Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 | |
Nevada | 61-1433933 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
10 South High Street, Canal Winchester, Ohio, 43110 |
(Address of principal executive offices) |
(614) 833-9713 x235 |
(Issuer’s telephone number) |
o Large accelerated filer Accelerated filer | o Non-accelerated filer |
x Smaller reporting company |
F-2 |
F-4 |
September 30, 2009 | December 31, 2008 | |||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and equivalents | $ | 1,674 | $ | 13,000 | ||||
Accounts receivable, net | 32,164 | 39,410 | ||||||
Inventory | 3,974 | 8,673 | ||||||
Other current assets | 14,117 | 3,193 | ||||||
Total Current Assets | 51,929 | 64,276 | ||||||
Furniture and Equipment, net | 28,008 | 36,474 | ||||||
Other Assets | ||||||||
Goodwill | 269,725 | 269,725 | ||||||
Total Other Assets | 269,725 | 269,725 | ||||||
Total Assets | $ | 349,662 | $ | 370,475 | ||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 955,694 | $ | 1,010,477 | ||||
Bank overdraft | 2,032 | - | ||||||
Payable-related party | 388,652 | 40,741 | ||||||
Notes payable-short term | 33,854 | 58,211 | ||||||
Client deposits | 10,026 | 33,521 | ||||||
Total Current Liabilities | 1,390,258 | 1,142,950 | ||||||
Long Term Liabilities | ||||||||
Convertible notes payable, net of discount of $37,500 | 755,466 | 100,000 | ||||||
Total Liabilities | 2,145,724 | 1,242,950 | ||||||
Stockholders' Equity (Deficit) | ||||||||
Common stock: $0.001 par value; 100,000,000 shares authorized, 25,897,103 and 24,436,491 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively | 25,897 | 24,436 | ||||||
Additional paid-in capital | 14,793,370 | 14,034,678 | ||||||
Accumulated deficit | (16,615,329 | ) | (14,931,589 | ) | ||||
Total Stockholders' Equity (Deficit) | (1,796,062 | ) | (872,475 | ) | ||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 349,662 | $ | 370,475 |
June 30, 2009 | December 31, 2008 | ||||
(Unaudited) | |||||
Assets | |||||
Current Assets | |||||
Cash and equivalents | $ | 7,960 | $ | 13,000 | |
Accounts receivable, net | 31,208 | 39,410 | |||
Inventory | 1,230 | 8,673 | |||
Other current assets | 27,884 | 3,193 | |||
Total Current Assets | 68,282 | 64,276 | |||
Furniture and Equipment, net | 36,990 | 36,474 | |||
Other Assets | |||||
Deposits | 45,088 | - | |||
Goodwill | 269,725 | 269,725 | |||
Total Other Assets | 314,813 | 269,725 | |||
Total Assets | $ | 420,085 | $ | 370,475 | |
Liabilities and Stockholders' Equity (Deficit) | |||||
Current Liabilities | |||||
Accounts payable and accrued expenses | $ | 1,068,051 | $ | 1,010,477 | |
Payable-related party | 173,386 | 40,741 | |||
Notes payable-short term | 33,700 | 58,211 | |||
Client deposits | 22,157 | 33,521 | |||
Total Current Liabilities | 1,297,294 | 1,142,950 | |||
Long Term Liabilities | |||||
Convertible notes payable | 780,466 | 100,000 | |||
Total Liabilities | 2,077,760 | 1,242,950 | |||
Stockholders' Equity (Deficit) | |||||
Common stock: $0.001 par value; 100,000,000 shares authorized, 25,937,103 and 24,436,491 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively | 25,937 | 24,436 | |||
Additional paid-in capital | 14,753,330 | 14,034,678 | |||
Accumulated deficit | (16,436,942) | (14,931,589) | |||
Total stockholders' equity (deficit) | (1,657,675) | (872,475) | |||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 420,085 | $ | 370,475 |
For the Three Months Ended September 30, 2009 | For the Three Months Ended September 30, 2008 | For the Nine Months Ended September 30, 2009 | For the Nine Months Ended September 30, 2008 | |||||||||||||
Net Revenue | $ | 168,715 | $ | 321,871 | $ | 730,922 | $ | 986,990 | ||||||||
Cost of Goods Sold | 112,036 | 181,071 | 418,849 | 609,414 | ||||||||||||
