Intelligent
Communication Enterprise Corporation
|
|
(Exact
name of registrant as specified in its charter)
|
|
Pennsylvania
|
25-1229323
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
13
Spottiswoode Park Road
|
|
Singapore
|
088640
|
(Address
of principal executive offices)
|
(Zip
Code)
|
+65
6324-0225
|
|
(Registrant’s
telephone number)
|
|
n/a
|
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
x
|
Yes
|
¨
|
No
|
¨
|
Yes
|
¨
|
No
|
Large
accelerated filer o
|
Accelerated
filer ¨
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
¨
|
Yes
|
x
|
No
|
x
|
Yes
|
¨
|
No
|
Page
|
||
PART
I—FINANCIAL INFORMATION
|
||
Item
1:
|
Financial
Statements:
|
|
Unaudited
Consolidated Balance Sheets as at March 31, 2010, and
|
||
December
31, 2009
|
3
|
|
Unaudited
Consolidated Statements of Operations for the
|
||
Three
Months Ended March 31, 2010 and 2009
|
4
|
|
Unaudited
Consolidated Statement of Stockholders’ Equity and
|
||
Comprehensive
Loss for the Three Months Ended March 31, 2010
|
5
|
|
Unaudited
Consolidated Statements of Cash Flows for the
|
||
Three
Months Ended March 31, 2010 and 2009
|
6
|
|
Notes
to Consolidated Financial Statements
|
8
|
|
Item
2:
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and
Results of Operations
|
18
|
|
Item
3:
|
Quantitative
and Qualitative Disclosures About Market Risk
|
20
|
Item
4T:
|
Controls
and Procedures
|
20
|
PART
II—OTHER INFORMATION
|
||
Item
6:
|
Exhibits
|
22
|
Signatures
|
22
|
INTELLIGENT
COMMUNICATION ENTERPRISE CORPORATION
|
|||||
Consolidated
Balance Sheets
|
|||||
March
31, 2010 and December 31, 2009
|
|||||
(unaudited)
|
|||||
March
31,
|
December
31,
|
||||
2010
|
2009
|
||||
Assets
|
|||||
Current
assets:
|
|||||
Cash
|
$
|
428,936
|
$
|
620,412
|
|
Restricted
cash
|
159,363
|
152,392
|
|||
Accounts
receivable, net
|
2,210,502
|
1,782,553
|
|||
Receivable
from employees
|
383,477
|
-
|
|||
Prepaid
expenses and deposits
|
195,488
|
198,161
|
|||
Income
taxes receivable
|
10,140
|
14,108
|
|||
Total
current assets
|
3,387,906
|
2,767,626
|
|||
Property
and equipment, net
|
742,405
|
784,702
|
|||
Intangible
assets, net
|
10,466,635
|
2,037,291
|
|||
Total
assets
|
$
|
14,596,946
|
$
|
5,589,619
|
|
Liabilities
and Stockholders' Equity (Deficit)
|
|||||
Current
liabilities:
|
|||||
Accounts
payable
|
$
|
3,472,759
|
$
|
2,296,860
|
|
Accrued
expenses
|
1,192,222
|
1,166,916
|
|||
Accrued
compensation
|
101,345
|
6,996
|
|||
Customer
deposits and deferred revenue
|
207,892
|
459,386
|
|||
Amounts
due to stockholder
|
611,516
|
515,061
|
|||
Promissory
note
|
17,352
|
17,352
|
|||
Convertible
notes payable, net of discounts
|
1,912,736
|
1,787,454
|
|||
Total
current liabilities
|
7,515,822
|
6,250,025
|
|||
Stockholders'
Equity (Deficit)
|
|||||
Preferred
stock:
|
|||||
$0.0001
par value, authorized 150,000,000
|
|||||
issued
and outstanding nil shares (2009 - nil)
|
-
|
-
|
|||
Common
stock:
|
|||||
$0.0001
par value, authorized 250,000,000,000 shares
|
|||||
issued
and outstanding 93,725,841 shares (2009 - 62,381,118)
|
9,373
|
6,239
|
|||
Additional
paid in capital
|
26,112,077
|
15,353,102
|
|||
Deficit
|
(18,807,888)
|
(15,955,706)
|
|||
Accumulated
other comprehensive gain (loss)
|
(232,438)
|
(64,041)
|
|||
Total
stockholders' equity (deficit)
|
7,081,124
|
(660,406)
|
|||
Total
liabilities and stockholders' equity (deficit)
|
$
|
14,596,946
|
$
|
5,589,619
|
|
See
accompanying notes to consolidated financial statements.
