, pricing
and characteristics of products or services. We cannot predict the impact, if
any, that future laws and regulations or legal or regulatory changes may have on
our business.
The law relating to the liability of on-line services companies and
Internet access providers for information carried on or disseminated through
their systems is currently unsettled. Parties have instituted several private
lawsuits seeking to impose such liability upon on-line services companies and
Internet access providers. In addition, there is proposed legislation which
would impose liability for or prohibit the transmission on the Internet of
certain types of information and content. We may be exposed to such potential
liability in the event we were to make services such as the one offered through
our public access terminals available over the Internet. Although we carry
insurance, it may not be adequate to compensate us in the event we become liable
for information carried on or disseminated through our systems.
-9-
<PAGE>
OUR FAILURE TO RETAIN SUBCONTRACTORS WOULD RESULT IN COSTS AND DELAYS AND WOULD
ADVERSELY AFFECT OUR BUSINESS
We are responsible for the design of our public access terminals.
Subcontractors are responsible for the engineering and manufacturing of their
hardware and graphical components. Only a limited number of public access
terminals have been built offering the service combination we are proposing, so
it is difficult for us to predict if our current subcontractors will be able to
engineer and produce such terminals on a satisfactory basis. While we believe
that we could arrange to have public access terminals built by other
subcontractors on comparable terms, we would experience costs and delays if we
needed to do so. Our future success will depend in part on our ability to retain
subcontractors and maintain good relationships with them, because we need to
assure the timelines and quality of the manufacture of our public access
terminals.
OUR STOCK IS THINLY TRADED AND MAY EXPERIENCE PRICE VOLATILITY
Our common stock currently is quoted in the National Quotation Bureau
"Pink Sheets." The trading volume of our common stock historically has been
limited, and there can be no assurance that an active public market for our
common stock will be developed or sustained. In addition, trading in our
securities is subject to the "penny stock" rules (See "Penny stock rules may
make buying or selling our common stock difficult"). The trading price of our
common stock in the past has been, and in the future could be, subject to wide
fluctuations. These fluctuations may be caused by a variety of factors,
including the following:
o quarterly variations in our operating results;
o actual or anticipated announcements of new products or services by us
or our competitors;
o changes in analysts' estimates of our financial performance;
o general conditions in the markets in which we compete; and
o worldwide economic and financial conditions.
The stock market in general also has experienced extreme price and
volume fluctuations that have particularly affected the market prices for many
rapidly expanding companies and often have been unrelated to the operating
performance of such companies. These broad market fluctuations and other factors
may adversely affect the market price of our common stock.
"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR COMMON STOCK DIFFICULT
Trading in our securities is subject to the "penny stock" rules. The
SEC has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who recommends
our securities to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market. In addition, broker-dealers must disclose commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities they offer. The additional burdens imposed upon
broker-dealers by such requirements
-10-
<PAGE>
may discourage broker-dealers from effecting transactions in our securities,
which could severely limit their market price and liquidity.
FUTURE SALES OF SHARES BY GEORGE STROUTHOPOULOS, OUR CHIEF EXECUTIVE OFFICER AND
PRESIDENT, COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
There are approximately 40,280,607 shares of our common stock
outstanding, of which approximately 9,383,033 shares are held beneficially by
Mr. Strouthopoulos. Mr. Strouthopoulos will be able to sell these shares in the
public markets from time to time, subject to certain limitations on the timing,
amount and method of such sales imposed by SEC regulations. If Mr.
Strouthopoulos were to sell a large number of shares, the market price of our
common stock could decline significantly. Moreover, the perception in the public
markets that such sales by Mr. Strouthopoulos might occur could also adversely
affect the market price of our common stock.
CONTROL BY GEORGE STROUTHOPOULOS COULD PREVENT A CHANGE OF CONTROL OF OUR
COMPANY AND MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
George Strouthopoulos, individually, and through a related entity, owns
approximately 23.3% of our common stock. Accordingly, for as long as Mr.
Strouthopoulos continues to beneficially own a controlling interest in our
common stock, he will be able to exercise a significant amount of influence over
our management and operations. This concentration of ownership could have the
effect of preventing us from undergoing a change of control in the future and
might affect the market price of our common stock.
CERTAIN PROVISIONS OF NEVADA LAW WHICH COULD MAKE A TAKEOVER MORE DIFFICULT
COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK OR DEPRIVE YOU OF A
PREMIUM OVER THE MARKET PRICE
The laws of Nevada (the state in which we are incorporated) contain
provisions that might make it more difficult for someone to acquire control of
us in a transaction not approved by our board of directors. These provisions
could also discourage proxy contests and make it more difficult for you and
other stockholders to elect directors other than the candidates nominated by our
board of directors. The existence of these provisions could adversely affect the
market price of our common stock.
Although such provisions do not have a substantial practical
significance to investors while Mr. Strouthopoulos controls us, such provisions
could have the effect of depriving stockholders of an opportunity to sell their
shares at a premium over prevailing market prices should Mr. Strouthopoulos'
combined voting power decrease to less than a controlling interest.
THE FUTURE SUCCESS OF OUR ON-LINE BUSINESS WILL DEPEND ON THE CONTINUED
DEVELOPMENT AND MAINTENANCE OF THE INTERNET INFRASTRUCTURE
The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. Our
future success will depend upon the development and maintenance of the
Internet's infrastructure to cope with this increased traffic. This will require
a reliable network backbone with the necessary speed, data capacity and
security, and the timely development of complementary products, such as high
speed modems, for providing reliable Internet access and services. Many Internet
service providers, which provide our customers with access to the Internet, and
other suppliers of Internet systems and components have experienced a variety of
outages and other delays as a result of damage to portions of their
infrastructure and other technical problems and could face similar outages and
delays in the future. Such outages and delays are likely to affect the level of
Internet usage
-11-
<PAGE>
and the processing of transactions on our web site and are not within our
control. In addition, the Internet could lose its viability due to delays in the
development or adoption of new standards to handle increased levels of activity
or due to increased government regulation. The adoption of new standards or
government regulation may require us to incur substantial data processing
development and compliance costs.
BECAUSE WE RELY ON ENCRYPTION TECHNOLOGY OUR BUSINESS IS VULNERABLE TO SECURITY
RISKS WHICH MAY COMPROMISE OUR CUSTOMER TRANSACTION DATA
A significant barrier to Internet commerce is the secure transmission
of confidential information over public networks. We rely on third-party
encryption and authentication technology to facilitate secure transmission of
confidential information. We cannot assure you that advances in computer and
cryptography capabilities or other developments will not result in a compromise
of the algorithms we use to protect customer transaction data.
WE DO NOT EXPECT TO PAY DIVIDENDS AND INVESTORS SHOULD NOT BUY OUR COMMON STOCK
EXPECTING TO RECEIVE DIVIDENDS
We have not paid any dividends on our common stock in the past, and do
not anticipate that we will declare or pay any dividends in the foreseeable
future. Consequently, you will only realize an economic gain on your investment
in our common stock if the price appreciates. You should not purchase our common
stock expecting to receive cash dividends.
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements involve certain known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. These factors include, among others, the factors set forth above
under "Risk Factors." The words "believe," "expect," "anticipate," "intend" and
"plan" and similar expressions identify forward-looking statements. We caution
you not to place undue reliance on these forward-looking statements. We
undertake no obligation to update or revise any forward-looking statements or to
publicly announce the result of any revisions to any of the forward-looking
statements in this document to reflect future events or developments.
USE OF PROCEEDS
The selling stockholders are selling all of the shares of common stock
covered by this prospectus for their own account. Accordingly, we will not
receive any of the proceeds from the resale of these shares. We may receive
proceeds from the exercise of the warrants and the sale of the notes. We expect
to use such net proceeds, if any, for general corporate purposes. We have agreed
to bear the expenses relating to the registration of the shares, other than
brokerage commissions and expenses, if any, which will be paid by the selling
stockholders.
-12-
<PAGE>
MARKET PRICE OF OUR COMMON STOCK
Our common stock is quoted in the National Quotation Bureau "Pink
Sheets", under the symbol "ICOA". As of November 16, 2000, we had 40,280,607
shares of common stock outstanding held by 763 stockholders of record.
The following table sets forth the range of high and low bid prices of
our common stock for the fiscal quarters of 1998, 1999 and 2000 (as of November
16, 2000).
<TABLE>
<CAPTION>
YEAR QUARTER HIGH LOW
------------------- ---------------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
2000 4 .102 .080
3 .190 .060
2 .190 .050
1 .200 .040
------------------- ---------------------------------- -------------------------- -------------------------
1999 4 .160 .020
3 .350 .081
2 .875 .100
1 .360 .030
------------------- ---------------------------------- -------------------------- -------------------------
1998 4 .180 .010
3 .093 .010
2 .187 .040
1 .150 .045
</TABLE>
DIVIDENDS
We have never paid a cash dividend on our common stock. It is our
present policy to retain earnings, if any, to finance the development and growth
of our business. Accordingly, we do not anticipate that cash dividends will be
paid until our earnings and financial condition justify such dividends, and
there can be no assurance that we can achieve such earnings.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is our plan of operation for the following 12 months, and
should be read in conjunction with our financial statements and notes thereto
appearing in this prospectus.
We are a development stage company in the process of building an
automated network of interactive Internet pay stations with addressable video
advertising displays. The products and services that we intend to offer are
described in the "Business" description. We have generated no revenues, and the
report of our independent auditors on our financial statements as of September
30, 2000 and December 31, 1999 contains an explanatory paragraph regarding an
uncertainty with respect to our ability to continue as a going concern.
During the next 12 months, we expect to spend an estimated $2,000,000
to manufacture a prototype pay station terminal and, upon completion of the
prototype, several pay station terminals which we intend sending to various
certification agencies for approval. We expect that this effort will culminate
in "production ready" drawings and manufacturing specifications which we intend
using to
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<PAGE>
manufacture the pay station terminals. The final manufacturing and deployment of
the pay station terminals will require an estimated $2,200,000 for the first 220
units.
Throughout the next 12 months, we expect to develop our network and
service operations centers. We expect that this development effort will result
in the creation of an operational environment under which the pay station
terminals will operate.
In conjunction with the development effort described above, we will
either outsource or construct the network which will support the pay station
terminals. This network will require servers and co-location facilities, in
addition to backup and redundant sites.
As we develop our business, we expect to employ additional people in
accordance with our business plan. However, where appropriate, we intend to
outsource functions such as repair, installation, and networking.
We raised $450,000 (net of expenses) in connection with the August 2000
financing. Pursuant to the terms of that financing, we can require the investors
to purchase convertible notes totaling $9,500,000. The conditions for these
additional investments include:
o various minimum price and trading volume requirements;
o we need to be a reporting company under the Securities Exchange Act of
1934, as amended;
o our shares must be registered on the OTC Bulletin Board or other
principal market; and
o a registration statement, of which this prospectus forms a part, must
be effective.
We intend to meet our long-term liquidity needs through available cash
and cash flow as well as through additional financing from outside sources. We
anticipate that our existing working capital will be sufficient to fund our
operations at least through February 28, 2001. Continuing operations thereafter
will depend on cash flow from operations and the ability to obtain additional
funds from the August 2000 financing which is subject to certain conditions (as
discussed above), and to raise additional funds through equity, debt or other
financing. There can be no assurance, however, that such funds will be available
or that we will meet the further funding conditions of the August 2000
financing. If we are not successful in raising additional funds, we might be
forced to delay, scale back or eliminate certain product and service development
programs or cease operations altogether. See "Risk Factor - -We require
additional funds to achieve our current business strategy."
