U.S. SECURITIES AND EXCHANGE
COMMISSION Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30 2003
[ ] 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: 0-27865
ICEWEB, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 54-1789433
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
620 Herndon Parkway, Suite 360, Herndon, VA 20170
(Address of Principal executive offices)
Issuer's telephone number, including area code: (703) 964-8000
Check whether the issuer (1) filed all reports required to be filed by 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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 34,150,878 issued and
outstanding at June 30, 2003.
ICEWEB INC.
QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED
June 30, 2003
TABLE OF CONTENTS
Page No.
PART I FINANCIAL INFORMATION --------
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheet as at June 30, 2003 ...3
Unaudited Condensed Consolidated Statements of Operations for
the nine months ended June 30, 2003 and June 30, 2002 ................4
Unaudited Condensed Consolidated Statements of Cash Flows for
the nine months ended June 30, 2003 and June 30, 2002 ................5
Notes to Unaudited Condensed Consolidated Financial Statements .....6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .............................................7-13
PART II OTHER INFORMATION ...................................................13
Signatures ..........................................................15
2
ITEM 1. FINANCIAL STATEMENTS
ICEWEB, INC.
June 30, 2003
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS 2003
Current assets:
Cash ........................................................ $ 106,608
Accounts receivable, net .................................... $ 646,215
Prepaid Expenses ............................................ 15,376
-----------
Total current assets ...................................... 768,199
Property and equipment, net ................................... 65,170
Deposits ...................................................... 9,533
Goodwill ...................................................... 174,866
-----------
Total Fixed Assets ............................................ $ 249,569
Total assets .................................................. $ 1,017,768
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable ............................................ $ 669,942
Accrued expenses ............................................ 101,539
Line of credit - related party .............................. 266,270
Deferred Rent Revenue ....................................... 26,080
Note Payable - Seller ....................................... 123,000
Notes payable - related party ............................... 247,000
-----------
Total current liabilities ................................. $1,433,831
Stockholders' deficit:
Common stock, $.001 par value;
100,000,000 shares authorized, 34,150,878 issued .......... 34,151
Additional paid in capital .................................. 2,020,188
Accumulated deficit ......................................... (2,470,402)
-----------
Total stockholders' deficit ............................... (416,063)
-----------
Total liabilities and stockholders' deficit ................... 1,017,768
See notes to condensed consolidated unaudited financial statements
3
ICEWEB INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002
(UNAUDITED)
Nine Months Ended
-------------------------------
June 30, 2003 June 30, 2002
------------- -------------
Revenues ................................... 628,496 171,665
Cost of Sales .............................. 463,563 63,611
----------- -----------
Gross Profit ............................... 164,933 108,054
Operating expenses:
Marketing & sales ........................ 16,018 188,134
Research & Development ................... - 69,433
General & Administrative ................. 231,721 372,223
----------- -----------
247,739 629,790
Operating loss ............................. (82,806) (521,736)
Interest income(expense) ................... (17,447) (3,527)
Loss on disposal of assets ................. - 2,117
Net Loss ................................... (100,253) (527,382)
=========== ===========
Basic loss per common share ................ $ .00 $ (.02)
Weighted average common shares outstanding . 31,909,100 25,307,864
See notes to condensed consolidated unaudited financial statements
4
ICEWEB INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002
(UNAUDITED)
Three Months Ended
-------------------------------
June 30, 2003 June 30, 2002
------------- -------------
Revenues ................................... 595,631 30,493
Cost of Sales .............................. 452,817 14,313
----------- -----------
Gross Profit ............................... 142,814 16,180
Operating expenses:
Marketing & sales ........................ 10,683 72,283
Research & development ................... - 26,392
General & Administrative ................. 29,598 135,749
----------- -----------
40,281 234,424
Operating Income (Loss) .................... 102,533 (218,242)
Interest income(expense) ................... (7,850) (88)
Prior Period Adjustment .................... 90,018 -
Net Income(loss) ........................... 94,683 (218,330)
=========== ===========
