SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER: 000-29331
IKON VENTURES, INC.
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(Exact name of Small Business Issuer as Specified in its Charter)
NEVADA 76-0270295
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
1000 Woodbury Road, Suite 214, Woodbury, NY 11797
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(Address of Principal Executive Offices)
(516) 682-9700
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Issuer's Telephone Number. Including Area Code
Check whether the issuer (1), has filed all reports required to be
filed by Section 13 or 15(d) of The Securities Exchange Act of 1934 during the
preceding 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: As of August 15, 2001, the registrant
had 20,158,132 shares of Common Stock outstanding.
IKON VENTURES, INC.
FORM 10-QSB
For the Quarter Ended June 30, 2001
Index Page
Number
PART I FINANCIAL INFORMATION
Item 1 Balance Sheets at June 30, 2001 and December 31, 2000
(unaudited for June 30, 2001 period) ........................... 3
Statements of Operations for the six months ended
June 30, 2001 and 2000 (unaudited) and for the three months
ended June 30, 2001 and 2000 (unaudited) ....................... 4
Statements of Cash Flows for the six months ended
June 30, 2001 and 2000 (unaudited) ............................. 5
Notes to Unaudited Financial Statements ........................ 6
Item 2 Management's Discussion and Analysis or Plan of Operation ...... 12
PART II
Item 1 Legal Proceedings .............................................. 12
Item 2 Changes in Securities .......................................... 12
Item 3 Defaults Upon Senior Securities ................................ 13
Item 4 Submission of Matters to a Vote of Security Holders ............ 13
Item 5 Other Information .............................................. 13
Item 6 Exhibits and Reports on Form 8 - K ............................. 13
2
IKON VENTURES, INC.
BALANCE SHEETS
June 30, 2001 December 31,
Notes (Unaudited) 2000
$000 $000
------- -------
Assets
Current assets
Cash and cash equivalents 0 19
Prepaid and other current assets 3 3
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Total current assets 3 22
Property, plant and equipment, net 2 3
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5 25
======= =======
Liabilities and stockholders' equity
Current liabilities
Trade accounts payable 57 6
Accrued expenses and other 158 169
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Total current liabilities 215 175
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Total liabilities 215 175
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Stockholders' equity
Common stock, $0.001 par value. Authorized 100,000,000 shares; issued
and outstanding 310,890 shares in 2001 and 31,089,000 shares in 2000 -- --
Additional paid-in capital 11,830 11,830
Accumulated deficit (12,040) (11,980)
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Total stockholders' equity (210) (150)
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Total liabilities and stockholders' equity 5 25
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The accompanying notes are an integral part of these financial statements.
3
IKON VENTURES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Three Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
$000 $000 $000 $000
------ ------ ------ ------
Net sales -- -- -- --
Cost of goods sold -- -- -- --
------ ------ ------ ------
Gross profit -- -- -- --
Selling, general and administrative expenses (60) (227) (20) (60)
------ ------ ------ ------
Operating loss (60) (227) (20) (60)
Other income, net -- -- -- --
------ ------ ------ ------
Loss before provision for income taxes (60) (227) (20) (60)
Provision for income tax (5) -- -- -- --
------ ------ ------ ------
Net loss (2) (60) (227) (20) (60)
====== ====== ====== ======
Loss per common share (basic) ($0.193) ($0.015) ($0.064) ($0.004)
====== ====== ====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
4
IKON VENTURES, INC.
STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND JUNE 30, 2000
(UNAUDITED)
Note June 30, June 30,
2001 2000
$000 $000
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Net cash used by operating activities 6 (19) (4)
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Cash flows from investing activities -- --
Proceeds from disposal of property, plant and equipment -- --
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Net cash provided by investing activities -- --
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Cash flows from financing activities
Proceeds from issuance of common stock -- --
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Net cash provided by financing activities -- --
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Net decrease in cash and cash equivalents (19) (4)
Cash and cash equivalents at beginning of year 19 13
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Cash and cash equivalents at June 30 0 9
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Major non-cash transactions
In February, 2001 the Company effected a one for one hundred reverse stock
split.
The accompanying notes are an integral part of these financial statements.
5
IKON VENTURES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2001
1 Summary of significant accounting policies and practices
(a) Description of business
Ikon Ventures, Inc. ("the Company") was incorporated in Nevada
on May 31, 1997. The Company operated a Zeolite and related
chemicals production facility in Mira, Italy, through its main
subsidiary Zeolite Mira S.r.l. ("Zeolite Mira"). The Company's
customers were major European detergent companies with a small
proportion of production being sold through trading companies.
At the beginning of 1999 Zeolite Mira was sold. The Company
had no trading operations and was exploring new opportunities
until August 8, 2001, when the Company acquired all of the
outstanding common stock of Sutton Online, Inc. See Note 10
below.
(b) Cash equivalents
The Company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents.
(c) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation
on plant and equipment is calculated on the straight-line
method over the estimated useful lives of the assets.