THE AUGUST 2000 FINANCING
The agreements and instruments relating to the rights and obligations
of the securities issued in the August 2000 financing are filed as exhibits to
the registration statement, of which this prospectus forms a part. We urge you
to read them in their entirety.
SUBSCRIPTION AGREEMENTS
On August 28, 2000, under the terms of each of the subscription
agreements between us and each of the investors referred to therein, we sold
$500,000 in 9% convertible notes and agreed to issue warrants, when the notes
are converted, to purchase up to a number of shares of our common stock equal to
12% of the number of shares of our common stock issued upon conversion of the
notes. Our notes
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<PAGE>
were issued in reliance on the exemptions from registration provided by
Regulation S of the Securities Act of 1933, as amended.
For 180 days after the effectiveness of this registration statement, we
are restricted from issuing any equity, convertible debt or other securities
which are or could be, by conversion or registration, free-trading securities,
except for the following issuances, among others:
o equity or debt issued in connection with us acquiring a business or
assets; or
o stock issued in connection with us establishing a joint venture, a
partnership or creating a licensing arrangement.
o up to 8,333,333 common stock purchase warrants in connection with any
equity or debt financing for not less than $500,000 of gross proceeds,
under certain conditions involving minimum exercise prices and minimum
waiting periods before the common stock issuable upon exercise becomes
freely tradable.
Each investor was granted a right of first refusal to purchase the same
number of shares, on the same terms, as any other issuance by us (except in
certain circumstances as set forth in the subscription agreements) until 180
days after the registration statement, of which this prospectus forms a part, is
declared effective.
LIMITATION ON THE INVESTORS' OWNERSHIP OF OUR SHARES
----------------------------------------------------
Notwithstanding the foregoing, we cannot require an investor to
purchase notes convertible into shares of our common stock, permit an investor
to convert its notes into shares of our common stock, or permit a warrant holder
to exercise its warrants, if it would result in such investor owning more than
4.99% of all of our common stock, as would be outstanding on that purchase date,
conversion date or exercise date, when aggregated with all other shares of
common stock then owned by that investor beneficially or deemed beneficially
owned by that investor, including shares of common stock into which such notes
are convertible, as determined in accordance with Section 16 of the Exchange
Act. However, an investor may waive the conversion limitations after giving us
75 days prior notice.
NO SHORT SELLING BY THE INVESTOR
--------------------------------
No investor may engage in short sales of our common stock, except as
provided in the agreement.
THE NOTES
The outstanding notes have a maturity date of three years from issuance
and are convertible into our common stock at a per share price determined at the
time of conversion, equal to the lower of:
o $.04933, or
o 70% of the average of the three lowest closing bid prices for our
common stock for the 60 trading days preceding the conversion date.
If, however, the notes have not yet been converted as of their maturity
date, the holder will have the option of converting the notes at a price equal
to 78% of the average of the 3 lowest closing bid prices of the common stock
during the 10 trading days preceding the maturity date.
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<PAGE>
Under the terms of the subscription agreements, we have the option,
subject to certain conditions, of requiring the investors to purchase additional
convertible put notes totaling $9,500,000 in a series of puts issued not more
frequently than once in each 30-calendar day period during a span of 3 years
beginning with the effectiveness of the registration statement of which this
prospectus forms a part. The conditions for these additional investments
include:
o various minimum price and trading volume requirements;
o we need to be a reporting company under the Securities Exchange Act of
1934, as amended;
o our shares must be registered on the OTC Bulletin Board or other
principal market; and
o the registration statement, of which this prospectus forms a part, must
be effective.
The terms of these convertible put notes are the same as the notes
issued to the investors at the closing, except that the maturity date of the put
notes is 3 years from the date that the put notes are issuable, and except for
the conversion price of the put notes. The conversion price of the put notes
having an aggregate value of $500,000 will be the lower of:
o 80% of the average of the 3 lowest closing bid prices of the common
stock during the 30 trading days prior to the closing date for purchase
of the put notes, and
o 70% of the average of the 3 lowest closing bid prices of the common
stock during the 60 trading days prior to the date of conversion of the
related put note.
The conversion price of the remainder of the put notes having an
aggregate value of $9,000,000 will be:
o 72% of the average of the 3 lowest closing bid prices of the common
stock for the 15 trading days prior to the date of conversion of the
related put note, subject to an increase of up to 80% if we meet
specified targets for trading volume and average closing bid price of
our common stock during 22-day look-back periods occurring a specified
number of months after the effective date of the registration
statement.
Under the terms of the subscription agreements, we are required to file
a registration statement registering 45,000,000 shares of our common stock, of
which at least 33,000,000 shares must be reserved for issuance upon conversion
of the notes and upon exercise of the warrants issuable in connection with the
notes; and the remainder of the shares may be reserved for issuance upon
conversion of the put notes and upon exercise of the warrants issuable in
connection with the put notes.
SUBSCRIPTION AGREEMENT WARRANTS
The warrants will be issued in connection with the conversion of the
notes ("initial warrants"), and put warrants will be issued in connection with
the conversion of put notes ("put warrants"). The initial warrants, once issued,
will be exercisable at an exercise price equal to $.07. The put warrants, once
issued, will be exercisable at an exercise price equal to the lowest bid price
of our common stock during the 10 trading days preceding the related put date.
The number of shares issuable upon exercise of the initial warrants and put
warrants will equal 12% of the number of shares issued upon conversion of the
related initial notes or put notes. The initial warrants and put warrants will
have a term of five years from the date of issuance.
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<PAGE>
Put warrants will also be issued at the end of each year, for a period
of three years, subject to certain conditions, if we do not require the
investors to purchase put notes worth certain amounts during such year. The
number of shares issuable upon exercise of these put warrants will be equal to
12% of the number of shares of common stock which would have been issued upon
conversion of the related put note, had we required the investors to purchase
such notes.
All of the warrants and put warrants have adjustment provisions for
standard dilution events including stock splits, stock dividends and similar
transactions.
FINDER'S FEES
On August 28, 2000, at the closing of this financing, we paid the
following fees: $50,000, which is 10% of the aggregate amount of the notes
purchased, of which $40,000 was paid to Alon Enterprises Ltd., and $10,000 was
paid to Libra Finance S.A. In addition, we agreed to pay finder's fees of 10% of
actual cash proceeds from the exercise of the warrants and put warrants to be
issued in connection with the conversion of the notes and put notes.
BUSINESS - OUR COMPANY
A SUMMARY OF WHAT WE DO
We are a development stage company in the process of building an
automated network of interactive pay station terminals with video advertising
displays. We plan to own and operate a communications services and electronic
publishing network by deploying public access multimedia terminals which will be
centrally managed from our network and service-operating center. The network
will satisfy the demand for Internet access and business services for people
"on-the-go". This network will provide traditional communication services, such
as telephone, e-mail, facsimile, copy and print; it will also provide e-commerce
services, such as advertising, shopping, and other transactional services, as
well as a platform for publishing a wide variety of information and electronic
fulfillment services. Since 1990, we funded development and distribution of
several generations of public access fax terminals known as GoFax.
OUR PRODUCTS AND SERVICES
We intend to place, own, and operate terminals in strategic, high
traffic areas, so we can reach consumers and earn revenue by offering services
from the following three categories:
TELECOMMUNICATIONS SERVICES
o Internet and e-mail access
o Local and long distance phone calls
o Laptop, palm and wireless connectivity
BUSINESS SERVICES
o Fax -- send and receive (real time or forward)
o Copy original documents
o Print (from laptop or other enabled portable device,
documents, Internet pages, or e-mail attachments)
E-COMMERCE SERVICES
o Passive advertising from attract mode
o Sponsorships of portal and directory services
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o Banner and other strategically placed advertising
o Click-through referrals
o Affiliate transactions and other client services
We intend to sell both telecommunication and business services directly
to the consumer. We also intend to introduce a passive advertising medium from
which we expect to derive advertising revenues based on exposures.
We intend to package content with support from strategic partners,
sponsors, service affiliates and third party content providers. Pages that we
develop will enable us to earn additional revenue from special relationships for
referral, click-through, transactional, and fulfillment activities, as well as
provide additional screen space for advertisement placements.
We intend to engage in referral or affiliate programs from which we
expect to earn substantial commissions for both delivering customers and
managing transactions: such as providing reservations (airline, hotel, car
rental, and restaurant), printing maps, and issuing tickets.
DEVELOPING OUR PAY STATION TERMINALS
In the first phase of development, we expect to manufacture a prototype
pay station terminal. We do not intend to manufacture the prototype ourselves;
instead, we expect to develop alliances with manufacturers and network
providers. Once the manufacturer is engaged, we expect to have a prototype
developed within 3 months. Thereafter, we intend to have several pay station
terminals developed in order to send to various certification agencies for
approval certification. Once we receive this approval, we will start having the
pay stations manufactured and deployed. We plan to place a minimum of 10,000 pay
station terminals in the marketplace within 5 years.
OUR TECHNOLOGY
Our technology approach is to develop and have manufactured pay station
terminals with full communications and multi-media capability. Very little in
the way of application programming will be resident on the remote terminal which
will allow for future growth and enhancements as service requirements evolve and
change.
Using "shrink-wrap" software which we intend customizing, our pay
station terminals will include such standard features as: phone; fax; copy;
print; and Internet and with advanced features such as: voice over Internet
protocol; fax over Internet protocol; streaming audio and video; as well as
provisioning for future enhancements like voice recognition. We intend to
provide a complete voice, fax, audio and video, and data-over-Internet solution
incorporating signal, network, telephony, and management processing software for
a comprehensive integrated suite of application services.
Terminals will be supported by WebCentral(TM), a unified management
solution which is intended to provide a fully integrated infrastructure designed
to manage the network and services from a centralized site. WebCentral(TM) is a
content-rich publishing, management, distribution, fulfillment, and bill
settlement system.
We will, as part of our development, create an "intuitive user
interface". Through this non-invasive entry screen, we intend to create a
relationship with our customers each time they visit a WebCenter pay station
terminal, regardless of its location.
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Assuming we obtain sufficient financing, we expect to spend
approximately $2,000,000 in the first six months to implement an operational
environment and field units. This involves the purchase of components and
software, the integration of the network, and the execution of the operational
programming. It also includes functionally testing terminals, finishing the
mechanical design and production tooling, receiving UL and FCC certifications,
and field-testing.
OUR STRATEGIES
Our deployment strategy is to capture the highest priority placements:
airports (especially in the pay phone banks), convention centers and the hotels
that surround these venues. We are primarily targeting business travelers.
Further deployment will target major retail locations and their affinity
programs.
As we acquire and queue for installation of our terminals, we intend to
establish local field service centers in each of the top 25 markets in major
metropolitan areas to both support and further capitalize on our local presence.
Beyond the basic services contemplated, our strategy is to leverage
these locations by publishing and packaging both local and national information
as well as transactional services deemed useful to their targeted audiences. We
expect that these e-commerce services will include affinity programs, pre-paid
telephone service, travel arrangements (airline ticketing, hotel and rental car
reservations, detailed maps, directories, etc.), shopping opportunities, bill
paying, money transfer and other electronic banking activities, as well as
universal messaging store and forward services.
