United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-Q
☒ QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2014.
or
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For
the transition period from __________ to __________.
Commission
file number 000-53278
IC
PLACES, INC.
FKA
IC PUNCH MEDIA, INC.
(Name
of small business issuer in its charter)
Delaware |
|
42-1662836
|
(State
or other jurisdiction
of incorporation or organization) |
|
(I.R.S.
Employer
Identification No.) |
3915 San Fernando Rd. Glendale, California
91204
(Address
of principal executive offices and Zip Code)
Registrant’s telephone number, including
area code: 323-362-2428
Indicate
by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☐ No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐
No ☒
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a
smaller reporting company)
Smaller
reporting company ☒
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
No ☒
The number of shares of the issuer’s
common stock, par value $.00001 per share, outstanding as of September 12, 2014 is 605,091,318.
TABLE
OF CONTENTS
|
Page |
Part I. Financial
Information |
3 |
Item
1. Financial Statements. |
3 |
Balance
Sheets for the periods ending June 30, 2014 (unaudited) and December 31, 2013 (audited) |
3 |
Statement
of Operations for the three and six month periods ending June 30, 2014 and 2013 (unaudited) |
4 |
Statements
of Cash Flows for the six month periods ending June 30, 2014 and 2013 (unaudited) |
5 |
Notes
to Financial Statements (unaudited) |
6 |
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
4. Controls and Procedures. |
20 |
Item
4T. Controls and Procedures. |
20 |
Part II. Other
Information |
21 |
Item
1. Legal Proceedings. |
21 |
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds. |
21 |
Item
3. Defaults Upon Senior Securities. |
21 |
Item
4. Mine Safety Disclosures. |
21 |
Item
5. Other Information. |
21 |
Item
6. Exhibits |
21 |
Signatures |
22 |
Part
I. Financial Information
Item
1. Financial Statements.
IC
PLACES, INC.
FKA
IC PUNCH MEDIA, INC.
BALANCE
SHEET
(unaudited)
| |
June
30,
2014 (unaudited) | | |
December 31,
2013 (restated) | |
Current
Assets | |
| | |
| |
Cash | |
$ | 15,954 | | |
$ | --- | |
Prepaid
expenses | |
| 112,500 | | |
| 87,260 | |
| |
| | | |
| | |
Total
Current Assets | |
| 128,454 | | |
| 87,260 | |
| |
| | | |
| | |
Fixes
assets, net of depreciation | |
| 7,011 | | |
| 7,952 | |
| |
| | | |
| | |
TOTAL
ASSETS | |
$ | 135,465 | | |
$ | 95,212 | |
| |
| | | |
| | |
Current
Liabilities | |
| | | |
| | |
Accrued
Liabilities | |
| 38,932 | | |
| 36,886 | |
Bank
overdraft | |
| 697 | | |
| 398 | |
| |
| | | |
| | |
Convertible
notes payable, net of discount $89,444 and $35,412, respectively | |
| 305,865 | | |
| 285,989 | |
Derivative
liability | |
| 614,971 | | |
| 177,761 | |
Total
Current Liabilities | |
| 960,465 | | |
| 501,034 | |
| |
| | | |
| | |
Stockholders'
Deficit | |
| | | |
| | |
| |
| | | |
| | |
Preferred
stock, $.00001 par value, 500,000,000 shares authorized, 240,000,000 and 240,000,000 shares issued, respectively | |
| 2,400 | | |
| 2,400 | |
| |
| | | |
| | |
Common
stock, $.00001 par value, 4,000,000,000 shares authorized, 57,759,056 and 31,604,333 shares issued, respectively | |
| 578 | | |
| 316 | |
Paid-in
capital | |
| 13,895,428 | | |
| 13,795,490 | |
Accumulated
deficit | |
| (14,723,406 | ) | |
| (14,204,028 | ) |
Total
Stockholders' Equity | |
| (825,000 | ) | |
| (405,822 | ) |
| |
| | | |
| | |
TOTAL
STOCKHOLDERS' EQUITY/(DEFICIT) | |
$ | 135,465 | | |
$ | 95,212 | |
See
notes to financial statements.
IC
PLACES, INC.
FKA
IC PUNCH MEDIA, INC.