Gross profit | 56,679 | 140,800 | 312,073 | 377,576 | ||||||||||||
Operating Expenses | ||||||||||||||||
Depreciation and amortization | 4,325 | 5,250 | 14,390 | 16,112 | ||||||||||||
Selling, general and administrative | 189,974 | 95,835 | 1,286,658 | 453,250 | ||||||||||||
Total operating expenses | 194,299 | 101,085 | 1,301,048 | 469,362 | ||||||||||||
Operating Loss | (137,620 | ) | 39,715 | (988,975 | ) | (91,786 | ) | |||||||||
Other Income and Expenses | ||||||||||||||||
Interest expense | (40,767 | ) | (22,341 | ) | (68,382 | ) | (246,338 | ) | ||||||||
Other income (expense) | - | - | 3,891 | (52 | ) | |||||||||||
Total other income and expenses | (40,767 | ) | (22,341 | ) | (64,491 | ) | (246,390 | ) | ||||||||
Net loss before income taxes | (178,387 | ) | 17,374 | (1,053,466 | ) | (338,176 | ) | |||||||||
Income tax expense | - | - | - | - | ||||||||||||
Discontinued Operations | - | - | (630,274 | ) | 599,571 | |||||||||||
Net Income (Loss) | $ | (178,387 | ) | $ | 17,374 | $ | (1,683,740 | ) | $ | 261,395 | ||||||
Basic Earnings (Loss) Per Share | ||||||||||||||||
Continuing operations | $ | (0.01 | ) | $ | 0.00 | $ | (0.04 | ) | $ | (0.05 | ) | |||||
Discontinued operations | $ | - | $ | - | $ | (0.03 | ) | $ | 0.10 | |||||||
$ | (0.01 | ) | $ | 0.00 | $ | (0.07 | ) | $ | 0.04 | |||||||
Weighted Average | ||||||||||||||||
Common Shares Outstanding | 25,917,103 | 12,345,655 | 25,129,519 | 6,239,377 |
For the Three Months Ended June 30, 2009 | For the Three Months Ended June 30, 2008 | For the Six Months Ended June 30, 2009 | For the Six Months Ended June 30, 2008 | ||||||||
Net Revenue | $ | 294,917 | $ | 318,538 | $ | 562,207 | $ | 665,119 | |||
Cost of Goods Sold | 151,801 | 197,272 | 306,813 | 428,343 | |||||||
Gross profit | 143,116 | 121,266 | 255,394 | 236,776 | |||||||
Operating Expenses | |||||||||||
Depreciation and amortization | 4,792 | 5,407 | 10,065 | 10,862 | |||||||
Selling, general and administrative | 267,751 | 207,420 | 1,096,684 | 357,415 | |||||||
Total operating expenses | 272,543 | 212,827 | 1,106,749 | 368,277 | |||||||
Operating Loss | (129,427) | (91,561) | (851,355) | (131,501) | |||||||
Other Income and Expenses | |||||||||||
Interest expense | (17,968) | (175,779) | (27,615) | (223,997) | |||||||
Other income (expense) | 3,848 | (52) | 3,891 | (52) | |||||||
Total other income and expenses | (14,120) | (175,831) | (23,724) | (224,049) | |||||||
Net loss before income taxes | (143,547) | (267,392) | (875,079) | (355,550) | |||||||
Income tax expense | - | - | - | - | |||||||
Discontinued Operations | (630,274) | - | (630,274) | 599,571 | |||||||
Net Income (Loss) | $ | (773,821) | $ | (267,392) | $ | (1,505,353) | $ | 244,021 | |||
Basic Earnings (Loss) Per Share | |||||||||||
Continuing operations | $ | (0.01) | $ | (0.01) | $ | (0.04) | $ | (0.01) | |||
Discontinued operations | $ | (0.03) | $ | - | $ | (0.03) | $ | 0.02 | |||
$ | (0.03) | $ | (0.01) | $ | (0.06) | $ | 0.01 | ||||
Weighted Average Common Shares Outstanding | 25,186,797 | 41,547,980 | 24,873,658 | 34,734,444 |
Common Stock | Additional | Accumulated | Total Stockholders' | |||||||||||||||||
Shares | Amount | Paid-in Capital | Deficit | Deficit | ||||||||||||||||
Balance, December 31, 2007 | 105,537 | $ | 105 | $ | 12,739,114 | $ | (14,972,886 | ) | $ | (2,233,667 | ) | |||||||||
Notes converted to common stock at $1.45 per share | 55,125 | 55 | 79,945 | - | 80,000 | |||||||||||||||
Notes converted to common stock at $0.80 per share | 333,280 | 333 | 268,417 | - | 268,750 | |||||||||||||||
Beneficial conversion feature | - | - | 3,540 | - | 3,540 | |||||||||||||||
Shares issued for cash at $0.001 per share | 5,300,000 | 5,300 | - | - | 5,300 | |||||||||||||||