REVENUES AND MARKETING
We are in the developmental stage of our pay station terminal business
and currently have no revenues.
We have developed a multi-faceted marketing plan to facilitate the
following objectives:
o acquire and retain strategic locations
o forge synergy partnerships with suppliers and location hosts o
attract and fulfill targeted users
o stimulate repeat usage and loyalty
o secure advertising and e-commerce sponsorship
o promote specialized services and unique features
o create industry awareness
We plan to acquire strategic locations for our pay station terminals
through an in-house sales and marketing department and a network of independent
contractors working on a commission basis.
Once our product is fully operational, we expect the following average
daily revenue per pay station terminal from our service mix at the various venue
installations:
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<TABLE>
<CAPTION>
------------------- -------------------------- --------------- ----------------- ------------ -------------------
VENUES COMMUNICATIONS SERVICE COMMERCE AVERAGE AVERAGE
------ -------------- ------- --------
Phone, E-mail Fax, Copy, Advertising, DAILY YEARLY
Internet Browsing Print Transactions TOTAL TOTAL
------------------- -------------------------- --------------- ----------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Airports $ 30 $ 25 $ 37 $ 92 $ 33,500
------------------- -------------------------- --------------- ----------------- ------------ -------------------
Hotels $ 17 $ 16 $ 18 $ 51 $ 18,500
------------------- -------------------------- --------------- ----------------- ------------ -------------------
Retailers $ 11 $ 10 $ 13 $ 34 $ 12,250
------------------- -------------------------- --------------- ----------------- ------------ -------------------
Others $ 14 $ 16 $ 21 $ 51 $ 18,500
------------------- -------------------------- --------------- ----------------- ------------ -------------------
</TABLE>
MARKETING TO LOCATIONS
We are attempting to enter into agreements with various airports and
convention centers to place our terminals in such locations.
As we secure each new airport or convention center, we will concentrate
our local marketing efforts on the surrounding hotels. Concurrently, we will
initiate placement campaigns to retail drug and food chains, as well as malls to
provide hosting services for affinity programs and a complimentary e-commerce
platform.
We will offer location hosts the option to create customized content
and targeted presentations to reach their customers and enhance relationship
marketing efforts.
MARKETING TO END-USERS
Our approach to attracting new users and stimulating repeat business is
to strategically locate the terminals in high traffic areas in front of captive
audiences, and use the display screen to motivate usage by offering low-cost
services and free incentives. Rewards for continued usage, sweepstakes,
give-aways, coupons, discounted merchandise, free maps and concierge services
(ie. restaurant locations, reservations, etc.) are successful and commonly used
techniques.
ADVERTISING, PUBLICITY, TRADE SHOWS AND PROMOTIONS
We have developed a "marketing communications action plan" that
identifies a combination of programs including a selective print advertising
campaign, interviews and articles in key trade publications, and press
management to deliver our message to prospects.
We also intend to exhibit at significant industry trade shows including
those for airports, lodgings, and convention industries. We also expect to
develop and schedule promotional events for specific local markets to synergize
with ongoing installations. We will also seek co-branded national promotional
opportunities, as soon as we establish service in a critical number of markets.
INTERNATIONAL MARKETS
We have identified substantial offshore opportunities to install our
network of terminals. There is enormous demand in those areas most frequented by
international business travelers as well as countries with modest teledensities,
where traditional telephony and Internet access are not available to the average
consumer. In these instances, we intend to establish strategic alliances with
in-country business partners to install, maintain and operate a network
operations center, and/or service operation center facilities, as may be
appropriate.
-20-
<PAGE>
COMPETITION
Once we introduce our products and services into the market place, we
anticipate experiencing significant competition from various sources for our
different services. We compete with companies that offer terminals that provide
e-mail and Internet services or pay station terminals with standard phone and
fax features. For example, our Internet terminal business may compete with
numerous companies, including TelWeb Inc. (recently purchased by Schlumberger)
which has primarily concentrated on markets in Canada and Europe and has
announced plans to develop and maintain a centralized network control facility
to manage services for the owner operators deploying their units, Aerzone
(formerly Laptop Lane which was recently purchased by SoftNet Systems, Inc.) and
CAIS Internet, which have been in the business for far longer than us. Our
potential location providers, namely airports, telephone companies, hotels,
convention centers, malls, and retail food and drug stores, may also become our
competitors by developing their own products or offering services that we intend
to provide. Many of such competitors have resources far greater than ours.
Aerzone (formerly Laptop Lane which was recently purchased by SoftNet
Systems, Inc.) is a competitive business model which leases space in airports
and provides customers a 40 square-foot private workstation with walls, a door,
tabletop and chair. They are currently situated in 11 airports, and expect to
open 2 more this year. Moreover, SoftNet Systems, Inc. in association with CMGI,
Nokia, Compaq and Cisco are planning a wireless LAN for laptops and other mobile
communication devices for use in airports, hotels and convention centers. CAIS
Internet, with its acquisitions of iPORT and QuickATM, has recently announced a
somewhat similar strategy.
Below, is a brief overview highlighting several competitive products
and companies, with actual services offered as of the date of this prospectus as
far as we are aware (except for our services which are planned). The competitors
vary widely, from manufacturers of competitive units selling to owner operators
to companies vying for prime locations and operating their own kiosks.
<TABLE>
<CAPTION>
WEBCENTER 3000(TM) VS. COMPETITORS
--------------------------------------------------------------------------------------
F E A T U R E S
---------- --------- -------- --------- ----------- ---------- --------- -----------
E-MAIL NETWORK
MULTI-FEATURE PHONE FAX COPY PRINT & LAPTOP VIDEO OPERATING
PAYSTATIONS INTERNET ACCESS CENTERS
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
<S> <C>
WEBCENTER 3000(TM) YES YES YES YES YES YES YES YES
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
KING YES NO NO NO YES NO NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
GET2NET NO NO NO NO YES YES NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
ICOM YES NO NO YES YES NO NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
I-MAGIC YES NO NO NO YES YES NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
LAPTOP LANE YES YES YES YES YES YES NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
NET ACCESS NO NO NO NO YES NO NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
PAY NET / NETNEARU YES NO NO YES YES NO YES NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
CAIS/QUICKATM NO YES NO NO YES NO NO NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
TELWEB YES YES NO YES YES NO YES NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
TOUCHNET YES YES YES YES YES NO YES NO
----------------------- ---------- --------- -------- --------- ----------- ---------- --------- -----------
</TABLE>
-21-
<PAGE>
EMPLOYEES
We employ five people, four of whom are full-time employees. We expect
to employ additional people as we continue to implement our plan of operation.
None of our employees are covered by a collective bargaining agreement, and we
believe that our relationship with our employees is satisfactory.
DESCRIPTION OF PROPERTY
Our subsidiary, WebCenter leases, on a month to month basis,
approximately 2,200 square feet in a building located at 111 Airport Road,
Warwick, RI 02889. This lease may be terminated by either the landlord or us
with three months prior written notice.
LEGAL PROCEEDINGS
Fernando L. Sabino filed a complaint against us and George
Strouthopoulos, our Chief Executive Officer, alleging that we failed to redeem
200,000 shares of our common stock pursuant to a stock purchase agreement
between him and us dated June 24, 1997. In October, 1999, judgment was entered
against us with fees totaling $58,300. In October 2000, we entered into a
settlement agreement with Mr. Sabino which includes the following terms: we will
pay Mr. Sabino $5,000 per month, commencing October 2000 through August 2001,
and we will pay a final payment of $3,300 on September 2001; Mr. Sabino has
agreed to stay execution on the judgment until the settlement is fully repaid or
credited from Mr. Sabino's sale, if any should occur, of the shares of our
common stock which are the subject of the claim.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information about our executive officers
and directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C>
George Strouthopoulos 58 Chief Executive Officer, President and Director
Erwin Vahlsing, Jr. 44 Chief Financial Officer, Treasurer, Secretary and
Director
William P. Lord 43 President, WebCenter Technologies Inc.
Jeffrey S. Holub 53 Vice President of Information Technologies, WebCenter
Technologies, Inc.
</TABLE>
GEORGE STROUTHOPOULOS is our Chief Executive Officer and President. Mr.
Strouthopoulos was appointed to our Board of Directors in 1991. He has served as
our Chief Executive Officer and President since his appointment in 1991. From
1990 to 1997, Mr. Strouthopoulos was President of GoFax, Inc., our former
subsidiary.
-22-
<PAGE>
ERWIN VAHLSING, JR., is our Chief Financial Officer, Treasurer and
Secretary. Mr. Vahlsing was appointed to our Board of Directors in February of
1999. Mr. Vahlsing has served as our Chief Financial Officer and Treasurer since
his appointment in April of 1999 and has served as our Secretary since his
appointment in November of 2000. Since January 2000, Mr. Vahlsing has been a
Senior Partner in the management consulting firm of Carter and Vahlsing, CPA.
From 1998 to January 2000, Mr. Vahlsing was General Manager of Connect
Teleservices, LLC, a telemarketing company. From 1996 to 1998, Mr. Vahlsing
served as Senior Financial Analyst for Monarch Industries, an architectural
woodworking firm. During 1995, Mr. Vahlsing owned Ocean State Financial
Consulting, a financial consulting business. Mr. Vahlsing received his degree in
Accounting from the University of Connecticut, and an Masters in Business
Administration from the University of Rhode Island.
WILLIAM P. LORD is President of WebCenter Technologies, Inc., our
wholly-owned subsidiary. He has served as President since his appointment in
June 1999. From September 1997 until April 1999, Mr. Lord served as Vice
President of Strategic Marketing & Corporate Communications for U.S. Digital
Communications, a distributor of mobile satellite telephony solutions such as
Iridium, INMARSAT and MSAT. From 1987 to 1997, Mr. Lord was the President of
Lord Enterprises, Inc., a management and marketing consulting company.
JEFFREY S. HOLUB is Vice President of Information Technologies of
WebCenter Technologies, Inc., our wholly-owned subsidiary. Mr. Holub has held
this position since he started working with us in June 1999. From 1994 to 1999,
Mr. Holub owned an Internet consulting practice. Mr. Holub received his B.A. in
History from the University of Wisconsin.
BOARD OF DIRECTORS
Our board currently consists of two directors with one vacancy. Prior
to February 1999 our board consisted of George Strouthopoulos and Gary Finck. In
February 1999, Messrs. Strouthopoulos and Finck appointed Erwin Vahlsing Jr. and
Robert Galbreath to our board. Mr. Finck died in April 1999 and Mr. Galbreath
resigned from our board in December 1999.
BOARD COMMITTEES
The board of directors has established no committees.
EXECUTIVE COMPENSATION
None of our executive officers received salaries from us during the
1999 fiscal year. However, certain executive officers were paid consulting
services for services provided to us during the 1999 fiscal year. See "Certain
Relationships and Related Transactions".
The following table sets forth information concerning annual and
long-term compensation, on an annualized basis for the 2000 fiscal year, for our
Chief Executive Officer and for each of our other executive officers (the "named
executive officers") whose compensation on an annualized basis is anticipated to
exceed $100,000 during fiscal 2000.