STATEMENTS
OF OPERATIONS
(unaudited)
| |
For
the
Three Months Ended
June 30, | | |
For
the
Six Months Ended
June 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Revenue | |
$ | --- | | |
$ | --- | | |
$ | --- | | |
$ | --- | |
| |
| | | |
| | | |
| | | |
| | |
Expenses: | |
| | | |
| | | |
| | | |
| | |
General
and administrative | |
| 36,059 | | |
| 56,247 | | |
| 42,277 | | |
| 122,882 | |
Depreciation
& amortization | |
| 470 | | |
| 1,875 | | |
| 941 | | |
| 3,021 | |
Stock
compensation | |
| 37,249 | | |
| 21,000 | | |
| 49,749 | | |
| 36,210 | |
Operating
Loss | |
| (73,778 | ) | |
| (79,122 | ) | |
| (92,967 | ) | |
| (162,113 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other
income & (expense) | |
| | | |
| | | |
| | | |
| | |
Change
in derivative | |
| (222,133 | ) | |
| (48,464 | ) | |
| (204,562 | ) | |
| 55,452 | |
Interest
expense | |
| (222,320
| ) | |
| (128,405 | ) | |
| (226,290 | ) | |
| (136,138 | ) |
Total
other income/(expense) | |
| (444,453 | ) | |
| (176,869 | ) | |
| (430,852 | ) | |
| (80,686 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
loss from continued operations | |
$ | (518,231 | ) | |
$ | (255,991 | ) | |
$ | (523,819 | ) | |
$ | (242,799 | ) |
| |
| | | |
| | | |
| | | |
| | |
Gain/(loss)
on disposal of assets (net of tax) | |
| 4,441 | | |
| 586,268 | | |
| 4,441 | | |
| (522,409 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
Income (Loss) | |
$ | (513,790 | ) | |
$ | 330,277 | | |
$ | (519,378 | ) | |
$ | (765,208 | ) |
Net
Income Loss Per Share | |
| | | |
| | | |
| | | |
| | |
Net income (loss) available to common shareholders per share: |
Basic: | |
| | | |
| | | |
| | | |
| | |
Loss from continuing operations | |
$ | (0.01 | ) | |
| (0.01 | ) | |
| (0.01 | ) | |
| (0.01 | ) |
Income (loss) from discontinued operations | |
| - | | |
| 0.03 | | |
| - | | |
| (0.03 | ) |
Net loss | |
$ | (0.01 | ) | |
| 0.02 | | |
| (0.01 | ) | |
| (0.04 | ) |
Diluted: | |
| | | |
| | | |
| | | |
| | |
Loss from continuing operations | |
$ | (0.01 | ) | |
| - | | |
| (0.01 | ) | |
| (0.01 | ) |
Income from discontinued operations | |
| - | | |
| 0.01 | | |
| - | | |
| (0.03 | ) |
Net income | |
$ | (0.01 | ) | |
| - | | |
| (0.01 | ) | |
| (0.04 | ) |
Weighted average number of common shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 39,849,965 | | |
| 19,106,807 | | |
| 36,854,450 | | |
| 19,106,807 | |
Diluted | |
| 39,849,965 | | |
| 111,668,235 | | |
| 36,854,450 | | |
| 19,106,807 | |
See
notes to financial statements.
IC
PLACES, INC.
FKA
IC PUNCH MEDIA, INC.