|
INTELLIGENT
COMMUNICATION ENTERPRISE CORPORATION
|
|||||
Consolidated
Statements of Operations
|
|||||
For
the three months ended March 31, 2010 and 2009
|
|||||
(unaudited)
|
|||||
2010
|
2009
|
||||
Revenue
|
$
|
2,502,173
|
$
|
2,004,527
|
|
Cost
of revenue
|
2,056,877
|
1,455,781
|
|||
Gross
margin
|
445,296
|
548,746
|
|||
Expenses:
|
|||||
General
and administrative
|
3,247,545
|
1,210,153
|
|||
Research
and development
|
-
|
27,984
|
|||
3,247,545
|
1,238,137
|
||||
Other
income and expense:
|
|||||
Interest
expense
|
(1,379)
|
(2,427)
|
|||
Interest
expense - related parties
|
(48,554)
|
(76,758)
|
|||
(49,933)
|
(79,185)
|
||||
Net
loss for the period
|
$
|
(2,852,182)
|
$
|
(768,576)
|
|
Loss
per share - basic and diluted
|
$
|
(0.04)
|
$
|
(0.01)
|
|
Weighted
average number of shares outstanding
|
70,203,639
|
54,614,059
|
|||
See
accompanying notes to consolidated financial statements.
|
INTELLIGENT
COMMUNICATION ENTERPRISE CORPORATION
|
||||||||||||||||
Consolidated
Statement of Stockholders' Equity and Comprehensive Loss
|
||||||||||||||||
For the three months ended March 31, 2010 | ||||||||||||||||
(unaudited)
|
||||||||||||||||
Common
Stock
|
Additional
|
Accumulated
Other Compre-
hensive Gain |
Total
Stockholders'
Equity |
|||||||||||||
Number
of Shares
|
Amount
|
Paid-in
Capital
|
Deficit
|
(Loss)
|
(Deficit)
|
|||||||||||
Balance
December 31, 2009
|
62,381,118
|
$
|
6,239
|
$
|
15,353,102
|
$
|
(15,955,706)
|
$
|
(64,041)
|
$
|
(660,406)
|
|||||
Net
loss
|
-
|
-
|
-
|
(2,852,182)
|
-
|
(2,852,182)
|
||||||||||
Foreign
currency translations
|
-
|
-
|
-
|
-
|
(168,397)
|
(168,397)
|
||||||||||
Comprehensive
loss
|
(3,020,579)
|
|||||||||||||||
Common
stock issued for services provided
|
2,400,000
|
240
|
1,139,760
|
-
|
-
|
1,140,000
|
||||||||||
Common
stock issued for acquisition of subsidiary
|
28,944,723
|
2,894
|
9,597,106
|
-
|
-
|
9,600,000
|
||||||||||
Beneficial
conversion feature of convertible note payable
|
-
|
-
|
22,109
|
-
|
-
|
22,109
|
||||||||||
Balance
March 31, 2010
|
93,725,841
|
$
|
9,373
|
$
|
26,112,077
|
$
|
(18,807,888)
|
$
|
(232,438)
|
$
|
7,081,124
|
|||||
See
accompanying notes to consolidated financial statements.