-23-
<PAGE>
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------- ------------------------------------------------- ------------------------------ --------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK AWARDS UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS COMPENSATION
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
George Strouthopoulos 2000 $120,000(2) $ 0 $ 0 0 0 $ 0 (3)
Chief Executive Officer
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
Erwin Vahlsing, Jr. 2000 0(4) 0 0 0 0 0 (3)
Treasurer and Director
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
William P. Lord 2000 120,000(5) 0 0 0 0 0 (3)
President of WebCenter
Technologies, Inc.
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
Jeffrey S. Holub 2000 90,000(6) 0 0 0 0 0 (3)
Vice President of
Information Technologies
of WebCenter
Technologies, Inc.
----------------------------- ------- -------------- --------- ---------------- --------------- -------------- --------------
</TABLE>
(1) The named executive officers are not expecting to receive any long term
incentive plan payouts in 2000.
(2) Mr. Strouthopoulos commenced the right to receive his salary in September
2000 and thus will only be entitled to receive $40,000 during the 2000
fiscal year.
(3) The aggregate amount of personal benefits not included in the Summary
Compensation Table does not exceed the lesser of either $50,000 or 10% of
the total annual salary and bonus paid to the named executive officers.
(4) Mr. Vahlsing does not receive a salary from us for his services. See
"Certain Relationships and Related Transactions".
(5) Mr. Lord commenced the right to receive his salary in September 2000 and
thus will only be entitled to receive $40,000 during the 2000 fiscal year.
Prior to September 2000, Mr. Lord received compensation from us as a
consultant. See "Certain Relationships and Related Transactions".
(6) Mr. Holub commenced the right to receive his salary in September of 2000
and thus will only be entitled to receive $30,000 during the 2000 fiscal
year. Prior to September 2000, Mr. Holub received compensation from us as a
consultant. See "Certain Relationships and Related Transactions".
STOCK OPTIONS
We did not grant stock options in 1999. As of the date of this
prospectus, we have not granted stock options in 2000.
No executive officer held stock options during the 1999 fiscal year. As
of the date of this prospectus, no executive officer holds stock options.
2000 STOCK OPTION PLAN
Our stock option plan was adopted by our board of directors on November
1, 2000. The plan will be submitted for the approval of our stockholders at the
next annual meeting of stockholders. Options granted under the plan may include
those qualified as incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended, as well as non-qualified options. Employees as
well as other individuals, such as outside directors and consultants of ICOA
(and our affiliated corporations) who are expected to contribute to our future
growth and success are eligible to participate in the plan. However, incentive
stock options may only be granted to persons who are employees of ICOA or
certain of our affiliates on the date of grant. As of November 30, 2000, no
options had been granted under the plan.
-24-
<PAGE>
Once the registration statement, of which this prospectus is a part,
becomes effective, the plan will be administered by a committee of our board of
directors of not less than two directors, each of whom must be a "Non-Employee
Director" within the meaning of regulations promulgated by the Securities and
Exchange Commission and an "Outside Director," within the meaning of regulations
promulgated by the U.S. Department of the Treasury. The stock option plan
committee has the authority under the plan to determine the terms of options
granted under the plan, including, among other things, the individuals who will
receive options, the times when they will receive them, whether an incentive
stock option and/or non-qualified option will be granted, the number of shares
to be subject to each option, and the date or dates each option will become
exercisable.
The following summary of the plan is qualified in its entirety by
reference to the text of the plan, a copy of which is filed as an exhibit to the
registration statement of which this prospectus is a part.
TYPES OF GRANTS AND AWARDS
The plan permits the grant of options which are intended to either be
"incentive stock options" within the meaning of Section 422 of the Code, or
"non-qualified stock options", which do not meet the requirements of Section 422
of the Code.
ELIGIBILITY
All employees (including officers), directors and consultants of ICOA
and our affiliated corporations are eligible to be granted options under the
plan. We currently have five employees.
STOCK SUBJECT TO THE PLAN
The total number of shares of common stock for which options may be
granted under the plan may not exceed 7,500,000, subject to possible adjustment
in the future, including adjustments in the event of a recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction affecting our common stock. Any shares of common stock
subject to any option which for any reason expires, is canceled or is terminated
unexercised will again become available for granting of options under the plan.
However, once the registration statement, of which this prospectus is a part,
becomes effective, none of our employees may be granted options with respect to
more than 2,000,000 shares of common stock during any calendar year.
-25-
<PAGE>
ADMINISTRATION
Once the registration statement, of which this prospectus is a part,
becomes effective, the plan will be administered by a committee of the board of
directors of not less than two directors, each of whom must be a "Non-Employee
Director" within the meaning of regulations promulgated by the Securities and
Exchange Commission and an "Outside Director," within the meaning of regulations
promulgated by the U.S. Department of the Treasury. The stock option plan
committee has the authority under the plan to determine the terms of options
granted under the plan, including, among other things, the individuals who will
receive options, the times when they will receive them, whether an incentive
stock option and/or non-qualified option will be granted, the number of shares
to be subject to each option, the date or dates each option will become
exercisable (including whether an option will become exercisable upon certain
reorganizations, mergers, sales and similar transactions involving ICOA), and
the date or dates upon which each option will expire. The stock option plan
committee has the authority, subject to the provisions of the plan, to construe
the terms of option agreements and the plan; to prescribe, amend and rescind
rules and regulations relating to the plan; and to make all other determinations
in the judgment of the stock option plan committee necessary or desirable for
the administration of the plan.
EXERCISE PRICE
The exercise price of options granted under the plan is determined by
the stock option plan committee, but in the case of an incentive stock option
may not be less than 100% of the fair market value of the common stock on the
date the incentive stock option is granted (110% of such fair market value in
the case of incentive stock options granted to an optionee who owns or is deemed
to own stock possessing more than 10% of the total combined voting power of all
classes of stock of ICOA (a "ten percent stockholder")). The exercise price is
payable by delivery of cash or a check to the order of ICOA in an amount equal
to the exercise price of such options, or by any other means (including, without
limitation, cashless exercise) which the board of directors determines are
consistent with the purpose of the plan and with applicable laws and
regulations.
TERMS AND CONDITIONS
o Options granted to employees and consultants may be granted for such
terms as is established by the stock option plan committee, provided
that, the term will be for a period not exceeding ten years from the
date of the grant, and further provided that incentive stock options
granted to a ten percent stockholder will be for a period not
exceeding five years from the date of grant.
o Except to the extent otherwise determined by the stock option plan
committee at the time of grant of a non-qualified stock option, if an
optionee's relationship with ICOA is terminated for any reason other
than "disability" or death, the option may be exercised at any time
within three months thereafter to the extent exercisable on the date
of termination. However, in the event that the termination of such
relationship is either (a) for cause, or (b) otherwise attributable to
a breach by the optionee of an employment or confidentiality or
non-disclosure agreement, such option will terminate immediately.
o Except to the extent otherwise determined by the stock option plan
committee at the time of grant of a non-qualified stock option, in the
event of the death of an optionee while an employee of, or consultant
or advisor to ICOA, within three months after the termination of such
relationship (unless such termination was for cause or without the
consent of ICOA) or within one year following the termination of such
relationship by reason of the optionee's "disability", the option may
be exercised, to the extent exercisable on the date of his or her
death, by the
-26-
<PAGE>
optionee's legal representatives at any time within one year after
death, but not thereafter and in no event after the date the option
would otherwise have expired.
o An option may not be transferred other than by will or the laws of
descent and distribution and may be exercised during the lifetime of
the optionee only by the optionee.
o The stock option plan committee may (i) accelerate the date or dates
on which an option may be exercised, or (ii) extend the dates during
which an option may be exercised, provided, that no such acceleration
or extension with cause any option intended to be an incentive stock
option to fail to qualify as an incentive stock option, or cause the
plan or any option granted thereunder to fail to comply with
applicable short-swing profit rules promulgated by the Securities and
Exchange Commission.
o The stock option plan committee may include additional provisions in
option agreements, including without limitation, restrictions on
transfer, repurchase rights, rights of first refusal, commitments to
pay cash bonuses or to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options,
provided, that such additional provisions will not be inconsistent
with the requirements of applicable law and such additional provisions
will not cause any option intended to be an incentive stock option to
fail to qualify as an incentive stock option.
EMPLOYMENT AGREEMENT
As of the date of this prospectus, we have not entered into written
employment agreements with any of our employees.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of November 16, 2000, certain
information with respect to the beneficial ownership of the common stock by (1)
each person known by us to beneficially own more than 5% of our outstanding
shares, (2) each of our directors, (3) each named executive officer and (4) all
of our executive officers and directors as a group. Except as otherwise
indicated, each person listed below has sole voting and investment power with
respect to the shares of common stock set forth opposite such person's name.
-27-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) OUTSTANDING SHARES
-------------------- ------------------------ ----------------------
5% STOCKHOLDERS
---------------
<S> <C> <C> <C>
Dale Newberg 6,650,000 (3) 16.5%
550 N. Island
Golden Beach, FL 33160
Susan Bruno 2,294,295 5.7%
140 Old Distillery Road
Hendersonville, NC 28730
G&C Inc. 8,213,263 (4) 20.4%
DIRECTORS AND NAMED
-------------------
EXECUTIVE OFFICERS
------------------
George Strouthopoulos 9,383,033 (5) 23.3%
Erwin Vahlsing, Jr. 200,200 *
William P. Lord -- *
Jeffrey P. Holub 50,000 *
All the Officers and Directors 9,633,233 23.9%
as a Group
----------------
* Less than 1%
</TABLE>
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
ICOA, 111 Airport Road, Warwick, RI 02889.
(2) Under the rules of the SEC, a person is deemed to be the beneficial owner
of a security if such person has or shares the power to vote or direct
the voting of such security or the power to dispose or direct the
disposition of such security. A person is also deemed to be a beneficial
owner of any securities if that person has the right to acquire
beneficial ownership within 60 days of the date hereof. Unless otherwise
indicated by footnote, the named entities or individuals have sole voting
and investment power with respect to the shares of common stock
beneficially owned.
(3) Based upon a Schedule 13D filing, dated August 18, 2000 and includes
2,650,000 shares held by Dale Financial Consulting Svc Pension Plan of
which Ms. Newberg is the President.
(4) Mr. Strouthopoulos is the sole stockholder of G&C Inc.
(5) Includes 8,213,263 shares held by G&C Inc., of which Mr. Strouthopoulos
is the sole stockholder.
DILUTION
As of November 16, 2000, we had issued and outstanding 40,280,607
shares of common stock. At that date, there were an additional 57,900,000 shares
of common stock subject to possible future issuances.
-28-
<PAGE>
The existence of notes issued and issuable to certain of the selling
stockholders pursuant to the subscription agreements, and the warrants issuable
in connection therewith may adversely affect the terms on which we may obtain
additional equity financing. Moreover, the holders are likely to exercise their
rights to acquire common stock at a time when we would otherwise be able to
obtain capital with more favorable terms than we could obtain through the
exercise of such securities.
DILUTION EFFECTS OF THE SECURITIES UNDERLYING THE SUBSCRIPTION AGREEMENTS
The following table describes the number of shares of our common stock
into which the initial notes in the principal amount of $500,000 issued to
certain of the selling stockholders, and warrants issuable in connection
therewith, would have been convertible or exercisable if the holders of these
securities could have fully converted or exercised all of such securities on
November 17, 2000 based on three alternate presumed market prices. This table
also describes the percentages of our total outstanding common stock represented
by the shares of common stock into which all of such notes and warrants would
have been convertible on November 17, 2000.