(d) Research and development
Research and development costs are expensed as incurred. There
were no research and development costs in the six months ended
June 30, 2001 and 2000.
(e) Income taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period
that includes the enactment date.
6
IKON VENTURES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2001
(continued)
1 Summary of significant accounting policies and practices (continued)
(f) Commitments and contingencies
Liabilities for loss contingencies, including environmental
remediation costs, arising from claims, assessments,
litigation, fines and penalties, and other sources are
recorded when it is probable that a liability has been
incurred and the amount of the assessment and/or remediation
can be reasonably estimated. Recoveries from third parties
which are probable of realization are separately recorded, and
are not offset against the related environmental liability, in
accordance with Financial Accounting Standards Board
Interpretation No.39, Offsetting of Amounts Related to Certain
Contracts.
In October 1997, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 96-1,
Environmental Remediation Liabilities. SOP 96-1 was adopted by
the Company on January 1, 1998 and requires, among other
things, environmental remediation liabilities to be accrued
when the criteria of Statement of Financial Accounting
Standards ("SFAS") No. 5, Accounting for Contingencies, have
been met. The guidance provided by SOP 96-1 is consistent with
the Company's current method of accounting for environmental
remediation costs and, therefore, adoption of this new
statement does not have a material impact on the Company's
financial position, results of operations, or liquidity.
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and
reasonably estimable. Accruals for estimated losses for
environmental remediation obligations generally are recognised
no later than completion of the remedial feasibility study.
Such accruals are adjusted as further information develops or
circumstances change. Costs of future expenditures for
environmental remediation obligations are not discounted to
their present value. Recoveries of environmental remediation
costs from other parties are recorded as assets when their
receipt is deemed probable.
(g) 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, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from
these estimates.
7
IKON VENTURES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2001
(continued)
1 Summary of significant accounting policies and practices (continued)
(h) Impairment of long-lived assets and long-lived assets to be
disposed of
The Company adopted the provisions of SFAS No 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, on January 1, 1997. This Statement
requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the
fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value
less costs to sell.
(i) Foreign currency translation
Assets and liabilities denominated in foreign currencies are
translated into US dollars at current exchange rates. For
operations using the US dollar or the currency of a highly
inflationary economy as their functional currency, translation
gains or losses are generally reported in non-interest
revenues. Translation gains and losses for operations using
any other currency as their functional currency are reported,
net of tax effects, in stockholders' equity as cumulative
translation adjustments.
2 Financial position and basis of accounting
These consolidated financial statements have been prepared on a going
concern basis which contemplates the commencement, continuation and
expansion of trading activities as well as the realization of assets
and liquidation of liabilities in the ordinary course of business.
During 1997 the Company acquired the net liabilities of Zeolite Mira,
issuing shares to finance the acquisition. The Company traded at a loss
during 1997 and Zeolite Mira continued to record losses in 1998,
depleting the Company's cash resources. The Company sold Zeolite Mira
in 1999 resulting in the Company having no operating entities until
August 8, 2001, when the Company acquired all of the outstanding common
stock of Sutton Online, Inc. See Note 10 below.
The Company's continuation as a going concern is dependent on its
ability to issue new stock which will be required to fund the purchase
of additional businesses. This factor among others may indicate that
the Company may be unable to continue as a going concern for a
reasonable period of time. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
8
IKON VENTURES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2001
(continued)
3 Acquisitions and dispositions
There have been no acquisitions or dispositions in 2000 and 2001 until
August 8, 2001, when the Company acquired all of the outstanding common
stock of Sutton Online, Inc. See Note 10 below.
4 Fair value of financial instruments
SFAS No 107, Disclosure About Fair Value of Financial Instruments,
requires certain disclosures regarding the fair value of financial
instruments. Cash and cash equivalents, trade accounts receivable,
other current assets, trade accounts payables and accrued expenses are
reflected in the consolidated financial statements at fair value
because of the short term maturity of these instruments.
5 Income taxes
No credit has been taken for the operating losses which potentially
give rise to a deferred tax asset for the Company, on the grounds that
the directors do not believe that the company will be able to derive
any value from such an asset.
6 Reconciliation of net loss to net cash provided by operating activities
The reconciliation of net loss to net cash provided by operating
activities was as follows:
June 30, June 30,
2001 2000
$000 $000
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Net loss (40) (167)
Adjustments to reconcile loss to net cash provided by
operating activities:
Issue of common stock in payment of supplier
-- 40
Changes in assets and liabilities net of effect from
acquisitions and disposals:
Depreciation and amortisation of property, plant and equipment
1 --
(Decrease) increase in accounts payable 31 47
(Decrease) increase in accrued expenses and liabilities (11) 36
Decrease (increase) in prepayments and other assets -- 40
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Cash used by operating activities (19) (4)
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9
IKON VENTURES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2001
(continued)
7 Stock option and compensation plans
In 1999, the Company adopted the Ikon Ventures, Inc.1999 Incentive
Program ( the "1999 Plan") that permits the granting of any or all of
the following types of awards: stock options, stock appreciation
rights, in tandem with stock options or free standing, and restricted
stock grants. The aggregate number of shares that may be issued or
transferred under the 1999 Plan is 22,500 ( after giving effect to the
reverse split effected in February 2001), subject to adjustment under
certain circumstances. As of June 30, 2001, no award had been made
under the 1999 Plan.
