U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB
Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of
1934 for the Quarterly Period Ended June 30, 2003
Commission File Number: 000-28481
Iconet, Inc.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 86-0891931
_________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 Gaucho Hills Drive, Rolling Hills Estates, California 90274
_______________________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
(416) 682-9255
___________________________
(Issuer's telephone number)
N/A
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed be Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
There are 39,645,430 shares of common stock outstanding as of June 30, 2003. The
shares are traded on the OTC Bulletin Board, under the symbol "ICON".
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ICONET, INC.
(A Company in the Development Stage)
BALANCE SHEET
June 30, 2003
______________
(Unaudited)
ASSETS
DEFERRED TAX ASSET (NET) $ -
Total other assets -
____________
Total assets $ -
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 355,644
Bank overdraft payable 28,375
Related party payable 450,465
Advance payable 17,650
Interest payable to a related party 151,967
Accrued expenses 3,081
Payroll tax payable 84,665
____________
Total current and total liabilities 1,091,847
____________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 100,000,000 shares
authorized, 39,507,115 shares issued and outstanding 39,507
Additional paid-in capital 3,380,156
Deficit accumulated during the development stage (4,511,510)
____________
Total stockholders' deficit (1,091,847)
____________
Total liabilities and stockholders' deficit $ -
============
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
(Unaudited)
CUMULATIVE
FROM
INCEPTION
(AUGUST 1997) SIX MONTHS SIX MONTHS THREE MONTHS THREE MONTHS
THROUGH JUNE ENDED ENDED ENDED ENDED
30, 2003 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002
____________ _____________ _____________ _____________ _____________
REVENUE
ADMINISTRATIVE AND GENERAL COSTS
Consulting $ (2,489,066) (397,499) $(158,915) $ (107,667) $ (70,165)
Research and development (179,027) - - - -
Marketing (159,394) - - - -
Exploration (15,000) (15,000) - - -
Deferred compensation (300,000) (280,000) (40,000) (280,000) (20,000)
Legal and accounting (414,634) (12,500) (24,451) (12,500) (17,451)
Operating and administrative (725,786) (15,269)) (9,863) (193) (2,517)
Rent (79,335) (2,500) (5,800) (1,000) (5,800)
Depreciation (5,562) - - - -
Amortization (16,500) - - - -
____________ ___________ ___________ ___________ ___________
Total operating costs and expenses (4,384,304) (722,768) (239,029) (401,360) (115,933)
____________ ___________ ___________ ___________ ___________
NON-OPERATING INCOME
Dividend income 1,212 - - - -
Gain on cancellation of contracts 74,104 - - - -
Gain on cancellation of amortization 16,500 - - - -
Loss on disposal of assets (59,641) - - - -
____________ ___________ ___________ ___________ ___________
Total non-operating income 32,175 - - - -
____________ ___________ ___________ ___________ ___________
INTEREST EXPENSE (159,381) (1,509) (4,704) (645) (3,471)
____________ ___________ ___________ ___________ ___________
Net loss before income taxes (4,511,510) (724,277) (243,733) (402,005) (119,404)
____________ ___________ ___________ ___________ ___________
Provision for income taxes - - - - -
____________ ___________ ___________ ___________ ___________
Net loss $ (4,511,510) $ (724,277) $ (243,733) $ (402,005) $ (119,404)
============ =========== =========== =========== ===========
Loss per common share - basic $ (0.36) $ (0.02) $ (0.01) $ (0.01) $ (0.00)
============ =========== =========== =========== ===========
Weighted average common shares -basic 12,489,409 43,415,448 31,257,115 38,707,115 31,257,115
============ =========== =========== =========== ===========
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
STATEMENS OF CASH FLOWS
(Unaudited)
CUMULATIVE
FROM
INCEPTION
(AUGUST 1997) SIX MONTHS SIX MONTHS
THROUGH JUNE ENDED ENDED
30, 2003 JUNE 30, 2003 JUNE 30, 2002
____________ _____________ _____________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,511,510) $ (724,277) $ (243,733)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation expense 22,062 - -
Deferred compensation expense 400,000 280,000 40,000
Gain on cancellation of amortization (16,500) - -
Loss on disposal of assets 59,641 - -
Cancellation of mining rights 15,000 15,000 -
Decrease in deposits 14,925 - -
Decrease in prepaid consulting 796,250 352,000
Deposit paid (14,925) - -
Increase (decrease) in accounts payable 419,619 - (8,035)
Interest (decrease) in related party payable 516,065 - (23,599)
Increase incurred on bank overdraft 1,509 1,509 -
Increase in payroll and payroll taxes payable 68,327 - -
Increase in interest payable 158,197 - 4,703
Increase in accrued expenses 40,918 2,634 42,595