For purposes of this table, we assume that the average of the three
lowest closing bid prices for a share of our common stock during the immediately
preceding 60 day trading period before conversion, which is an element of the
prescribed conversion price, was the same as the price per share referred to in
each of the respective rows of column one of the table and we also assume that
the registration statement had been declared effective by November 17, 2000.
<TABLE>
<CAPTION>
Percentage of our outstanding
Number of shares of common stock represented by
common stock issuable the shares of common stock
Percentage of market Conversion upon conversion of the issuable upon conversion of
price per share of our price for notes and exercise of the notes, and upon exercise of
common stock notes warrants the warrants
------------------------------ --------------- --------------------------- ----------------------------
<S> <C> <C> <C>
At $0.134 per share (150% of
the market price at November $0.049 11,428,572 22.1%
16, 2000)
At $0.089 per share (100% of
the market price at November $0.049 11,428,572 22.1%
16, 2000)
At $0.045 per share (50% of
the market price at November $0.032 17,500,000 30.3%
16, 2000)
</TABLE>
The following table describes:
o the number of shares of our common stock into which put notes and
warrants issuable in connection therewith, would have been
convertible, if we require certain of the selling stockholders to
purchase $1,000,000 of notes, pursuant to the terms of the
subscription agreements and the holders of these securities could
fully convert these put notes as of November 17, 2000; and
-29-
<PAGE>
o the percentages of our total outstanding common stock represented
by the shares of common stock into which such notes and warrants,
including the initial notes in the amount of $500,000 previously
issued and warrants issuable in connection thereto, would have
been convertible on November 17, 2000 without regard to the
monthly maximum put amount as set forth in the subscription
agreements.
For purposes of this table we assume that the registration statement
had been declared effective by November 17, 2000.
<TABLE>
<CAPTION>
Percentage of our
Number of shares of common outstanding common stock
stock issuable upon represented by the shares of
conversion of the notes common stock issuable upon
Amount of Conversion price for and exercise of the conversion of notes, and
Convertible Notes notes warrants upon exercise of the warrants
---------------------- -------------------- --------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
$1,000,000 $0.049 and $0.061(1) 20,608,901 44.3%
</TABLE>
----------------
(1) Pursuant to the conversion formulas in the subscription agreement. See
"The August 2000 Financing".
SELLING STOCKHOLDERS
The shares being offered for resale by the selling stockholders consist
of the shares of common stock underlying notes and warrants issued and issuable
pursuant to the terms of the subscription agreements. The selling stockholders
do not have and, within the past three years have not had, any position, office
or other material relationship with us or any of our predecessors or affiliates.
The following table sets forth the name of the selling stockholders,
the number of shares of common stock beneficially owned by each of the selling
stockholders as of November 27, 2000, and the number of shares of common stock
being offered by the selling stockholders. The shares being offered hereby are
being registered to permit public secondary trading, and the selling
stockholders may offer all or part of the shares for resale from time to time.
However, the selling stockholders are under no obligation to sell all or any
portion of such shares nor are the selling stockholders obligated to sell any
shares immediately upon effectiveness of this prospectus. All information with
respect to share ownership has been furnished by the selling stockholders.
<TABLE>
<CAPTION>
Shares of common Shares of common stock
stock owned prior to Shares of common stock owned after offering(2)
Name of selling stockholder offering(1) to be sold(1) Number Percent
------------------------------ --------------------- ------------------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Keshet L.P. (3) 3,775,511 (4) 3,775,511 (4) 0 0%
Libra Finance S.A. (5) 489,797 (6) 489,797 (6) 0 0
Nesher Ltd. (7) 1,173,470 (8) 1,173,470 (8) 0 0
Talbiya B. Investments Ltd. (9) 734,696 (10) 734,696 (10) 0 0
Tusk Investments, Inc. (11) 4,081,633 (12) 4,081,633 (12) 0 0
--------- --------- --------- ---------
Total 10,255,107 10,255,107 0 0
</TABLE>
------------------------
-30-
<PAGE>
(1) Assumes that each selling stockholder had fully converted its notes
into our common stock on November 17, 2000, and that the warrants
issuable in connection therewith were issued, and that each selling
stockholder fully convert such warrants into our common stock on
November 17, 2000.
(2) Assumes that all of the shares of common stock offered in this
prospectus are sold and no other shares of common stock are sold during
the offering period.
(3) John Clarke, is a director of Keshet Management, the general partner of
Keshet L.P. and has investment control of Keshet L.P.
(4) Represents shares of our common stock issuable upon conversion of a
note in the amount of $185,000.
(5) Seymour Braun is a director of Libra Finance S.A. and has investment
control of Libra.
(6) Represents shares of our common stock issuable upon exercise of
warrants issuable with respect to the initial $500,000 of notes. Does
not include shares of our common stock issuable upon exercise of any
put warrants.
(7) John Clarke is a director of Nesher Ltd. and has investment control of
Nesher.
(8) Represents shares of our common stock issuable upon conversion of a
note in the amount of $57,500.
(9) John Clarke is a director of Talbiya B. Investments Inc. and has
investment control of Talbiya.
(10) Includes 1,173,470 shares of our common stock issuable upon conversion
of a note in the amount of $57,500, and 734,696 shares of our common
stock issuable upon exercise of warrants issuable with respect to the
initial $500,000 of notes. Does not include shares of our common stock
issuable upon exercise of any put warrants.
(11) Gisela Kindle is a director of Tusk Investments, Inc. and has
investment control of Tusk.
(12) Represents shares of our common stock issuable upon conversion of a
note in the amount of $200,000.
PLAN OF DISTRIBUTION
The shares may be sold or distributed from time to time by the selling
stockholders or by pledgees, donees or transferees of, or successors in interest
to, the selling stockholders, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The distribution of the shares
may be effected in one or more of the following methods:
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<PAGE>
o ordinary brokers transactions, which may include long or short sales,
o transactions involving cross or block trades on any securities or
market where our common stock is trading,
o purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus,
o "at the market" to or through market makers or into an existing market
for the common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through
agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing, or by any other legally available
means.
In addition, the selling stockholders may enter into hedging
transactions with broker-dealers who may engage in short sales, if short sales
were permitted, of shares in the course of hedging the positions they assume
with the selling stockholders. The selling stockholders may also enter into
option or other transactions with broker-dealers that require the delivery by
such broker-dealers of the shares, which shares may be resold thereafter
pursuant to this prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of shares for whom such broker-dealers may act as agent or to whom they may sell
as principal, or both (which compensation as to a particular broker-dealer may
be in excess of customary commissions). The selling stockholders and any
broker-dealers acting in connection with the sale of the shares hereunder may be
deemed to be underwriters within the meaning of Section 2(11) of the Securities
Act of 1933, and any commissions received by them and any profit realized by
them on the resale of shares as principals may be deemed underwriting
compensation under the Securities Act of 1933. Neither the selling stockholders
nor we can presently estimate the amount of such compensation. We know of no
existing arrangements between the selling stockholders and any other
stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the shares.
We will not receive any proceeds from the sale of the shares pursuant
to this prospectus. We have agreed to bear the expenses of the registration of
the shares, including legal and accounting fees, and such expenses are estimated
to be approximately $63,898.
We have informed the selling stockholders that certain
anti-manipulative rules contained in Regulation M under the Securities Exchange
Act of 1934 may apply to their sales in the market and have furnished the
selling stockholders with a copy of such rules and have informed them of the
need for delivery of copies of this prospectus.
The selling stockholders may also use Rule 144 under the Securities Act
of 1933 to sell the shares if they meet the criteria and conform to the
requirements of such rule.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, we wrote-off $125,288 of receivables owed to us by GoFax
when GoFax was dissolved.
-32-
<PAGE>
In June 1999, WebCenter entered into an agreement with Jeff Holub, its
Vice President of Information Technologies, to provide technology-related
consulting services. Pursuant to this agreement, WebCenter Technologies paid Mr.
Holub $7,500 per month for these services. This agreement was terminated in
September 2000, when Mr. Holub became a full time employee of WebCenter.
In June 1999, WebCenter Technologies, Inc., our wholly-owned
subsidiary, entered into an agreement with William Lord, its president, to
provide management and marketing consulting services. Pursuant to this
agreement, WebCenter paid Mr. Lord $10,000 per month for these services. This
agreement was terminated in September 2000 when Mr. Lord became a full time
employee of WebCenter.
In February 2000, we entered into an agreement with Carter & Vahlsing,
CPA to provide us with accounting and management advisory services. Under the
agreement, we pay Carter and Vahlsing, CPA $3,000 per month for these services.
Erwin Vahlsing, Jr., our Treasurer and a Director, is a Senior Partner of Carter
and Vahlsing, CPA.
As of September 30, 2000, George Strouthopoulos, our President, was
indebted to us in the amount of $133,599 for personal unsecured loans. The loans
are non-interest bearing and are payable on demand.
DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by-laws, copies of which have
been incorporated by reference as exhibits to the registration statement of
which this prospectus forms a part. The following discussion is qualified in its
entirety by reference to such exhibits.
GENERAL
Our authorized capital stock consists of 150,000,000 shares of common
stock, par value $.0001 per share. We have reserved 50,400,000 shares of common
stock for issuance upon conversion of outstanding convertible notes and upon
exercise of related warrants.
COMMON STOCK
The holders of the common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Our
certificate of incorporation and by-laws do not provide for cumulative voting
rights in the election of directors. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of common stock are entitled
to receive ratably such dividends as may be declared by the Board out of funds
legally available therefor. In the event of our liquidation or dissolution,
holders of common stock are entitled to share ratably in the assets remaining
after payment of liabilities. Holders of common stock have no preemptive,
conversion or redemption rights. All of the outstanding shares of common stock
are fully-paid and non-assessable.
-33-
<PAGE>
NEVADA BUSINESS COMBINATION PROVISIONS
ANTI-TAKEOVER LAW
We may be or in the future we may become subject to Nevada's control
share law. A corporation is subject to Nevada's control share law if it has more
than 200 stockholders, at least 100 of whom are stockholders of record and
residents of Nevada, and it does business in Nevada or through an affiliated
corporation.
The law focuses on the acquisition of a "controlling interest" which
means the ownership of outstanding voting shares sufficient, but for the control
share law, to enable the acquiring person to exercise the following proportions
of the voting power of the corporation in the election of directors: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more. The ability to exercise such voting
power may be direct or indirect, as well as individual or in association with
others.
The effect of the control share law is that the acquiring person, and
those acting in association with it, obtains only such voting rights in the
control shares as are conferred by a resolution of the stockholders of the
corporation, approved at a special or annual meeting of stockholders. The
control share law contemplates that voting rights will be considered only once
by the other stockholders. Thus, there is no authority to strip voting rights
from the control shares of an acquiring person once those rights have been
approved. If the stockholders do not grant voting rights to the control shares
acquired by an acquiring person, those shares do not become permanent non-voting
shares. The acquiring person is free to sell its shares to others. If the buyers
of those shares themselves do not acquire a controlling interest, their shares
do not become governed by the control share law.
If control shares are accorded full voting rights and the acquiring
person has acquired control shares with a majority or more of the voting power,
any stockholder of record, other than an acquiring person, who has not voted in
favor of approval of voting rights is entitled to demand fair value for such
stockholder's shares.