Basic Income per common share .............. $ .00 $ (.01)
Weighted average common shares outstanding . 31,909,100 29,437,878
See notes to condensed consolidated unaudited financial statements
5
ICEWEB INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002(UNAUDITED)
June 30, June 30,
2003 2002
--------- ----------
NET CASH USED IN OPERATIONS .......................... (72,078) (297,290)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed Assets ........................... (26,502) (9,695)
Proceeds from sale of fixed assets ................. - 10,000
Cash acquired in acquisitions ...................... 85,713 -
Acquisition of subsidiaries ........................ (42,000) -
--------- ----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 17,211 305
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of (proceeds from)
note payable - related party .................... (136,845) 34,014
Notes Payable ...................................... - 257,000
Contributed Capital ................................ - (1,139)
Proceeds from stock sales .......................... 289,310 -
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ..... 152,465 289,875
NET INCREASE (DECREASE) IN CASH ...................... 97,598 (7,110)
CASH, beginning of period ............................ 9,010 15,484
--------- ---------
CASH, end of period .................................. 106,608 8,374
========= =========
NON CASH TRANSACTIONS:
Conversion of debt to equity ......................... $ 10,000 $ -
Stock compensation expense ........................... $ 16,160 $ -
Stock issued in acquisitions ......................... $ 96,000 $ -
Amounts payable for acquisition ...................... $ 123,000 $ -
See notes to condensed consolidated unaudited financial statements
6
ICEWEB Inc.
Notes to Condensed Consolidated Financials Statements unaudited
NOTE 1 - BASIS OF PRESENTATION
The financial statements included in this report have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and include all adjustments (consisting only of
normal recurring adjustment) that are, in the opinion of management, necessary
for a fair presentation. These financial statements have not been audited.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations for
interim reporting. The Company believes that the disclosures contained herein
are adequate to make the information presented not misleading. However, these
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual Report for the year ended
September 30, 2002, which is included in the Company's Form 10-KSB for the year
ended September 30, 2002. The financial data for the interim periods presented
may not necessarily reflect the results to be anticipated for the complete year.
NOTE 2 - Acquisitions
Two companies were acquired in June 2003, Interlan Corporation and Seven
Corporation. The Company acquired all of the outstanding stock of Interlan and
Seven in exchanges for $165,000 in cash, $42,000 paid at closing and $123,000
payable over the next six months and 500,000 shares of Iceweb stock. The total
value of cash and stock paid was $261,000, resulting in goodwill recorded of
$174,866 as of June 30, 2003. These items are reflected in the Financial
Statements.
Founded in 1995, Interlan is a provider of Data Networking and Network Security
infrastructure solutions for business, government and education. Interlan
specializes in network security, remote access, wide area and local area network
products, services, training and consulting.
The Seven Corporation provides high-level CIO, CTO, and IT Program Management
services that enable our customers to implement Information Technology solutions
quickly and effectively.
Seven specializes in the planning, design, and implementation management of
technology systems for organizations that do not have the experience, time, or
on-staff capabilities to modernize their business.
The following unaudited consolidated pro forma interim financial information for
the Company is presented as if the share exchange had taken place on October 1,
for each of the respective years.
June 30, 2003
-------------
Revenue .................................... 2,784,445
Expenses ................................... 2,647,355
Net Income (Loss) .......................... 137,090
Income (Loss) per Share .................... 0
NOTE 3 - RELATED PARTIES
The Company has a payable to related parties for $123,000 as part of the
acquisition of the Seven Corporation.
7
NOTE 4 - STOCK OFFERING
The Company had a private placement of up to 3,000,000 units as of September 30,
2002 and the placement has been sold out. Each Unit consists of one share of
common stock and one common stock purchase warrant. Each warrant entitles the
holder to purchase one share of common stock at a purchase price of $.60 per
share. The Warrants are immediately exercisable and will expire on July 1, 2004.
Upon 15 days written notice, the Company may call any Warrant at a call price of
$.001 per underlying share should the common stock trade at or above $1 for 10
consecutive trading days prior to the date of such notice. The company has sold
a total number of approximately 4,000,000 shares of common stock in the nine
months ended June 30, 2003 through the private placement and through investment
letters to accredited investors.