Notes converted to common stock at $0.05 per share | 18,642,549 | 18,643 | 943,662 | - | 962,305 | |||||||||||||||
Net income for the year ended December 31, 2008 | - | - | - | 41,297 | 41,297 | |||||||||||||||
Balance, December 31, 2008 | 24,436,491 | 24,436 | 14,034,678 | (14,931,589 | ) | (872,475 | ) | |||||||||||||
Shares issued for services at $0.55 per share (unaudited) | 1,150,000 | 1,150 | 631,350 | - | 632,500 | |||||||||||||||
Shares issued for equipment at $0.25 per share (unaudited) | - | - | - | - | - | |||||||||||||||
Shares issued for services at $0.25 per share (unaudited) | 121,500 | 122 | 30,253 | - | 30,375 | |||||||||||||||
Shares issued for services at $0.25 per share (unaudited) | 129,112 | 129 | 32,149 | - | 32,278 | |||||||||||||||
Shares issued for cash at $0.25 per share (unaudited) | 60,000 | 60 | 14,940 | - | 15,000 | |||||||||||||||
Beneficial conversion feature | - | - | 50,000 | - | 50,000 | |||||||||||||||
Net loss for the nine months ended September 30, 2009 (unaudited) | - | - | - | (1,683,740 | ) | (1,683,740 | ) | |||||||||||||
Balance, September 30, 2009 (unaudited) | 25,897,103 | $ | 25,897 | $ | 14,793,370 | $ | (16,615,329 | ) | $ | (1,796,062 | ) |
Common Stock | Additional | Accumulated | Total Stockholders' | ||||||||||||
Shares | Amount | Paid-in Capital | Deficit | Deficit | |||||||||||
Balance, December 31, 2007 | 105,537 | $ | 105 | $ | 12,739,114 | $ | (14,972,886) | $ | (2,233,667) | ||||||
Notes converted to common stock at $1.45 per share | 55 | 79,945 | - | 80,000 | |||||||||||
Notes converted to common stock at $0.80 per share | 333 | 268,417 | - | 268,750 | |||||||||||
Beneficial conversion feature | - | - | 3,540 | - | 3,540 | ||||||||||
Shares issued for cash at $0.001 per share | 5,300,000 | 5,300 | - | - | 5,300 | ||||||||||
Notes converted to common stock at $0.05 per share | 18,643 | 943,662 | - | 962,305 | |||||||||||
Net income for the year ended December 31, 2008 | - | - | - | 41,297 | 41,297 | ||||||||||
Balance, December 31, 2008 | 24,436,491 | 24,436 | 14,034,678 | (14,931,589) | (872,475) | ||||||||||
Shares issued for services at $0.55 per share (unaudited) | 1,150 | 631,350 | - | 632,500 | |||||||||||
Shares issued for equipment at $0.25 per share (unaudited) | 40 | 9,960 | - | 10,000 | |||||||||||
Shares issued for services at $0.25 per share (unaudited) | 122 | 30,253 | - | 30,375 | |||||||||||
Shares issued for services at $0.25 per share (unaudited) | 129 | 32,149 | - | 32,278 | |||||||||||
Shares issued for cash at $0.25 per share (unaudited) | 60 | 14,940 | - | 15,000 | |||||||||||
Net loss for the six months ended June 30, 2009 (unaudited) | - | - | - | (1,505,353) | (1,505,353) | ||||||||||
Balance, June 30, 2009 (unaudited) | 25,937,103 | $ | 25,937 | $ | 14,753,330 | $ | (16,436,942) | $ | (1,657,675) |
For the Nine Months Ended September 30, 2009 | For the Nine Months Ended September 30, 2008 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | (1,053,466 | ) | $ | 261,395 | |||
Discontinued operations | (630,274 | ) | (488,071 | ) | ||||
Add back non-cash items: | ||||||||
Depreciation | 14,390 | 16,112 | ||||||
Gain on sale of fixed assets | (3,891 | ) | 52 | |||||
Amortization of discount on convertible debt | 12,500 | - | ||||||
Common stock issued for services | 695,153 | - | ||||||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Change in accounts receivable | 7,246 | 5,655 | ||||||
Change in other assets | (6,225 | ) | (15,093 | ) | ||||
Change in accounts payable and accrued liabilities | 157,983 | 248,524 | ||||||
Change in other liabilities | (23,495 | ) | (22,850 | ) | ||||
Net cash (used in) provided by operating activities | (830,079 | ) | 5,724 | |||||
INVESTING ACTIVITIES: | ||||||||
Sale of fixed assets | 5,860 | 149 | ||||||