Nevada's control share law may have the effect of discouraging
takeovers of the corporation.
BUSINESS COMBINATION LAW
In addition to the control share law, Nevada has a business combination
law which prohibits certain business combinations between Nevada corporations
and "interested stockholders" for three years after the "interested stockholder"
first becomes an "interested stockholder" unless the corporation's board of
directors approves the combination in advance. For purposes of Nevada law, an
"interested stockholder" is any person who is (i) the beneficial owner, directly
or indirectly, of ten percent or more of the voting power of the outstanding
voting shares of the corporation, or (ii) an affiliate or associate of the
corporation and at any time within the three previous years was the beneficial
owner, directly or indirectly, of ten percent or more of the voting power of the
then outstanding shares of the corporation. The definition of the term "business
combination" is sufficiently broad to cover virtually any kind of transaction
that would allow a potential acquiror to use the corporation's assets to finance
the acquisition or otherwise to benefit its own interests rather than the
interests of the corporation and its other shareholders.
The effect of Nevada's business combination law is to potentially
discourage parties interested in taking control of the company from doing so if
it cannot obtain the approval of our board of directors.
-34-
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Nevada Revised Statutes Section 78.7502 and 78.751, our articles
of incorporation and bylaws provide us with the power to indemnify any of our
directors, officers, employees or agents. The director, officer, employ or agent
must have conducted himself in good faith and reasonably believe that his
conduct was in, or not opposed to our best interests. In a criminal action the
director, officer, employee or agent must not have had a reasonable cause to
believe his conduct was unlawful. Advances for expenses may be made if the
director affirms in writing that he believes he has met the standards and that
he will personally repay the expense if it is determined he did not meet the
standards.
We will not indemnify a director or officer adjudged liable due to his
negligence or willful misconduct toward us, adjudged liable to us, or if he
improperly received personal benefit. Indemnification in a derivative action is
limited to reasonable expenses incurred in connection with the proceeding.
We have agreed to indemnify each of our directors and certain officers
against certain liabilities, including liabilities under the Securities Act of
1933. In addition, effective December 1, 2000, we will be covered by an
insurance policy with Chubb Insurance in the amount of $1,000,000 with respect
to potential liabilities of our directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described above, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
WHERE YOU CAN FIND MORE INFORMATION
Upon effectiveness of this registration statement we will commence
filing reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any report, proxy statement or other
information we file with the Commission at the Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices at 75 Park Place, Room 1400, New York, New York 10007 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. In addition, we will file electronic versions of
these documents on the Commission's Electronic Data Gathering Analysis and
Retrieval, or EDGAR, System. The Commission maintains a website at
http://www.sec.gov that contains reports, proxy statements and other information
filed with the Commission.
We have filed a registration statement on Form SB-2 with the Commission
to register shares of our common stock issuable upon exercise of warrants and
upon conversion of notes issued and issuable to be sold by the selling
stockholders. This prospectus is part of that registration statement and, as
permitted
-35-
<PAGE>
by the Commission's rules, does not contain all of the information set forth in
the registration statement. For further information with respect to us or our
common stock, you may refer to the registration statement and to the exhibits
and schedules filed as part of the registration statement. You can review a copy
of the registration statement and its exhibits and schedules at the public
reference room maintained by the Commission, and on the Commission's web site,
as described above. You should note that statements contained in this prospectus
that refer to the contents of any contract or other document are not necessarily
complete. Such statements are qualified by reference to the copy of such
contract or other document filed as an exhibit to the registration statement.
TRANSFER AGENT
The Transfer Agent and Registrar for the common stock is Signature
Stock Transfer, Inc., 14675 Midway Road, Suite 221, Addison, Texas 75001. Its
telephone number is (972) 788-4193.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus
has been passed upon for us by Parker Chapin LLP, The Chrysler Building, 405
Lexington Avenue, New York, New York 10174. Its telephone number is (212)
704-6000.
EXPERTS
Our financial statements at December 31, 1999, and for the nine-month
period ended September 30, 2000, appearing in this prospectus and registration
statement have been audited by Feldman Sherb & Co., P.C., independent auditors,
as set forth in their reports thereon (which contain an explanatory paragraph
describing conditions that raise substantial doubt about our ability to continue
as a going concern as described in Note 1 to the financial statements) appearing
elsewhere herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
-36-
<PAGE>
ICOA, INC. AND SUBSIDIARY
--------------------------
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
PAGE
NUMBER
------
Independent Auditors' Report F-2
Consolidated Financial Statements:
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholders' Deficit F-5
Statements of Cash Flows F-6
Notes to Financial Statements F7 - F13
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders
ICOA, Inc.
Warwick, Rhode Island
We have audited the accompanying consolidated balance sheets of ICOA, Inc. and
Subsidiary (A Development Stage Company) as of September 30, 2000 and December
31, 1999 and the related statements of operations, stockholders' deficit and
cash flows for the nine months ended September 30, 2000 and for the years ended
December 31, 1999 and 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ICOA, Inc. and
Subsidiary as of September 30, 2000 and December 31, 1999 and the results of its
operations and its cash flows for the nine months ended September 30, 2000 and
for the years ended December 31, 1999 and 1998 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred losses
of $655,805 for the nine months ended September 30, 2000, $630,327 and $139,522
for the years ended December 31, 1999 and 1998, respectively. Additionally, the
Company had a working capital deficiency of $34,324 at September 30, 2000. These
conditions raised substantial doubt about the Company's ability to continue as a
going concern. Management plans with respect to these matters are also described
in Note 2 to the financial statements. The accompanying financial statements do
not include any adjustments that might result should the Company be unable to
continue as a going concern.
/s/ Feldman Sherb & Co., P.C.
Feldman Sherb & Co., P.C.
Certified Public Accountants
New York, New York
November 28, 2000
F-2
<PAGE>
ICOA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------------------- ----------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 229,342 $ 1,932
Advance to officer 133,599 80,999
-------------------- ----------------------
TOTAL CURRENT ASSETS 362,941 82,931
-------------------- ----------------------
EQUIPMENT, net 10,491 9,624
OTHER ASSETS:
Advance to affiliates 2,000 1,500
Deposits 425 425
-------------------- ----------------------
TOTAL OTHER ASSETS 2,425 1,925
-------------------- ----------------------
$ 375,857 $ 94,480
==================== ======================
LIABILITIES AND STOCKHOLDERS' DEFICIT
--------------------------------------
CURRENT LIABILITIES:
Accrued expenses $ 94,351 $ 59,288
Notes payable 302,914 313,414
Common stock to be issued - 100,000
-------------------- ----------------------
TOTAL CURRENT LIABILITIES 397,265 472,702
-------------------- ----------------------
CONVERTIBLE DEBENTURES, net of conversion benefit 99,227 -
STOCKHOLDERS' DEFICIT:
Common stock, $.0001 par value; authorized - 150,000,000 shares;
issued and outstanding-40,280,607 shares and 32,475,000 shares
in 2000 and 1999, respectively 4,028 3,247
Additional paid-in capital 4,515,724 3,603,114
Accumulated deficit (Includes deficit during development stage of $1,074,833) (4,640,387) (3,984,583)
-------------------- ----------------------
TOTAL STOCKHOLDERS' DEFICIT (120,635) (378,222)
-------------------- ----------------------
$ 375,857 $ 94,480
==================== ======================
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
ICOA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months From January 1,
Ended September 30, Year Ended December 31, 1998 (Inception)
------------------- ----------------------- to September 30,
2000 1999 1999 1998 2000
--------------- --------------- -------------- -------------- ------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
--------------- --------------- -------------- -------------- ------------------
OPERATING EXPENSES:
Research and development - - 9,867 - 9,867
Selling, general and administrative 448,119 281,398 474,518 139,522 1,062,159
Depreciation 19,150 257 1,604 - 2,807
--------------- --------------- -------------- -------------- ------------------
TOTAL OPERATING EXPENSES 467,269 281,655 485,989 139,522 1,074,833
--------------- --------------- -------------- -------------- ------------------
OPERATING LOSS (467,269) (281,655) (485,989) (139,522) (1,074,833)
INTEREST EXPENSE (188,536) - (144,338) - (332,874)
--------------- --------------- -------------- -------------- ------------------
NET LOSS $ (655,805) $ (281,655) $ (630,327) $ (139,522)$ (1,407,707)
--------------- --------------- -------------- -------------- ------------------
NET LOSS PER SHARE - BASIC
AND DILUTED (0.02) (0.01) (0.02) (0.01) (0.05)
=============== =============== ============== ============== ==================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 36,942,612 28,193,277 29,203,426 22,664,611 28,936,362
=============== =============== ============== ============== ==================
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
ICOA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock
($.0001 par value) Additional Total
------------------------------ Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 22,664,611 $ 2,266 $ 2,884,981 $ (3,214,734) $ (327,487)
Net loss - - - (139,522) (139,522)
------------ ------------ ------------ ------------- --------------
Balance, December 31, 1998 22,664,611 2,266 2,884,981 (3,354,256) (467,009)
Issuance of stock for:
Cash and exercise of warrants 8,582,000 858 529,342 530,200
Compensation 268,099 27 22,813 22,840
Interest 435,000 43 68,797 68,840
Settlement of loans payable 525,290 53 97,181 97,234
Net loss - - - (630,327) (630,327)
------------ ------------ ------------ ------------- --------------
Balance, December 31, 1999 32,475,000 3,247 3,603,114 (3,984,583) (378,222)
Issuance of stock for: -
Conversion of debentures 6,305,606 631 304,370 305,001
Cash 500,000 50 49,850 - 49,900
Cash received in 1999 1,000,000 100 100,000 - 100,100
Beneficial conversion - - 458,391 - 458,391
Net loss - - - (655,805) (655,805)
------------ ------------ ------------ ------------- --------------
Balance, September 30, 2000 40,280,606 $ 4,028 $ 4,515,725 $ (4,640,388) $ (120,635)
============ ============ ============ ============= ==============
</TABLE>
See notes to consolidated financial statements
F-5
<PAGE>
ICOA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From January 1,
Nine Months Ended Year Ended 1998 (Inception)
September 30, December 31, to September 30,
2000 1999 1999 1998 2000
------------ ------------- ------------- ------------- ----------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (655,805) $ (281,655) $ (630,327) $ (139,522) $ (1,399,602)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 19,150 257 1,604 -- 20,754
Non-cash compensation -- 2,266 22,840 -- 22,840
Beneficial conversion (400,773) -- 46,167 -- 62,853
Stock issued for interest expense -- -- 90,500 -- 90,500
Settlement of loans payable -- (68,234) (68,234) -- (68,234)
Changes in assets and liabilities:
Increase in prepaid expenses -- (40,000) -- -- --
Increase in advance to officers (52,600) (90,319) (80,999) -- (133,599)
Increase in other assets (500) (31,145) (1,925) -- (2,425)
Increase in accrued expenses 35,064 19,029 13,317 14,234 62,614
------------ ------------- ------------- ------------- ----------------
Net cash used in operating activities (1,055,464) (489,801) (607,057) (125,288) (1,344,299)
------------ ------------- ------------- ------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (20,017) (7,700) (11,228) -- (31,245)
------------ ------------- ------------- ------------- ----------------
Net cash used in investing activities (20,017) (7,700) (11,228) -- (31,245)
------------ ------------- ------------- ------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 1,314,164 532,200 559,607 -- 1,047,435
Increase (decrease) in common stock to be issued (100,000) -- 100,000 -- --
Repayment of notes -- (173,300) (56,906) -- (56,906)
Proceeds from notes 88,727 -- -- 173,955 663,455
Decrease in cash overdraft -- -- -- (31,151) (31,151)
------------ ------------- ------------- ------------- ----------------
Net cash provided by financing activities 1,302,891 358,900 602,701 142,804 1,622,833
------------ ------------- ------------- ------------- ----------------
Net increase (decrease) in cash 227,410 (2,133) (15,584) 17,516 247,289
Cash, at beginning of period 1,932 17,516 17,516 -- --
------------ ------------- ------------- ------------- ----------------
Cash, at end of period $ 229,342 $ 15,383 $ 1,932 $ 17,516 $ 247,289
============ ============= ============= ============= ================
SUPPLEMENTAL CASH FLOW INFORMATION:
No cash payments were made for income taxes or
interest during each of the above periods
NON-CASH INVESTING AND FINANCING ACTIVITIES :
Issuance of stock to settle notes payables $ -- $ 65,000 $ 65,000 $ -- $ 65,000
============ ============= ============= ============= ================
</TABLE>
See notes to consolidated financial statements
F-6
<PAGE>
ICOA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 AND 1998
1. THE COMPANY
-----------
ICOA, Inc. ("ICOA" or the "Company") (a Development Stage Company),
formerly known as Quintonix, Inc., was organized in September 1983 to
develop and sell credit card-operated fax machines. The Company
discontinued such operations in 1993 and remained inactive through
1998. Development stage started on January 1, 1998.
In March 1999, the Company organized Webcenter Technologies, Inc.