In February 2001, the Company adopted the Ikon Ventures, Inc. 2001
Stock Compensation Plan (the "2001 Plan") that provides for the payment
of compensation for services rendered through the award of shares of
the Company's common stock. The aggregate number of shares that may be
awarded under the 2001 Plan is 5,000,000 provided that no award may be
issued that would bring the total of all outstanding awards under the
2001 Plan to more than 20% of the total number of shares of the
Company's common stock at the time outstanding. As of June 30, 2001, no
award had been made under the 2001 Plan.
8 Related party transactions
Mr. I.W. Rice, a director of the Company, paid the following amounts in
settlement of a debt to a supplier during the six month period ended
June 30 2000. The amounts paid have been shown as a liability of the
Company and are payable to Mr. Rice. June 30, 2001 June 30, 2000 $000
$000
June 30, June 30,
2001 2000
$000 $000
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Debt settled on behalf of IKON -- 15
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9 Business and credit concentrations
The business is not currently trading and has no concentration of
business or credit risk.
10 Subsequent events
On August 8, 2001, the Company acquired all of the outstanding common
stock of Sutton Online, Inc., a Delaware corporation ("Sutton"),
pursuant to an Agreement and Plan of Share Exchange, dated as of June
19, 2001, as amended as of July 18, 2001 (the "Exchange Agreement").
Under the terms of the Exchange Agreement, the company issued to the
stockholders of Sutton an aggregate of 15,222,219 shares of the
Company's common stock in exchange for all of the outstanding shares of
common stock of Sutton. This issuance represented approximately 76% of
the post-exchange issued and outstanding shares of the Company after
giving effect to certain other issuances effected prior to or
simultaneous with the completion of the share exchange.
10
In connection with, and in contemplation of the share exchange, the
Company effected the following transactions:
On June 18, 2001, the Company issued a convertible promissory note in
the principal amount of $100,000, the proceeds of which were loaned to
Sutton pursuant to the Exchange Agreement. Upon the consummation of the
share exchange, the Company issued to the holder of the note an
aggregate of 25,000 shares of the Company's common stock in payment of
the note in accordance with its terms.
On July 31, 2001, the Company completed the sale of 100,000 shares of
its common stock at $4.00 per share in a private placement to certain
accredited investors.
On August 8, 2001, the Company entered into a one year investor
relations contract with Investor Relations Services, Inc. pursuant to
which the Company issued an aggregate of 500,000 shares of its common
stock as payment for services to be rendered.
On August 8, 2001, the Company issued an aggregate of 4,000,000 shares
of its common stock under the company's 2001 Stock Compensation Plan to
four unaffiliated individuals for consulting services rendered to the
Company.
11
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results Of Operations
The Company has been inactive since April 1999, when it disposed of all
of its then operations. Accordingly, management believes that comparison between
the results of operations for the current period and prior periods would not be
meaningful.
In August 2001, the Company acquired all of the outstanding common
stock of Sutton Online, Inc., a Delaware corporation ("Sutton"). Sutton is a
direct access service provider providing online trading solutions to
individuals, broker dealers and financial companies worldwide.
Liquidity And Capital Resources
As of August 8, 2001, the Company had liquid assets of approximately
$300,000. The Company believes that such amount, together with the cash
generated from operations, will be sufficient to fund its operations (including
the operations of Sutton) for approximately the next 60 days.
The Company is in active negotiations with several parties to raise
additional capital. Management believes that equity financing would most likely
serve as the source of such additional capital. Any such equity financing would
be expected to result in dilution to the holders of the Company's common stock.
The Company could also seek to finance such expenses through debt financing. Any
debt financing obtained by the Company would be likely to include restrictive
covenants limiting the Company with respect to various operational and financial
matters. In any event, there can be no assurance that additional financing,
whether through sales of equity or debt, will be available on terms and
conditions acceptable to the Company, if available at all. If such financing
cannot be obtained, the Company would be required to curtail its operations. Any
such curtailment would have a material adverse effect on the Company's business
and results of operations.
Forward Looking Statements
This Form 10-QSB and other reports filed by the Company from time to
time with the Securities and Exchange Commission (collectively the "Filings")
contain or may contain forward looking statements and information that are based
upon beliefs of, and information currently available to, the Company's
management as well as estimates and assumptions made by the Company's
management.
When used in the filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
12
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized
IKON VENTURES, INC.
Date: August 17, 2001 By: /s/ JONATHAN D. SIEGEL
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Jonathan D. Siegel
Chief Executive Officer
13