NOTE 5 - GOING CONCERN
In the quarter ending June 30, the corporation made two significant
Acquisitions that will directly impact the going concern and the business plan
of the company moving forward in an positive financial direction. As compared to
last quarter, the revenue increased 4500% which will directly impact the
companies ability to operate. In addition, one of the acquisitions has
guaranteed government contracts in excess of $1,000,000. The core IceWEB
E-Learning business also continued to grow in the quarter.
These events in total have reduced the overall losses in the company for the
year to $100,253, a 190% decrease as compared to last year. The two acquisitions
also provide additional technical resources and product certifications that are
key to growing the core software business.
The Company's auditors stated in their reports on the financial statements of
the Company for the years ended September 30, 2002 and 2001 that the Company is
dependent on outside financing and has had losses since inception that raise
substantial doubt about our ability to continue as a going concern. For the
years ended September 30, 2002 and 2001, the Company incurred net annual losses
of $751,925 and $996,474 respectively. Management believes that resources will
be available from private and operating sources in 2003 to continue the
marketing of the Company's products and services. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Management has established plans intended to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities
offerings to provide funds needed to increase liquidity, fund growth and
implement its business plan; however, no assurance can be given that the Company
will be able to raise any additional capital.
8
NOTE 6 - CHANGE IN ESTIMATE
During the quarter ended June 30, 2003, the Company recognized approximately
$90,018 in reduced expenses. This reduction in expenses related to 2002 accrued
payroll which were either forgiven or settled for less than the original amount.
NOTE 7 - NEW PRONOUNCEMENTS
In April 2003, the Financial Accounting Standards Board issued Statement of
Financial Account Standards No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This Statement amends Statement No. 133 to
clarify the financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. This statement is effective for contracts entered into or
modified after June 30, 2003.
In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Account Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability. The requirements of this Statement apply to issuers'
classification and measurement of freestanding financial instruments. This
Statement is effective for financial instruments entered into or modified after
May 31, 2003 and otherwise effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatorily redeemable
financial instruments of nonpublic entities. For nonpublic entities, mandatorily
redeemable financial instruments are subject to the provisions of this Statement
for the first fiscal period beginning after December 15, 2003.
NOTE 8 - SUBSEQUENT EVENT
On August 15, 2003, the Company entered into a verbal agreement with two related
parties to issue 450,000 shares of common stock as satisfaction of a related
party note payable of $97,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read together with the information contained
in the financial statements and related notes included elsewhere in this report.
Our independent auditors have added explanatory paragraphs to their audit
opinions issued in connection with the 2002 and 2001 financial statements which
states that our Company is dependent on outside financing and has had losses
since inception that raise substantial doubt about our ability to continue as a
going concern. Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
9
Critical Accounting Estimate
Financial Reporting Release No. 60, which was recently released by the U.S.
Securities and Exchange Commission, encourages all companies to include a
discussion of critical accounting estimates or methods used in the preparation
of financial statements. Our consolidated financial statements include a summary
of the significant accounting policies and methods used in the preparation of
our consolidated financial statements.
Management believes the following critical accounting policies affect the
significant judgments and estimates used in the preparation of the financial
statements.
Revenue Recognition - revenues are recognized at the time of shipment of the
respective products and/or services. Our Company includes shipping and handling
fees billed to customers as revenues.
Use of Estimates
Management's discussion and analysis of financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues, and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, management evaluates
these estimates, including those related to allowances for doubtful accounts
receivable and the carrying value of inventories and long-lived assets.
Management bases these estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis of making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.
Plan of operation
In June 2003, Iceweb acquired Interlan, Inc., a computer hardware re-seller and
Seven Corporation, an IT consulting firm. Both companies provide ideal cross
marketing opportunities and financially strengthen Iceweb's operations.
From 1999 until June 2001, Iceweb operated as a technology hardware and software
distributor business. In June 2001, we acquired the assets of Learning Stream,
Inc. (LSI) in bankruptcy and changed the business model to enable interactive
communication and education on the Internet. Our goal is to expand our product
and services offering to take advantage of what we believe to be a rapidly
growing market.