("WTI"), a wholly owned subsidiary, for the purpose of developing
"Webcenter 3000 Pay Station Terminal", a multi-functional public access
terminal thereby facilitating electronic commerce transactions through
the Internet. The Company was in the development stage at September 30,
2000.
2. GOING CONCERN
-------------
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company
incurred losses of $655,805 for the nine months ended September 30,
2000, $630,327 and $139,522 for the year's ended December 31, 1999 and
1998, respectively. Additionally, the Company had a working capital
deficiency of $34,324 at September 30, 2000. These conditions raised
substantial doubts about the Company's ability to continue as a going
concern.
Management is actively pursuing new debt and/or equity financing and
continually evaluating the Company's profitability; however, any
results of their plans and actions cannot be assured. The consolidated
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All material intercompany
transactions and balances have been eliminated in consolidation.
F-7
<PAGE>
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
Income Taxes
------------
The Company follows Statement of Financial Accounting Standards No. 109
, "Accounting for Income Taxes", which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
based on the differences between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse.
Fair Value of Financial Instruments
-----------------------------------
The Company considers its financial instruments, which are carried at
cost, to approximate fair value due to their near-term maturities.
New Accounting Pronouncements
-----------------------------
The Company has adopted Statement of Financial Accounting Standard No.
133 ("SFAS No. 133"), " Accounting for Derivative Instruments and
Hedging Activities" for the year ended December 31, 1999. SFAS No. 133
establishes a new model for accounting for derivatives and hedging
activities and supersedes and amends a number of existing standards.
The application of the new pronouncement did not a material impact on
the Company's financial statements.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Depreciation is provided
by the straight-line method over the estimated useful lives of the
related assets, which is estimated to be four years.
Research and Development
------------------------
Research and development costs are charged to expense as incurred.
F-8
<PAGE>
Loss per Common Share
---------------------
Net loss per common share is based on the weighted average number of
shares outstanding. Potential common shares includable in the
computation of fully diluted per share results are not presented in the
financial statements as their effect would be anti-dilutive.
Stock-Based Compensation
------------------------
The Company adopted Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock Based Compensation". SFAS 123
encourages the use of a fair-value-based method of accounting for
stock-based awards under which the fair value of stock options is
determined on the date of grant and expensed over the vesting period.
Under SFAS 123, companies may, however, measure compensation costs for
those plans using the method prescribed by Accounting Principles Board
Opinion No. 25, ("APB No.25"), "Accounting for Stock Issued to
Employees." Companies that apply APB No. 25 are required to include pro
forma disclosures of net earnings and earnings per share as if the
fair-value-based method of accounting had been applied. The Company
elected to account for such plans under the provisions of APB No. 25.
4. NOTES PAYABLE
-------------
The balances of the notes payables as of September 30, 2000 and
December 31, 1999 are $302,914 and $313,414, respectively. The accrued
interest on the notes is $76,404 and $59,288 at the end of September
30, 2000 and December 31, 1999. Of these amount $150,000 is with an
entity which can no longer be found, $29,599 is an advance with
questionable refundability, and the balance of $123,315 and $133,815 at
the end of September 30, 2000 and December 31, 1999, respectively, are
due on demand.
5. RELATED PARTY TRANSACTIONS
--------------------------
The Company wrote-off $125,288 of receivables in 1998 from an affiliate
due to the insolvency and dissolution of the affiliate.
As of September 30, 2000 and December 31, 1999, the Company was owed
$133,599 and $80,999, respectively by the President of the Company for
personal unsecured loans. The loans are non-interest bearing and
payable on demand.
6. INCOME TAXES
------------
At September 30, 2000, the Company had a net operating loss carryover
of approximately $4,600,000 available as offsets against future taxable
income, if any, which expire at various dates through 2013. The Company
has a deferred tax asset of $1,500,000 arising from such
F-9
<PAGE>
net operating loss deductions and has recorded a valuation allowance
for the full amount of such deferred tax asset. The difference between
the recorded income tax benefits and the computed tax benefits using a
35 percent effective rate is as follows:
<TABLE>
<CAPTION>
For the nine
months ended Year Ended December 31,
September 30, ----------------------------------
2000 1999 1998
------------- -------------- ---------------
<S> <C> <C> <C>
Computed expected income tax (benefit) $ (225,000) $ (215,000) $ (49,000)
Benefits not recorded 225,000 215,000 49,000
-------------------- --------------- ---------------
$ - $ - $ -
==================== =============== ===============
</TABLE>
7. PROPERTY AND EQUIPMENT
----------------------
Property and equipment, at cost, consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Office equipment $ 10,955 $ 8,885
Software 2,343 2,343
---------------------- ----------------------
13,298 11,228
Less accumulated depreciation (2,807) (1,604)
---------------------- ----------------------
$ 10,491 $ 9,624
====================== ======================
</TABLE>
8. STOCKHOLDERS' DEFICIT
---------------------
In August 2000, the number of authorized shares changed to 150,000,0000
shares of nonassesable voting common stock having a par value of $.0001
per share. All share information presented in the financial statements
has been restated retroactively.
In April 1999, the Company completed an offering of 5,000,000 shares of
common stock at $0.03 per share. In connection with the offering, the
Company issued warrants to purchase up to 3,000,000 shares of common
stock at $ 0.10 per share, and 3,000,000 shares of common stock at
$0.12 per share, and 1,000,000 shares of common stock at $0.19 per
share, which expired in February 2000. Gross proceeds from the sale of
shares and exercise of warrants totaled $530,200. The Company reduced
the warrant price from $0.12 per share to $0.10 per share for 1,020,290
warrants, such difference was
F-10
<PAGE>
recorded as interest expense. The common stock and warrants issued in
the offering, as well as the shares of common stock issued upon
exercise of the warrants, were issued in reliance on the exemption from
registration provided by Rule 504 of Regulation D and Section 3(b) of
the Securities Act.
During 1999, the Company issued 268,099 shares of common stock as
compensation for legal and consulting services to the Company. The
shares were valued between $.03 and $.10 per share.
During 1999, the Company issued 435,000 shares of common stock for
interest. The shares were valued at $.16 per share.
During 1999, the Company issued 525,290 shares for settlement of
loans and accrued interest totaling $97,234.
9. CONVERTIBLE DEBENTURES
----------------------
In March 2000, the Company issued 8% Series A Senior Subordinated
Convertible Redeemable Series A Debentures ("Series A Debentures") in
the aggregate face amount of $185,000 to one investor, and received
gross proceeds of $185,000. The Series A Debentures had a maturity date
of March 16, 2002. The Series A Debentures were convertible into the
shares of the Company's common stock at a conversion price for each
share of common stock equal to 75% of the average bid price of the
Company's common stock for the three consecutive trading days
immediately preceding the date of receipt by the Company of a notice of
conversion. The Series A Debentures bore interest at the rate of 8% per
annum, payable monthly in the form of additional shares of the
Company's common stock. As of May 2000, the Series A Debentures had
been converted into an aggregate 3,305,606 shares of the Company's
common stock. The Series A Debentures and shares of common stock issued
upon conversion of the Series A Debentures were issued in reliance on
the exemptions from the registration requirements provided by Rule 504
of Regulation D and Section 3(b) of the Securities Act.
In June 2000, the Company issued 8% Series B Senior Subordinated
Convertible Debentures ("Series B Debentures") in the aggregate face
amount of $120,000. The Series B Debentures had a maturity date of June
25, 2002. The Series B Debentures were convertible into shares of the
Company's common stock at a conversion price for each share of common
stock equal to 75% of the lowest bid price of the Company's common
stock for the three consecutive trading days immediately preceding the
date of receipt of a notice of conversion. The Series B Debentures bore
interest at the rate of 8% per annum, payable monthly in the form of
additional shares of the Company's common stock. As of July 2000, the
Series B Debentures had been converted into an aggregate 3,000,000
shares of the Company's common stock. The Series B Debentures and
shares of common stock issued upon conversion of the Series B
Debentures were issued in reliance on the exemptions from the
registration requirements provided by Rule 504 of Regulation D and
Section 3(b) of the Securities Act.
F-11
<PAGE>
The Company has recorded a beneficial conversion of $46,167 on the
March and June 2000 debentures which was charged to interest expense.
On August 28, 2000, the Company, under the terms of subscription
agreements, sold $500,000 in 9% convertible notes and agreed to issue
warrants on conversion of the notes for the purchase of the Company's
common stock equal to 12% of the number of shares issued on conversion
of the notes. This agreement places certain restrictions on the
Company's ability to issue any equity, convertible debt or other
securities until 180 days after an effective registration statement.
The notes mature August 28, 2003 and are convertible into common at the
lower of $0.04933 per share or 70% of the average of the three lowest
closing bid prices for the Company's common stock for the 60 trading
days preceding the conversion date. The warrants, when issued, are
exercisable at $0.07 per share. The Company has recorded a beneficial
conversion of $412,224 on this loan which has been capitalized and
being amortized over the term of the loan. The unamortized balance of
the beneficial conversion at September 30, 2000 of $400,773 is netted
against convertible debentures.
In addition, the Company under certain conditions, can require the
investors to purchase additional notes totaling $9,500,000 for a period
of 3 years commencing with an effective registration statement. The
terms of these convertible put notes are the same as the notes issued
on August 28, 2000, except that the maturity date of the put note is 3
years from the date that the put notes are issuable, and except for the
conversion price of the put notes. The conversion price of the put
notes having an aggregate value of $500,000 will be the lower of:
o 80% of the average of the 3 lowest closing bid prices of the
common stock during the 30 trading days prior to the
closing date for the purchase of put notes.
o 70% of the average of the 3 lowest closing bid prices of the
common stock during the 60 trading days prior to the date of
conversion of the related note.