STATEMENTS
OF CASH FLOWS
(unaudited)
| |
Six
Months Ended June 30, | |
| |
2014 | | |
2013 | |
Cash Flows from Operating Activities | |
| | |
| |
Net income/(loss) from operations | |
$ | (519,378 | ) | |
$ | (765,208 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | | |
| | |
| |
| | | |
| | |
Adjustments for charges not requiring outlay of cash: | |
| | | |
| | |
Depreciation | |
| 941 | | |
| 3,021 | |
Excess fair market value of derivatives at issuance | |
| 153,998 | | |
| --- | |
Change in derivative | |
| 204,562 | | |
| (55,452 | ) |
Amortization of debt discount | |
| 78,416 | | |
| 210,390 | |
Amortization of prepaid compensation | |
| 12,500 | | |
| --- | |
Common stock issued as compensation and for expenses | |
| 24,751 | | |
| 36,210 | |
(Gain)/loss on disposal of assets | |
| (4,441 | ) | |
| 522,409 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
(Increase)/decrease in accounts receivable | |
| --- | | |
| --- | |
(Increase)/decrease in prepaid expenses and other assets | |
| (37,740 | ) | |
| 13,229 | |
Increase/(decrease) in accounts payable and accrued expenses | |
| 1,648 | | |
| 14,480 | |
Net cash (used in) continuing operating activities | |
| (84,743 | ) | |
| (20,921 | ) |
Net cash (used in) discontinued operations | |
| --- | | |
| (28,178 | ) |
| |
| | | |
| | |
Net cash (used in) operating activities | |
| (84,743 | ) | |
| (49,099 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities | |
| | | |
| | |
Purchase of fixed assets | |
| --- | | |
| (2,082 | ) |
Net cash (used in) investing activities | |
| --- | | |
| (2,082 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Bank overdraft | |
| 697 | | |
| --- | |
Proceeds/(repayments) from loans and notes, net | |
| 100,000 | | |
| 76,000 | |
Shareholder advances/(repayments) | |
| --- | | |
| 742 | |
Net cash provided by financing activities | |
| 100,697 | | |
| 76,742 | |
| |
| | | |
| | |
Net change in cash | |
| 15,954 | | |
| 25,561 | |
Cash at beginning of period | |
| --- | | |
| --- | |
Cash at end of period | |
$ | 15,954 | | |
$ | 25,561 | |
| |
| | | |
| | |
Supplemental Disclosures of Cash Flow Information: | |
| | | |
| | |
Conversion of debt to equity | |
$ | 45,040 | | |
$ | 144,000 | |
Derivative Liability recorded as debt discount | |
| 113,500 | | |
| -- | |
Reclassification of derivative to APIC | |
| 34,850 | | |
| -- | |
See
notes to financial statements.
IC
PLACES, INC.
FKA IC PUNCH MEDIA, INC.
Notes to the Financial Statements
June 30, 2014 and 2013
(Unaudited)
1. Background Information
IC Places, Inc. ("The Company") was
formed on March 18, 2005 as a Delaware Corporation and was based in Celebration, Florida. The Company engaged in the ownership
and operation of a network of city-based websites for use by business and vacation travelers as well as local individuals. The
Company's www.icplaces.com websites provide local information about hotels, restaurant dining, golf courses, discount event tickets,
discount car rentals, discount airfare, and attraction tickets.
On July 10, 2012, IC Places, Inc. ("the
Company" or "Buyer") entered into an Asset Purchase Agreement with Punch Television Network (“Punch TV",
"Seller"). Through the agreement, the Buyer has acquire substantially all of the assets, tangible and intangible, owned
by Seller that are used in, or necessary for the conduct of, its Television Network business, including, without limitation: (i)
the Station Licenses, subject to any obligations contained in disclosed license agreements and all related intellectual property;
(ii) the fixed assets of Seller; (iii) any and all customer lists; and (iv) the goodwill associated therewith, all free and clear
of any security interests, mortgages or other encumbrances. The aggregate consideration for the assets and business was 13,500,000
shares of restricted common shares of PNCH Stock.
Punch TV is an African American network that
includes new programming. Punch TV Network differs from current "African American" television that uses research-driven
approaches to target African Americans audiences; Punch TV was designed to deliver entertainment to multicultural audiences. Punch
TV represents a Multi-Media experience that satisfies and excites viewers.
Effective May 14, 2013, the Company rescinded
the Punch Television Network Agreement and all associated employment agreements and the entire transaction has been cancelled by
mutual agreement of both parties. Joseph Collins resigned as President and Director as result of the rescission of the Punch Television
Network Agreement. Of the shares 15,000,000 restricted common shares issued to Collins for his employment agreement and 13,500,00
restricted common shares issued to purchase the assets of Punch TV, 13,000,00 shares remain outstanding, 15,500,000 were returned
to the Company.
In
September 2013, the Company announced that it will begin broadcasting Drive-In TV (Formerly VU Television), the first 24/7 video
network launched by IC Punch Media, Inc. Drive-In TV takes you back to a time when movies did not have to work so hard to be entertaining.
The network takes you to a time when millions of families and crazy kids spent their Friday nights excited to find out what was
in store for them at the Drive-in theater. Drive-In TV follows the classic Drive-In Theater formula. Complete with a sword wielding
serial killers¸ Kung Foo Masters, plenty of space men, bumbling
gum shoe type detectives and a string of cute¸ albeit ditzy
female victims and their jock or nerd boyfriends. Drive in TV is classic, predictable and entertaining up until the end TV.