Iceweb's proprietary software, IceSHOW(TM) under development since 1999 and
completed in 2002, allows us to create Web-ready multimedia productions very
quickly, giving us a tangible competitive advantage in both time and cost. Our
technology integrates audio, video and PowerPoint slides into a highly
interactive, customizable interface for online training and interactive
marketing.
10
Additional features can easily be added including closed captioning, indexing,
animation, quizzes and surveys and pay-per-view capabilities. The software ties
to a database backend that provides authentication and reporting.
Markets for Products and Services
Iceweb currently has customers in the training, corporate communications and
advertising/marketing segments. We focus on e-learning solutions while
continuing to support the other segments. Our acquisition of Seven has enhanced
our service sector capitability.
Training - A model customer has a widely dispersed audience with regular
training needs; these needs could include compliance with government
regulations, skills updating or educational enhancement.
A typical online course would include video or audio with synchronized slides,
plus interactive elements such as registration, quizzes and materials downloads
as well as a database to track progress, compliance and effectiveness. In
addition, training companies, universities or trade associations could charge
students for the course work, creating a new source of ongoing revenue. Iceweb
is providing e-learning solutions for the hotel brands within the Cendant
Corporation training hospitality managers worldwide.
Corporate Communications - A model customer is a corporation with offices
throughout the US or the world. Iceweb's solutions could provide on-demand or
live streaming of executive addresses or earnings calls. They could also be used
by the Human Resources department to provide orientation, introduce new benefits
programs or deliver presentations to employees on compliance matters, such as
sexual harassment training.
Advertising & Marketing - Online presentations can be used to sell or market
nearly any industrial or consumer product. As with any direct marketing
technique, the content is of prime importance. However, studies have shown that
by making the message entertaining, combining audio, video and synchronized
slides, retention dramatically increases.
Iceweb has the ability to profitably sell its products and services while
innovating to comply with the leading technology standards. In addition,
Iceweb's training focus will allow it to market is products and services to the
most rapidly growing viewing audience.
Technology
The majority of Iceweb's applications are based on client-server technology. The
authoring and content management application software has been developed using a
combination of C++, ColdFusion, Javascript, ASP, VBscript, Java, and Flash.
Since a majority of the processing is done on our server network, the author
only needs a browser to produce and manage presentations. This keeps the need
for desktop processing power to a minimum and allows for future development of
enterprise solutions that can be hosted within a customer's network. With the
acquisition of Interlan, we have extended our range of products to include
computer hardware.
11
All Iceweb's software utilizes its original technology in one form or another.
By leveraging the code of existing products, Iceweb decreases new product
development costs, shortens time to market and is therefore able to realize new
revenues from new products quickly.
IceSHOW(TM) is the company's core technology, a multimedia creation and delivery
platform. IceSHOW's powerful feature set and intuitive viewer interface are
designed for ease of use. It offers great flexibility and convenience to
non-technical users. IceSHOW(TM) further reduces costs through an online
production center. A "wizard" steps users through the process of uploading and
converting existing media components, then stitching them together seamlessly.
There are options for adding a branded interface and other interactive elements
as well. Taking only minutes to complete, the resulting show is ready for
distribution via the Internet or an intranet.
IceSLIDE(TM) is our PowerPoint-to-Flash format conversion tool. It makes
PowerPoint shows small enough to distribute via the Web or through e-mail.
IceSLIDE(TM) was developed from the slide conversion technology built into
IceSHOW(TM). We currently sell IceSLIDE(TM) directly to graphics professional
via our Web site.
Services
Consulting - Iceweb's consulting staff has years of experience in providing
custom multimedia solutions to all size organizations. Iceweb consulting
services include personalized project management, multimedia development,
synchronization of all media assets, application design and development,
software integration, instructional design, graphic design, foreign language
translations and delivery methods.