Expenses paid by issuance of
common stock 737,878 37,500 81,250
___________ ___________ ___________
Net cash used in operating activities (1,292,544) (35,634) (106,819)
___________ ___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of mining rights (15,000) - -
Purchase of fixed assets (65,203) - -
___________ ___________ ___________
Net cash used in investing activities (80,203) - -
___________ ___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from issuance of stock 454,635 - -
Proceeds received from officer advances 37,374 13,300 10,600
Proceeds from bank overdraft 30,552 32 -
Proceeds received advance 17,650 17,650
Payment made on bank overdraft (9,915) (453)
Payment of officer advances (5,474) - -
Proceeds received from line of credit 870,499 - -
Proceeds received from related party line of credit (22,574) - 95,350
___________ ___________ ___________
Net cash provided by financing activities 1,372,747 30,529 105,950
___________ ___________ ___________
Net increase in cash - (5,105) (869)
Cash and cash equivalents at inception,
December 31, 2002, and 2001 - 5,105 1,068
___________ ___________ ___________
Cash and cash equivalents at
June 30, 2003, and 2002 $ - $ - $ 199
=========== =========== ===========
SUPPLEMENTARY INFORMATION
During the six months ended June 30, 2002 and 2001, no amounts were paid for either interest or income taxes.
In May 2003, 200,000 common shares were issued in exchange for consulting expenses of $13,500.
Also in May 2003 1,000,000 shares were issued to the President of the Company pursuant to a stock option
agreement, to relieve $100,000 in officer advances and consulting fees payable.
In April 2003 the mining rights contract was cancelled and the 10,000,000 shares issued were cancelled.
In June 2002 the Company issued 1,500,000 shares of its common stock for consulting services of $75,000.
Also in June 2002 the Company issued 2,000,000 shares of its common stock as a partial payment for mining
rights.
See Notes to the Interim Financial Statements
ICONET, INC.
(A Company in the Development Stage)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
_________________________________________
June 30, 2003
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Iconet, Inc.
(the "Company") have been prepared by the Company in accordance with
accounting principles generally accepted in the United States of
America, pursuant to the Securities and Exchange Commission rules and
regulations. In management's opinion all adjustments necessary for a
fair presentation of the results for the interim periods have been
reflected in the interim financial statements. The results of
operations for any interim period are not necessarily indicative of the
results for a full year. All adjustments to the financial statements
are of a normal recurring nature.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Such disclosures
are those that would substantially duplicate information contained in
the most recent audited financial statements of the Company, such as
significant accounting policies and stock options. Management presumes
that users of the interim statements have read or have access to the
audited financial statements and notes thereto included in the
Company's most recent annual report on Form 10-KSB.
NEW PRONOUNCEMENTS
In February 2003 the Financial Accounting Standards Board "FASB" issued
Statement of Financial Accounting Standards "SFAS" No. 149, "Accounting
for Certain Financial Instruments with Characteristics of Liabilities
and Equity," which is effective at the beginning of the first interim
period beginning after March 15, 2003. SFAS No. 149 establishes
standards for the Company's classification of liabilities in the
financial statements that have characteristics of both liabilities and
equity. The Company believes the adoption of SFAS No. 149 will not have
a material effect on the Company's consolidated financial position or
results of operations.
In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity", which requires that certain financial instruments be presented
as liabilities that were previously presented as equity or as temporary
equity. Such instruments include mandatory redeemable preferred and
common stock, and certain options and warrants. SFAS 150 is effective
for financial instruments entered into or modified after May 31, 2003
and is generally effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS 150 will have no impact on the
Company's financial position as they have no financial instruments.
GOING CONCERN
These financial statements have been prepared assuming that the Company
will continue as a going concern. The Company is currently in the
development stage, and existing cash, other material assets, and
available credit are insufficient to fund the Company's cash flow needs
for the next year. The Company has available to them a $150,000 line of
credit from a shareholder. (See Note 2) Management is attempting to
raise additional capital.