Purchase of fixed assets | (7,893 | ) | (1,249 | ) | ||||
Net cash provided by in investing activities | (2,033 | ) | (1,100 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Cash proceeds from common stock issued | ||||||||
Repayment of notes payable | (24,357 | ) | (11,732 | ) | ||||
Cash proceeds from notes payable | 680,466 | 5,000 | ||||||
Cash proceeds from sale of common stock | 15,000 | 5,300 | ||||||
Proceeds from related party loans | 132,645 | - | ||||||
Stock offering costs paid | ||||||||
Proceeds from bank overdraft | 2,032 | - | ||||||
Repayment of notes payable | ||||||||
Accrued interest on notes payable | 15,000 | - | ||||||
Net cash provided by financing activities | 820,786 | (1,432 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (11,326 | ) | 3,192 | |||||
Cash and cash equivalents at beginning of the year | 13,000 | 1,373 | ||||||
Cash and cash equivalents at end of the year | $ | 1,674 | $ | 4,565 | ||||
SUPPLEMENTAL DISCLOSURE: | ||||||||
Cash paid during the year for interest | $ | 60,878 | $ | 48,359 | ||||
Cash paid during the year for income taxes | $ | - | $ | - | ||||
Non Cash Financing Activities | ||||||||
Common stock issued for convertible debt and accrued interest | $ | - | $ | 348,750 | ||||
Common stock issued for services | $ | 695,153 | $ | - |
For the Six Months Ended June 30, 2009 | For the Six Months Ended June 30, 2008 | ||||
OPERATING ACTIVITIES: | |||||
Net income (loss) | $ | (875,079) | $ | 244,021 | |
Discontinued operations | (630,274) | (488,071) | |||
Add back non-cash items: | |||||
Depreciation | 10,065 | 10,862 | |||
Gain on sale of fixed assets | (3,891) | 52 | |||
Common stock issued for services | 695,153 | - | |||
Adjustments to reconcile net loss to net cash used by operating activities: | |||||
Change in accounts receivable | 8,202 | 36,112 | |||
Change in other assets | (17,248) | (7,824) | |||
Change in accounts payable and accrued liabilities | 55,074 | 100,567 | |||
Change in other liabilities | (56,452) | 116,106 | |||
Net cash (used in) provided by operating activities | (814,450) | 11,825 | |||
INVESTING ACTIVITIES: | |||||
Sale of fixed assets | 5,860 | 149 | |||
Purchase of fixed assets | (2,550) | - | |||
Net cash provided by in investing activities | 3,310 | 149 | |||
FINANCING ACTIVITIES: | |||||
Repayment of notes payable | (24,511) | (1,218) | |||
Cash proceeds from notes payable | 680,466 | 5,000 | |||
Cash proceeds from sale of common stock | 15,000 | - | |||
Proceeds from related party loans | 132,645 | - | |||
Accrued interest on notes payable | 2,500 | - | |||
Net cash provided by financing activities | 806,100 | 3,782 | |||
Net increase (decrease) in cash and cash equivalents | (5,040) | 15,756 | |||
Cash and cash equivalents at beginning of the year | 13,000 | 1,373 | |||
Cash and cash equivalents at end of the year | $ | 7,960 | $ | 17,129 | |
SUPPLEMENTAL DISCLOSURE: | |||||
Cash paid during the year for interest | $ | 55,468 | $ | 35,829 | |
Cash paid during the year for income taxes | $ | - | $ | - | |
Non Cash Financing Activities | |||||
Common stock issued for convertible debt and accrued interest | $ | - | $ | 348,750 | |
Common stock issued for equipment | $ | 10,000 | $ | - |
a) |
60,000 shares issued for cash at $0.25 per share in accordance with the PPM dated December 30, 2008. |
Item 2. | Management’s Discussion and Analysis or Plan of Operation |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 1A: | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. |
Item4. | Submission of Matters to a Vote of Security Holders |
Exhibit Number | Description of Exhibit |
IB3 NETWORKS, INC. | |||
Date: | |||
By: | /s/ Eric Schmidt | ||
Eric Schmidt | |||
Title: | Chief Executive Officer and Chief Financial Officer |