IceSTUDIO(TM) - Iceweb provides services include audio/video production, live
Webcasting, audio/video editing, audio/video encoding, audio/video
transcription, and voiceovers.
o Encoding - We accept source material in virtually any format to digitize and
encode into a file format that is compatible with the streaming media
architecture being used. The end result is video and audio configured properly
for transmission online at the best possible resolution, motion, clarity and
system compatibility.
o Webcasting - We can produce live Webcasts from a studio or from on-location.
Our Webcasts can include audio, video, synchronized slides and graphics; shows
can appear in an interface branded with your company's look and feel. Interface
options include buttons for downloading additional material, sending a message
to the presenter and requesting technical help. Other available features include
advance user registration, user system detection, password protection,
interactive surveys, quizzes and more.
Sales & Marketing Strategy
Iceweb reaches its buyers directly through telesales and direct marketing. We
are also building a highly focused sales channel to refer or resell Iceweb
solutions.
12
Packaged Solutions
IceWEB's packaged solutions provide for on-demand viewing and include a
customized interface, login and registration forms, some level of interactivity,
and hosting services for a specified period of time. They require only minimal
amount of labor to create the presentations. These products include:
o IceSHOW(TM) e-Learning: Aimed at the educational market, this allows customers
with existing content (video, slides, etc.) to quickly produce an online
training session. It includes an online quiz with real-time results.
o IceSHOW(TM) HR: For corporate HR managers who wish to contact employees with
new information, for example, details on a new benefits program. It includes a
survey form to poll the viewers.
o IceSHOW(TM) Exec: This package, designed for local organizations, puts new
video of an executive address online; the video can be shot in our studio or at
the executive's location.
o IceSHOW(TM) WebVideo: Many companies have invested in corporate video
productions. This package allows them to quickly put them online. The customer
submits a videotape or electronic file of the original production. We provide
the encoding and hosting services as well as the customized interface.
The company launched an Online Learning portal, www.learningstream.com in the
second quarter. To date, it has sold over 300 courses online, has 175 available
classes and been resold under OEM license agreements to 3 customers.
Learningstream.com provides an outlet for customers to sell their online
classes. Iceweb will manage the e-commerce aspects and provide payments to the
course owners, in exchange for a percentage of the revenues. We will include
content that we have produced for our customers as well as existing online
content, or video content that we can convert for Web use. The technology to
support and manage this portal is already in use, as we are currently providing
these services for Fred Pryor Seminars.
Sales
Our solutions are sold directly and indirectly through agents and affiliates.
Agents and affiliates earn commissions or discounts based on their sales
volumes.
Competitive Advantages
Iceweb competitive advantages are its lean business model with low fixed costs
and its favorable margin on products and services through its technology.
Iceweb's core competency of digital media production is manifested in its
IceSHOW(TM) technology.
Our technology makes the creation of online multimedia shows easy and affordable
whether Iceweb is doing the work or the customers are using one of Iceweb's
products to do the work themselves. In either case, the cost and complexity of
the development is reduced substantially.
13
Results of Operations
Consolidated Net revenues - for the nine months ended June 30, 2003, we
generated revenues of $628,496, compared to $171,665 the comparative period in
2002, an increase of $456,831 and 266%. Sales for the three months ending June
30, 2003 were $595,631, compared to $30,493 for the three months ending June 30,
2002, an increase of $565,138 and 1853%. The primary reason for this increase
was the acquisitions of Interlan and Seven and the continued growth in our
marketing and sales strategy to build our business around the E-learning Space.
In addition our web portal www.learningstream.com has added revenues via online
classes and license agreements. For the 3 month period and the nine month period
ending June 30 ,2003, Interlan and Seven generated revenues in the amounts,
respectively, of $434,607 and $86,670.
Marketing and Sales - our sales and marketing expense consists of personnel
costs, including commissions, public relations, advertising, marketing programs,
lead generation, travel and trade shows. Marketing and sales costs decreased
from $72,283 for the three months ended June 30, 2002 to $10,683 for the three
months ended June 30, 2003, a decrease of $61,600 or 85%. Marketing and sales
costs decreased from $188,134 for the nine months June 30, 2002 to $16,018 for
the nine months ended June 30, 2003, a decrease of $172,116 or 91%. This
decrease was the result of continued realignment of our sales and marketing
personnel, commission expenses and marketing programs.