The conversion price of the remainder of the put notes having an
aggregate value of $9,000,000 will be:
o 72% of the average of the 3 lowest closing bid prices of the
common stock for the 15 trading days prior to the date of
conversion of the related put note, subject to an increase of
up to 80% if the Company meets specified targets for trading
volume and average closing bid price of the Company's common
stock during 22-day look-back periods occurring a specified
number of months after the effective date of the registration
statement.
Put warrants will be issued in connection with the conversion of put
notes ("put warrants"). The put warrants, once issued, will be
exercisable at an exercise price equal to the lowest bid price of the
Company's common stock during the 10 trading days preceding the related
put date. The number of shares issuable upon exercise of the put
warrants will equal 12% of the number of shares issued upon conversion
of the related put notes. The put warrants will have a term of five
years from the date of issuance.
Put warrants will also be issued at the end of each year, for a period
of three years, subject to certain conditions, if the Company does not
require the investors to purchase put notes worth certain amounts
during such year. The number of shares issuable upon exercise of these
put warrants will be equal to 12% of the number of shares of common
stock which would have been issued upon conversion of the related put
note, had the Company required the investors to purchase such notes.
F-12
<PAGE>
10. COMMITMENTS
-----------
Pursuant to a stock purchase agreement dated June 24, 1997, a compliant
was filed against the Company alleging the failure of the Company to
redeem 200,000 shares of common stock. In October 2000, the Company, in
settlement agreed to pay $5,000 per month commencing in October 2000
through August 2001, and a final payment of $3,300 which will be paid
on September 2001.
F-13
<PAGE>
--------------------------------------------------------------------------------
ICOA, INC.
45,000,000
Shares
Common Stock
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
____________, 2000
--------------------------------------------------------------------------------
-37-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
Under Nevada Revised Statutes Section 78.7502 and 78.751, our articles
of incorporation and bylaws provide us with the power to indemnify any of our
directors, officers, employees or agents. The director, officer, employ or
agent must have conducted himself in good faith and reasonably believe that
his conduct was in, or not opposed to our best interests. In a criminal action
the director, officer, employee or agent must not have had a reasonable cause
to believe his conduct was unlawful. Advances for expenses may be made if the
director affirms in writing that he believes he has met the standards and that
he will personally repay the expense if it is determined he did not meet the
standards.
We will not indemnify a director or officer adjudged liable due to his
negligence or willful misconduct toward us, adjudged liable to us, or if he
improperly received personal benefit. Indemnification in a derivative action
is limited to reasonable expenses incurred in connection with the proceeding.
Article Tenth of the registrant's Certificate of Incorporation provides
that the registrant shall indemnify any and all persons whom it shall have power
to indemnify to the maximum extent permitted by Nevada law. Article VII of the
registrant's by-laws provides that the registrant shall indemnify authorized
representatives of the registrant to the fullest extent permitted by Nevada law.
The registrant's by-laws also permit the registrant to purchase insurance on
behalf of any such person against any liability asserted against such person and
incurred by such person in any capacity, or out of such person's status as such,
whether or not the registrant would have the power to indemnify such person
against such liability under the foregoing provision of the by-laws or under the
provisions of Nevada law.
The registrant, effective December 1, 2000, will be covered under a
directors and officers liability insurance policy with Chubb Insurance. The
policy insures the directors and officers of the registrant against loss arising
from certain claims made against such directors or officers by reason of certain
wrongful acts.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered hereby. All such
expenses will be borne by the registrant; none shall be borne by any selling
stockholders.
Securities and Exchange
Commission registration fee $ 898
Legal fees and expenses (1) $40,000
Accounting fees and expenses (1) $20,000
Miscellaneous (1) $ 3,000
--------
Total $ 63,898
--------
-------------------------------
(1) Estimated.
Item 26. RECENT SALES OF UNREGISTERED SECURITIES.
II-1
<PAGE>
In February 1999, we issued 40,000 shares of common stock to a creditor
as payment for $4,000 of principal and interest indebtedness. Our shares were
issued in reliance on the exemption from registration pursuant to Section 4(2)
of the Securities Act.
In March 1999, we issued 250,000 shares of our common stock to a note
holder as payment for $25,000 of interest indebtedness. Our shares were issued
in reliance on the exemption from registration pursuant to Section 4(2) of the
Securities Act.
In March 1999, we issued 68,099 shares of our common stock as
compensation for legal services rendered. These shares were issued in reliance
on the exemptions from registration pursuant to Section 4(2) of the Securities
Act.
In April 1999, we concluded an offering of 5,000,000 shares of common
stock at $.03 per share for $150,000 in gross proceeds. In connection with the
offering, we also issued warrants to purchase up to 3,000,000 shares of our
common stock at an exercise price of $0.10 per share, 3,000,000 shares of our
common stock at an exercise price of $0.12 per share (of which the exercise
price of 1,020,290 warrants was reduced to $0.10 per share), and 1,000,000
shares of our common stock at an exercise price of $0.19 per share. The warrants
expired in February of 2000. From May 1999 through February 2000, warrants to
purchase an aggregate 5,717,000 shares of common stock were exercised and we
received gross proceeds of $530,200. Our shares were issued in reliance on the
exemptions from registration provided by Rule 504 of Regulation D and Section
3(b) of the Securities Act.
In June 1999, we issued 235,290 shares of our common stock to a note
holder as payment for $68,234 of indebtedness. Our shares were issued in
reliance on the exemption from registration pursuant to Section 4(2) of the
Securities Act.
In September 1999, we issued 200,000 shares of our common stock to a
consultant as compensation for consulting services rendered by the consultant.
Our shares were issued in reliance on the exemptions from registration provided
by Rule 701 of the Securities Act.
In March 2000, we issued 8% series A senior subordinated convertible
redeemable debentures in the aggregate face amount of $185,000 to one investor,
and received gross proceeds of $185,000. In connection with the issuance of the
series A debentures, we paid a sales commission of $18,500 plus a due diligence
fee of $4,625 to Capstone Partners. The series A debentures had a maturity date
of March 16, 2002. The series A debentures were convertible into shares of our
common stock at a conversion price equal to 75% of the average bid price of our
common stock as reported on the National Quotation Bureau's "Pink Sheets" for
the three consecutive trading days immediately preceding the date of receipt by
us of a notice of conversion. The series A debentures bore interest at a rate of
8% per annum, payable monthly in the form of additional shares of our common
stock. As of May 2000, all the series A debentures had been converted into an
aggregate 3,305,606 shares of our common stock. The series A debentures and the
shares of common stock issued upon conversion of the series A debentures were
issued in reliance on the exemptions from registration provided by Rule 504 of
Regulation D and Section 3(b) of the Securities Act and Section 3(a)(9) of the
Securities Act.
In June 2000, we issued 8% series B senior subordinated convertible
redeemable debentures in the face amount of $120,000 to one investor, and
received gross proceeds of $120,000. The series B debentures had a maturity date
of June 25, 2002. In connection with the issuance of the series B debentures, we
paid a sales commission of $12,000 plus a finder's fee of $2,400 to Capstone
Partners. The series B debentures were convertible into shares of our common
stock at a conversion price for each share of common stock equal to 75% of the
lowest bid price of our common stock as reported on the National Quotation
Bureau's "Pink Sheets" for the three consecutive trading days immediately
preceding
II-2
<PAGE>
the date of receipt by us of a notice of conversion. The series B debentures
bore interest at a rate of 8% per annum, payable monthly in the form of
additional shares of our common stock. As of July 2000, all the series B
debentures had been converted into 3,000,000 shares of our common stock. The
series B debentures and the shares of our common stock issued upon conversion of
the series B debentures were issued in reliance on the exemptions from
registration provided by Rule 504 of Regulation D and Section 3(b) of the
Securities Act and Section 3(a)(9) of the Securities Act.
In August 2000, we issued convertible notes in the aggregate amount of
$500,000, and received net proceeds of $450,000. See "The August 2000
Financing". The notes were issued in reliance on the exemptions from
registration provided by Regulation S of the Securities Act.
Item 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
-------------------------------------------
(a) Exhibits:
The following exhibits are filed as part of this registration
statement:
EXHIBIT DESCRIPTION
------- -----------
3.1 Articles of Incorporation of ICOA, Inc.
3.2 Articles of Amendment to the Articles of Incorporation of
ICOA, Inc., dated March 14, 1985
3.3 Articles of Amendment to the Articles of Incorporation of
ICOA, Inc., dated August 25, 2000
3.4 By-laws of ICOA, Inc., as amended
4.1 Specimen Certificate of the Company's common stock
5.1(1) Opinion of Parker Chapin LLP
10.1 2000 Stock Option Plan
10.2 Form of Subscription Agreement
10.3 Form of 9% Convertible Note
10.4 Form of Common Stock Purchase Warrant
21.1 Subsidiaries of the Company
23.1 Consent of Feldman Sherb & Co., P.C.
23.2(1) Consent of Parker Chapin LLP
24.1 Power of Attorney (included on page II-5 of the registration
statement)
27.1 Financial Data Schedule
--------------------
(1) To be filed by Amendment.
II-3
<PAGE>
Item 28. UNDERTAKINGS.
-------------
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information set forth in the
registration statement; and
(iii) Include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering therein, and
the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(B) Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel that the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(C) Undertaking Required by Regulation S-B, Item 512(f)
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Warwick,
State of Rhode Island, on the 30th day of November, 2000.
ICOA, Inc.
By: /S/ GEORGE STROUTHOPOULOS
----------------------------------------
George Strouthopoulos
Chief Executive, President and Director
POWER OF ATTORNEY
The undersigned directors and officers of ICOA, Inc. hereby constitute
and appoint George Strouthopoulos and Erwin Vahlsing, Jr. and each of them, with
full power to act without the other and with full power of substitution and
resubstitution, our true and lawful attorneys-in-fact with full power to execute
in our name and behalf in the capacities indicated below any and all amendments
(including post-effective amendments and amendments thereto) to this
registration statement under the Securities Act of 1933 and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and hereby ratify and confirm each and every
act and thing that such attorneys-in-fact, or any them, or their substitutes,
shall lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ GEORGE STROUTHOPOULOS Chief Executive Officer, November 30, 2000
--------------------------------------- President and Director
George Strouthopoulos
/S/ ERWIN VAHLSING, JR. Chief Financial Officer, November 30, 2000
---------------------------------------- Treasurer, Secretary and Director
Erwin Vahlsing, Jr.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
-------------
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3.1 Articles of Incorporation of ICOA, Inc.
3.2 Articles of Amendment to the Articles of Incorporation of
ICOA, Inc., dated March 14, 1985
3.3 Articles of Amendment to the Articles of Incorporation of
ICOA, Inc., dated August 25, 2000
3.4 By-laws of ICOA, Inc., as amended
4.1 Specimen Certificate of the Company's common stock
5.1(1) Opinion of Parker Chapin LLP
10.1 2000 Stock Option Plan
10.2 Form of Subscription Agreement
10.3 Form of 9% Convertible Note
10.4 Form of Common Stock Purchase Warrant
21.1 Subsidiaries of the Company
23.1 Consent of Feldman Sherb & Co., P.C.
23.2(1) Consent of Parker Chapin LLP
24.1 Power of Attorney (included on page II-5 of the registration
statement)
27.1 Financial Data Schedule
-------------------
(1) To be filed by Amendment.
II-6