The network is available free of charge on
FilmOn.com, icplaces.com and via the FilmOn mobile app on all iPhone and Android devices as well as several set top devices. Drive-In
TV is one of the first 24/7 networks launched exclusively, and in partnership with FilmOn through the FilmOn platform, and is focused
on tapping into this highly profitable 18-34 viewer market which is harder to reach through traditional TV. Under the partnership,
FilmOn offers VU Television full access to its cutting edge broadcast platform and wide bandwidth pipeline. Drive-In TV uses the
platform to program and broadcast its network 24/7 in a day parted format. While FilmOn will cover the broadcasting costs, the
Company will handle all aspects of running the network and then the two companies will share the advertising revenues on the initial
pre-roll ad when a viewer loads the player the first time.
In 2013, the Company entered into an agreement
to manage the assets of Imagination TV. Imagination TV is a 24/7 day parted Television Network built around the World's most fascinating
Motivators, Educators and Authors, delivering programing geared to Inspire, Motivate and Entertain our audience.
In March of 2014, the Company moved it’s
headquarters to Empire Media Center in Glendale California.
On December 11, 2013, in accordance with the
relevant sections of the Delaware General Corporation Law, the Company's Board of Directors approved the amendment of the Company's
Certificate of Incorporation to change the Company's name to “IC Places, Inc”.
2. Summary of Significant Accounting Policies
The
Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of
their application. Critical accounting policies and practices
are those that are both most important to the portrayal of the Company's financial condition and results and require management's
most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters
that are inherently uncertain. The Company's significant and critical accounting policies and practices are disclosed below as
required by generally accepted accounting principles.
Basis of Presentation
The following (a) condensed balance sheet
as of December 31, 2013, which has been derived from audited financial statements, and (b) the unaudited condensed financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements
and notes thereto contained in the Company’s Form 10-K/A Amendment No. 2 filed with the SEC on July 8, 2014. In the opinion
of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the condensed
financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2013
as reported in the Form 10-K/A have been omitted.
Fair Value Measurement
ASC 820 defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs. These inputs are prioritized below:
|
Level 1: |
Observable inputs such as quoted market prices in active markets for identical assets or liabilities |
|
Level 2: |
Observable market-based inputs or unobservable inputs that are corroborated by market data |
|
Level 3: |
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions. |
The Company's balance sheets include the following
financial instruments: cash, accounts receivable, accrued liabilities, convertible notes payable and derivative liabilities. The
carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period
of time between the origination of these instruments and their expected realization.
The Company’s derivative liabilities
consist of price protection features for embedded conversion features on debt which are carried at fair market value,
and are classified as Level 3 liabilities. The Company uses the Black-Scholes-Merton option pricing model to determine the fair
market value of those instruments (see Note 8).
Property and Equipment
Property and equipment is stated at cost. Depreciation
is computed by the straight-line method over estimated useful lives (3-7 years). The carrying amount of all long-lived assets is
evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted.
Based upon its most recent analysis, the Company believes that no impairment of property and equipment existed at June 30, 2014.
Long-lived assets such as property, and equipment
are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined
based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.
If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized
for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates
fair value using the expected future cash flows discounted at a rate that commensurate with the risk associated with the recovery
of the assets. We did not recognize any impairment losses for any periods presented.
Related Parties
The Company follows subtopic 850-10 of the
FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Share-based Compensation
All share-based payments to employees, including
grants of Common stock to be recognized as compensation expense in the financial statements based on their fair values. That expense
is recognized over the period during which an employee is required to provide services in exchange for the award, known as the
requisite service period (usually the vesting period). The Company had no common stock options granted or outstanding for all periods
presented.
Advertising Costs
The costs of advertising are expensed as incurred.
Advertising expense was $0 and $2,726 for the three month period ended June 30, 2014 and 2013, respectively. Advertising expense
was $0 and $3,131 for the six months ended June 30, 2014 and 2013, respectively.
Income Taxes
The Company accounts for income taxes under
the liability method. This method provides that deferred tax assets and liabilities are recorded based on the differences between
the tax basis of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable
income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
Earnings (Loss) Per Share
Basic earnings (loss) per share calculations
are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings
(loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. There are
no options or warrants outstanding, however, convertible notes payable are considered to be common stock equivalents, at the date
they are available to convert. As of June 30, 2014, there are potential share equivalents based on conversion options associated
with our debt instruments and preferred stock, however, due to net operating losses sustained anti-dilution issues are not applicable,
except for the three months ended June 30, 2013.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events
that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the related notes
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant
estimates include, but are not limited to: valuation of share-based transactions, valuation of derivative liabilities and valuation
of deferred tax assets. We based our 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 for making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results could differ from those estimates.