|
||||||||||||||||
INTELLIGENT
COMMUNICATION ENTERPRISE CORPORATION
|
||||||
Consolidated
Statements of Cash Flows
|
||||||
For
the three months ended March 31, 2010 and 2009
|
||||||
(unaudited)
|
||||||
2010
|
2009
|
|||||
Cash
provided by (used in):
|
||||||
Operating
activities:
|
||||||
Net
loss for the period
|
$
|
(2,852,182)
|
$
|
(768,576)
|
||
Adjustment
to reconcile net loss for the period to
|
||||||
net
cash provided by (used in) operating activities:
|
||||||
Depreciation
of property and equipment
|
117,135
|
135,457
|
||||
Amortization
of intangible assets
|
1,033,886
|
239,816
|
||||
Equity
line of credit discount
|
-
|
22,942
|
||||
Commissions
paid on equity line of credit
|
-
|
60,000
|
||||
Common
Stock issued for services
|
1,140,000
|
-
|
||||
Amortization
of debt discounts and beneficial conversion
|
||||||
of
convertible loans
|
22,109
|
46,383
|
||||
Changes
in operating assets and liabilities
|
||||||
net
of effects of acquisitions:
|
||||||
Accounts
receivable
|
(356,506)
|
362,699
|
||||
Prepaid
expenses and deposits
|
14,388
|
63,509
|
||||
Accounts
payable
|
850,349
|
(414,098)
|
||||
Accrued
expenses
|
(139,440)
|
231,383
|
||||
Customer
deposits and deferred revenue
|
(251,494)
|
96,230
|
||||
Accrued
compensation
|
93,713
|
91,685
|
||||
Income
taxes receivable
|
3,968
|
-
|
||||
Net
cash provided by (used in) operating activities
|
(324,074)
|
167,430
|
||||
Investing
activities:
|
||||||
Cash
component upon acquisition
|
28,617
|
677,250
|
||||
Increase
in restricted cash
|
(6,971)
|
(181,667)
|
||||
Net
cash provided by investing activities
|
21,646
|
495,583
|
||||
Financing
activities:
|
||||||
Proceeds
from equity lines of credit, net of commissions
|
-
|
70,000
|
||||
Proceeds
from advance from director
|
-
|
24,986
|
||||
Repayment
of advances to employees
|
28,477
|
-
|
||||
Proceeds
from advance from affiliated company
|
221,737
|
-
|
||||
Net
cash provided by financing activities
|
250,214
|
94,986
|
||||
Increase
(decrease) in cash during the period
|
(52,214)
|
757,999
|
||||
Foreign
exchange effect on cash
|
(139,262)
|
36,634
|
||||
Cash
at beginning of the period
|
620,412
|
14,138
|
||||
Cash
at end of the period
|
$
|
428,936
|
$
|
808,771
|
||
See
accompanying notes to consolidated financial statements.
|
INTELLIGENT
COMMUNICATION ENTERPRISE CORPORATION
|
||||||
Consolidated
Statements of Cash Flows (continued)
|
||||||
For
the three months ended March 31, 2010 and 2009
|
||||||
(unaudited)
|
||||||
Supplementary
Information:
|
||||||
2010
|
2009
|
|||||
Interest
paid
|
$
|
-
|
$
|
-
|
||
Income
taxes paid
|
-
|
-
|
||||
Non-cash
transactions:
|
||||||
Common
stock converted for settlement of
|
||||||
equity
lines of credit
|
-
|
67,298
|
||||
Common
stock issued for acquisition of subsidiary
|
9,600,000
|
-
|
||||
See
accompanying notes to consolidated financial statements.