General and administrative expense - our general and administrative expense
consists primarily of personnel costs, rent, legal, accounting, human resources,
telecommunications, office supplies and corporate governance and compliance.
General and administrative expense decreased from $372,223 for the nine months
ended June 30, 2002 compared to $231,721 for the nine months ended June 30, 2003
a decrease of $140,502 or 38%. The primary reasons for this decrease was a
change in estimate for certain expenses that resulted in a reduction of expenses
of approximately $90,000 during the three and nine months ended June 30, 2003.
The decrease is also the result of a reduction in rent expense, personnel costs,
and other fixed expenses. This also represents our success in operational
efficiency initiatives to streamline work processes to permanently reduce the
Company's overall cost structure.
Overall, our loss per share was $.00 for the nine and three months ended June
30, 2003 as compared to a loss per share of $(.02) and $(.01) per share for the
nine and three months ended June 30, 2002, respectively. We don't expect our
loss per share to increase in the 4th quarter.
We believe that the company can sustain operations with the consistent revenue
generated from the operations of the company. The company will require
additional capital to continue Research and Development, Acquisitions and
Marketing programs. There are no assurances that we will be able to obtain the
additional capital in which event our future operations would be materially and
adversely affected.
14
Liquidity and Capital Resources
Since inception, our operating and investing activities have used more cash than
they have generated. Because of the continued need for substantial amounts of
working capital to fund the growth of the business and to pay our operating
expenses, we expect to continue to experience significant negative operating and
investing cash flows for the foreseeable future. Our existing working capital
will not be sufficient to fund the continued implementation of our plan of
operation during the next 12 months and to meet our capital commitments and
general operating expenses. We are unable to predict at this time the exact
amount of additional working capital we will require, however, in order to
provide any additional working capital which we may require, we will in all
likelihood be required to raise additional capital through the sale of equity or
debt securities. We currently have no commitments to provide us with any
additional working capital. If we do not have sufficient working capital to
implement our plan of operation described above, it is likely that we will cease
operations.
Cautionary Factors That May Affect Future Results
This report and other written reports and oral statements made from time to time
by the Company may contain so-called "forward-looking statements," all of which
are subject to risks and uncertainties. One can identify these forward-looking
statements by their use of words such as "expects," "plans," "will,"
"estimates," "forecasts," "projects" and other works of similar meaning. One can
identify them by the fact that they do not relate strictly to historical or
current facts. These statements are likely to address the Company's growth
strategy, financial results, and product and development programs. One must
carefully consider any such statement and should understand that many factors
could cause actual results to differ from the Company's forward-looking
statements. These factors include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and some that are
not. No forward-looking statement can be guaranteed and actual future results
may vary materially.
The Company does not assume the obligation to update any forward-looking
statement. One should carefully evaluate such statements in light of factors
described in the Company's filings with the Securities and Exchange Commission,
especially on Forms 10-K, 10-Q and 8-K. In various filing the Company has
identified important factors that could cause actual results to differ from
expected or historic results. The Company notes these factors for investors as
permitted by the Private Securities Litigation Reform Act of 1995. One should
understand that it is not possible to predict or identify all such factors.
Consequently, the reader should not consider any such list to be a complete list
of all potential risks or uncertainties.
15
Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Evaluation of disclosure controls and procedures
Within the 90 days prior to the filing date of this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company's President and Chief Financial Officer. Based upon that evaluation,
they concluded that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to satisfy
the Company's disclosure obligations under the Exchange Act.
Changes in internal controls
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.
Planned Sale of Stock
The Chairman and CEO is planning to file a 10B5-1 stock plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-B
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350.
(b) Reports on Form 8-K None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned as duly authorized officers of the Company.
IceWEB, Inc.
DATED: August 14, 2003 By: /s/ John R. Signorello
--------------------------------
John R. Signorello
Chairman and Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)
8