Deferred Financing Costs, net
Costs with respect to the issuance of common
stock, or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions
or amortized as debt discount over the term of any debt funding, if successful, or expensed if the proposed equity or debt transaction
is unsuccessful.
Conventional Convertible Debt
The
Company records conventional convertible debt in accordance with ASC Topic 470-20, “Debt
with Conversion and Other Options.” Conventional
convertible debt is a financial instrument in which the holder may only realize the value of the conversion option by exercising
the option and receiving the entire proceeds in a fixed number of shares or the equivalent amount of cash. Conventional convertible
debt with a non-detachable conversion feature that does not contain a cash settlement option, and is not accounted for as a derivative,
is recorded as a debt instrument in its entirety.
Derivatives Liabilities, Beneficial conversion
features and Debt Discounts
The
Company evaluates stock options, stock warrants or other contracts to determine if those contracts or embedded components of those
contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, “Derivative
Instruments and Hedging: Contracts in Entity’s Own Equity”.
The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument
and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as
a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion
or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value
is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification
under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
If
a conversion feature of conventional convertible debt is not accounted for as a derivative instrument and provides for a rate of
conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”).
A BCF is recorded by the Company as a debt discount. The convertible debt is recorded net of the discount related to the BCF. The
Company amortizes the discount to interest expense over the life of the debt using the straight-line method which approximates
the effective interest rate method.
Equity Instruments Issued to Non-Employees
for Acquiring Goods or Services
Issuances
of the Company’s common stock or warrants for acquiring goods
or services are measured at the fair value of the consideration or the fair value of the equity instruments issued, whichever is
more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is
determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance
commitment” which would include a penalty considered to be
of a magnitude that is sufficiently large disincentive for non-performance) or (ii) the date at which performance is complete.
When it is appropriate for the Company to recognize the cost of a transaction during the financial reporting periods prior to the
measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current
fair values at each of those interim financial reporting dates.
Correction of an Error in Previously Issued Financial Statements
The
Company follows guidance under ASC 250-10-45-23 for reporting any error in the financial statements of a prior period discovered
after the financial statements are issued or are available to be issued. The current comparative statements as presented reflect
the retroactive application of any error corrections. Those items that are reported as error corrections in the Company’s
restatements of net income and retained earnings, as well as other affected balances for all periods reported there-in, are disclosed
in Note 5 of the footnotes to the financial statements presented herein.
3. Going Concern
The accompanying unaudited financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate
continuation of the Company as a going concern.
The Company incurred a net loss for the six
months ended June 30, 2014. As of June 30, 2014, the Company had minimal cash with which to satisfy any future cash requirements.
These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company depends upon capital
to be derived from future financing activities such as subsequent offerings of its common stock or debt financing in order to operate
and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that
are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance
of the Company's business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability
to hire key employees to build and maintain websites and to provide services and support to its customers and users. There may
be other risks and circumstances that management may be unable to predict.
The unaudited financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the possible inability of the Company to continue as a going concern.
4. Recently Issued Accounting Pronouncements
In June 2014 the FASB issued ASU 2014-10 regarding
development stage entities. The ASU removes the definition of development stage entity, as was previously defined under generally
accepted accounting principles in the United States (U.S. GAAP), from the accounting standards codification, thereby removing the
financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.
In addition, the ASU eliminates the requirements
for development stage entities to (i) present inception-to-date information in the statement of income, cash flow and stockholders'
equity, (ii) label the financial statements as those of a development stage entity, (iii) disclose a description of the development
stage activities in which the entity is engaged, and (iv) disclose in the first year in which the entity is no longer a development
stage entity that in prior years it had been in the development stage.
The
Company has chosen to early adopt the ASU for the Company’s
financial statements as of June 30, 2014. The adoption
of this ASU impacted the Company’s reporting by eliminating
the requirement to report inception to date financial information and describe the Company as a development stage company as previously
required. Management does not believe that any other recently issued,
but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
5. Correction of error, restatement of financial statements
The Company’s net loss for the
three and six month’s period ended June 30, 2014 included a reduction of expenses of approximately $50,000 as a result
of the Company correcting amortization of prepaid stock compensation in the year ended December 31, 2012. This correction
resulted in reduced general and administrative expense of approximately $50,000. This error was not considered material to
prior periods, individually, or in the aggregate, and was not considered material to the three and six month periods ended
June 30, 2014. These errors did not impact debt covenant compliance not operating results or earnings (loss) per share.