|
Assets
|
||
Cash
|
$
|
28,617
|
Accounts
receivable
|
83,158
|
|
Due
from related parties
|
411,954
|
|
Property
and equipment
|
39,017
|
|
Intangible
assets
|
9,623,318
|
|
Total
assets
|
10,186,064
|
|
Liabilities
|
||
Accounts
payable and accrued expenses
|
586,064
|
|
Total
liabilities
|
586,064
|
|
Net
assets acquired
|
$
|
9,600,000
|
Intelligent
Communication Enterprise Actual 1/1/2009 to 3/31/2009
|
Solesys
1/1/2009 to 3/31/2009
|
Pro
Forma
|
|||
Revenue
|
$2,004,527
|
$ 77,838
|
$
2,082,365
|
||
Net
income (loss) for the period
|
(768,576)
|
(799,347)
|
(1,567,923)
|
||
Loss
per share – basic and diluted
|
$(0.01)
|
$(0.02)
|
March
31, 2010
|
December
31, 2009
|
|||||
Furniture,
computer equipment and software
|
$
|
2,678,716
|
$
|
2,509,238
|
||
Leasehold
Improvements
|
57,072
|
48,736
|
||||
Vehicle
|
130,071
|
54,094
|
||||
2,865,859
|
2,612,068
|
|||||
Less
accumulated depreciation
|
(2,123,454)
|
(1,827,366)
|
||||
Property
and equipment, net
|
$
|
742,405
|
$
|
784,702
|
March
31, 2010
|
December
31, 2009
|
|||||
Customer
and reseller relationships
|
$
|
1,331,551
|
$
|
1,271,113
|
||
Supplier
contracts
|
1,864,172
|
1,779,558
|
||||
Intellectual
property
|
9,384,503
|
|||||
12,580,227
|
3,050,671
|
|||||
Less
accumulated amortization
|
(2,113,592)
|
(1,013,380)
|
||||
$
|
10,466,635
|
$
|
2,037,291
|
·
|
$63,925
due September 30, 2010
|
·
|
$121,343
due October 31, 2010
|
·
|
$102,186
due November 31, 2010
|
·
|
February
10, 2010 - $250,000
|
·
|
May
15, 2010 - $250,000
|
·
|
September
15, 2010 - $500,000
|
·
|
December
10, 2010 - $500,000
|
·
|
issued
2,400,000 shares of common stock for services received with a fair value
of $1,140,000; and
|
·
|
issued
28,944,723 shares of common stock for the acquisition of all the
outstanding shares of Solesys S.A. with a fair value of
$9,600,000.
|
Number
of Warrants
|
Exercise
Price
|
Expiry
|
|
||
44
|
$ 500.00
|
2011
|
40
|
575.00
|
2011
|
200
|
4,000.00
|
2012
|
2,500
|
0.22
|
2013
|
2,500
|
0.125
|
2013
|
2,500
|
0.125
|
2013
|
Number
of
|
Weighted
Average
|
|||
Options
|
Exercise
Price
|
|||
Outstanding
at December 31, 2007
|
675
|
$ 0.031
|
||
Options
issued:
|
||||
to
a director on May 3, 2008, fair value of $33,047
|
804
|
0.001
|
||
to
an employee on August 15, 2008, fair value of $14,180
|
1,365
|
0.020
|
||
to
employees on August 15, 2008, fair value of $1,872
|
180
|
0.001
|
||
to
an employee on December 8, 2008, fair value of $205
|
120
|
10.000
|
||
Outstanding
at December 31, 2008
|
3,144
|
|||
to
an employee on May 1, 2009, fair value $96
|
120
|
0.002
|
||
options
forfeited
|
(180)
|
6.66
|
||
options
exercised
|
(2,772)
|
0.001
|
||
to
employees on November 12, 2009, fair value of $92,117
|
681,750
|
0.293
|
||
Outstanding
at December 31, 2009 and March 31, 2010
|
682,062
|
$ 0.293
|
Number
|
Average
|
Number
|
Intrinsic
|
|||||
Outstanding
|
Remaining
|
Exercisable
|
Value
|
|||||
at
|
Contractual
|
at
|
at
|
|||||
March
31,
|
Life
|
March
31,
|
March
31,
|
|||||
Exercise
Price
|
2010
|
(Years)
|
2010
|
2010
|
||||
$0.056
|
312
|
2.08
|
312
|
$ 159
|
||||
0.293
|
681,750
|
4.58
|
326,250
|
166,388
|
Three
Months Ended
March 31,
2010
|
Three
Months Ended
March
31, 2009
|
||||
Revenue
|
|||||
Corporate
and PIV
|
$
|
-
|
$
|
-
|
|
Mobile
messaging
|
2,422,914
|
2,004,527
|
|||
Solesys
|
79,259
|
-
|
|||
$
|
2,502,173
|
$
|
2,004,527
|
||
Loss
|
|||||
Corporate
and PIV
|
$
|
(1,500,895)
|
$
|
(383,305)
|
|
Mobile
messaging
|
(515,393)
|
(385,271)
|
|||
Solesys
|
(835,894)
|
-
|
|||
$
|
(2,852,182)
|
$
|
(768,576)
|
||
Assets
|
|||||
Corporate
and PIV
|
$
|
4,653
|
$
|
108,047
|
|
Mobile
messaging
|
5,393,566
|
5,686,475
|
|||
Solesys
|
9,198,727
|
-
|
|||
$
|
14,596,946
|
$
|
5,794,522
|
Three
Months Ended March 31, 2010
|
Three
Months Ended March 31, 2009
|
||||
Revenue
|
|||||
Corporate