2. ADVANCE PAYABLE
During the quarter an unrelated third party advanced the Company
$17,650 to pay expenses. There are currently no terms for this advance.
3. RELATED PARTY TRANSACTIONS
The company rented office space on a month-to-month basis from an
officer in order to perform administrative functions. For the six
months ended June 30, 2003, rent of $2,500 was expensed.
During the six months ended June 30, 2003, the company incurred expense
for consulting byfficers and shareholders. The total expense for the
six months ended June 30, 2003, was $37,500. The total related party
payable as of June 30, 2003, was $450,465.
An officer of Iconet, Inc. advanced the Company funds to pay expenses.
During the six months ended June 30, 2003, travel and other office
expenses of $13,300 were paid by the officer. In May 2003 the Company
issued 1,000,000 shares of its common stock to the officer pursuant to
a stock option dated September 1, 2001. This issuance relieved officer
advances payable and consulting fees payable by $31,900 and $68,100,
respectively.
The Company has a $150,000 line of credit from a shareholder. As of
June 30, 2003, the line of credit was not used.
4. CAPITAL STOCK
In January 2003 the company issued 550,000 shares of its common stock
to relieve the common stock subscribed.
In April 2003 the Company and Sea Emerald Development Corp. rescinded
their agreement for the purchase and sale of the mining claims situated
in Porcupine Mining Division, Canada. The 10,000,000 shares of the
Company's restricted Common Stock issued to Sea Emerald were cancelled.
In May 2003 the Company issued 200,000 shares of common stock to a
shareholder in exchange for accrued consulting services of $13,500.
Also in May 2003 the Company issued 1,000,000 shares of its common
stock to an officer pursuant to a stock option dated September 1, 2001.
This issuance relieved $100,000 payable to the officer.
5. COMMITMENTS AND CONTINGENCIES
There are various claims and lawsuits pending against the Company
arising in the normal course of the Company's business. Although the
amount of liability at June 30, 2003, cannot be ascertained, management
is of the opinion that any resulting liability will not materially
affect the Company's financial position.
Merrill Lynch Canada Inc., has filed suit against the Company regarding
a dispute related to the sale of its restricted common stock by an
unrelated third party to Merrill Lynch. At this time the Company does
not know if it will sustain a loss, or the amount of the loss.
The Company settled an action by a bank regarding an overdraft. The
Company paid $9,915 of the overdraft. The amount due as of June 30,
2003 is $28,343, which has been accrued by the Company. The Company
paid three payments and then defaulted on this settlement.
PART II - OTHER INFORMATION
June 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS
The Company, has reviewed, and continues to review, its corporate files,
books and records, and based thereon, it has not been able to conclusively
identify a basis for a certain undetermined amount of its current Accounts
Payable and for the Related Parties payable to previous management. We have been
unable, at this point, to locate back up documentation or back up invoices for
some of such payables. Our review continues in this regard.
On April 3, 2003, based on further due diligence by the parties, the Company
and Sea Emerald Development Corp., a Canadian corporation ("Sea Emerald"),
mutually agreed to rescind their agreement for the purchase and sale of 100%
interest in 21 mining claims situated in Langmuir Township, Porcupine Mining
Division, Ontario, Canada. The 10,000,000 shares of the Company's restricted
Common Stock issued to Sea Emerald have been returned to the Company's treasury
for cancellation.
The company has entered into two option agreements with Starfire Minerals
for various mining claims that it has not, nor does it intend to complete on.
Dr. Stewart Jackson has resigned from the Board of Directors in April 2003.
Mr. Ron Shorr has resigned from the Board of Directors in April 2003.
Mr. Randy Miller resigned from the Board of Directors in June 2003.
Mr. Matthew Markin serves as the Company's sole officer and Director at this
time.
The Company has also adopted an Option Plan for Directors, Officers and
Employees, subject to shareholder approval.
The Company has defaulted on settlement agreement for the lawsuit with JP
Morgan after having made three payments totalling $9962.37.
The Company has attained a Berlin Stock Exchange listing.
The Company is currently considering various business opportunities.
ITEM 7. SIGNATURES
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ICONET, INC.
July 21, 2003 /s/ MATTHEW MARKIN
________________________________
Matthew Markin
SECTION 302 CERTIFICATION
I, Matthew Markin, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Iconet, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d- 14) for the
registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
July 21, 2003 /s/ MATTHEW MARKIN
_________________________________
Matthew Markin
Chairman and CEO