and PIV
|
$
|
-
|
$
|
-
|
|
Mobile
messaging
|
2,422,914
|
2,004,527
|
|||
Solesys
|
79,259
|
-
|
|||
$
|
2,502,173
|
$
|
2,004,527
|
||
Loss
|
|||||
Corporate
and PIV
|
$
|
(1,500,895)
|
$
|
(383,305)
|
|
Mobile
messaging
|
(515,393)
|
(385,271)
|
|||
Solesys
|
(835,894)
|
-
|
|||
$
|
(2,852,182)
|
$
|
(768,576)
|
|
(i)
|
Lack of independent directors
for our board and audit committee. We currently have one
independent director on our board, which is comprised of three
directors. Although there is no requirement that we have any
independent directors, we intend to have a majority of independent
directors as soon as we are reasonably able to do
so.
|
|
(ii)
|
Insufficient segregation of
duties in our finance and accounting functions due to limited
personnel. During the three-month period ended March 31,
2010, we had one person on staff that performed nearly all aspects of our
financial reporting process, including access to the underlying accounting
records and systems, the ability to post and record journal entries, and
responsibility for the preparation of the financial
statements. This creates certain incompatible duties and a lack
of review over the financial reporting process that would likely result in
a failure to detect errors in spreadsheets, calculations, or assumptions
used to compile the financial statements and related disclosures as filed
with the Securities and Exchange Commission. These control
deficiencies could result in a material misstatement to our interim or
annual consolidated financial statements that would not be prevented or
detected.
|
|
(iii)
|
Insufficient corporate
governance policies. Although we have a code of ethics
that provides broad guidelines for corporate governance, our corporate
governance activities and processes are not always formally
documented. Specifically, decisions made by the board to be
carried out by management should be documented and communicated on a
timely basis to reduce the likelihood of any misunderstandings regarding
key decisions affecting our operations and
management.
|
(iv)
|
Accounting for technical
matters. Our current accounting personnel perform
adequately in the basic accounting and recordkeeping
function. However, our operations and business practices
include complex technical accounting issues that are outside the routine
basic functions. The complex areas include issuance of
convertible debt (with attached warrants), beneficial conversion features
issued with equity lines of credit, and accounting for software
development costs. These technical accounting issues are
complex and require significant expertise to ensure that the accounting
and reporting are accurate and in accordance with generally accepted
accounting principles. This is especially important for
periodic interim reporting that is not subject to
audit.
|
Exhibit
Number*
|
Title
of Document
|
Location
|
||
Item
31
|
Rule
13a-14(a)/15d-14(a) Certifications
|
|||
31.01
|
Certification
of Principal Executive Officer Pursuant to Rule 13a-14
|
Attached
|
||
31.02
|
Certification
of Principal Financial Officer Pursuant to Rule 13a-14
|
Attached
|
||
Item
32
|
Section
1350 Certifications
|
|||
32.01
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
|
Attached
|
||
32.02
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
|
Attached
|
*
|
All exhibits are
numbered with the number preceding the decimal indicating the
applicable SEC reference number in Item 601 and the number following the
decimal indicating the sequence of the particular
document.
|
Registrant
|
||
Intelligent
Communication Enterprise Corporation
|
||
Date:
May 20, 2010
|
By:
|
/s/
Luther L. Jao
|
Luther
L. Jao, President and
|
||
Chief
Executive Officer
|
||
Date:
May 20, 2010
|
By:
|
/s/
Kenneth G.C. Telford
|
Kenneth
G.C. Telford
|
||
Chief
Financial Officer
|