Therefore, these items were corrected in the current period.
The Company issued 240,000,000 shares of its
Series A Preferred in December 2013 to its Chief Executive Officer. The correct number of Series A Preferred shares outstanding
as of the date of the filing of the original 10-K/A on May 1, 2014 did not correctly reflect the amount of preferred shares outstanding,
as reflected in the table below.
| |
As originally reported | | |
As restated | |
Number of the issuer's Preferred Stock outstanding as of the date of the most recently filed Form 10-K/A on May 1, 2014 | |
| --- | | |
| 240,000,000 | |
Restatement
The prior period amounts included
on the Balance Sheet for the period ending December 31, 2013 have been restated to reflect the amount of preferred shares outstanding
as well as an error in depreciation for the period.
The table below reflects the resulting effect to the financial statements.
December
31, 2013 | |
| | |
| | |
| |
| |
As Previously Reported | | |
Adjustment | | |
As
Restated | |
Balance Sheet
(Extract) | |
| | |
| | |
| |
Fixed
assets, net of depreciation | |
$ | 8,108 | | |
$ | (156 | ) | |
$ | 7,952 | |
Stockholders’
deficit | |
| | | |
| | | |
| | |
Series
A Preferred stock | |
$ | --- | | |
$ | 2,400 | | |
$ | 2,400 | |
Common
stock | |
$ | 316 | | |
$ | --- | | |
$ | 316 | |
Paid
in capital | |
$ | 13,795,490 | | |
$ | --- | | |
$ | 13,795,490 | |
Accumulated
deficit | |
$ | (14,201,472 | ) | |
$ | (2,556 | ) | |
$ | (14,204,028 | ) |
Total Stockholders’ Deficit | |
$ | (405,666 | ) | |
$ | (156 | ) | |
$ | (405,822 | ) |
Total
Liabilities & Equity | |
$ | 95,368 | | |
$ | (156 | ) | |
$ | 95,212 | |
| |
| | | |
| | | |
| | |
Statement
of Operations (Extract) | |
| | | |
| | | |
| | |
Depreciation | |
$ | 1,713 | | |
$ | 156 | | |
$ | 1,869 | |
Stock
Compensation | |
$ | 3,022,710 | | |
$ | 2,400 | | |
$ | 3,025,110 | |
Net
Loss | |
$ | (5,865,885 | ) | |
$ | (2,400 | ) | |
$ | (5,868,287 | ) |
The Company determined that the accumulated depreciation and related
depreciation expense was previously understated by $156.
The
Company determined that the preferred stock based compensation paid out as per the majority shareholder’s
employment agreement in the amount of $2,400 had previously not been recognized.
6. Property and Equipment
| |
June 30, 2014
| | |
December 31, 2013
| |
| |
(unaudited) | | |
(restated) | |
Office Furniture | |
$ | 10,571 | | |
$ | 10,571 | |
Computer Equipment | |
| 2,018 | | |
| 2,018 | |
| |
| 12,589 | | |
| 12,589 | |
Less accumulated depreciation | |
| (5,578 | ) | |
| (4,637 | ) |
Property and equipment, net | |
$ | 7,011 | | |
$ | 7,952 | |
Depreciation
expense was $471 and $1,146 for the three months ended June 30, 2014 and 2013, respectively.
Depreciation expense was $941 and $3,021 for
the six months ended June 30, 2014 and 2013, respectively.
7. Notes Payable
Convertible Notes Payable
Convertible notes have been issued
at various times to a third party lender. The convertible notes mature within 9 months from the date of issuance, accrue interest
at a rate at 8% per year, and are convertible at the option of the note holder into shares of common stock at a 50-65% discount
of the 10 day trailing trading price of the stock value.
To properly account for the
convertible note payable, the Company performed a detailed analysis to obtain a thorough understanding of the transaction. The
Company reviewed ASC Topic 815, to identify whether any equity-linked features in the original issue discount convertible notes
are freestanding or embedded. The Company determined that there were no free standing features. The convertible notes payable was
then analyzed in accordance with Topic 815 to determine if the embedded conversion feature should be bifurcated and accounted for
at fair value and remeasured at fair value in income. Due to the variable number of shares that could be issued, the Company determined
that the embedded conversion feature did meet the requirements for bifurcation pursuant to Topic 815. As a result the Company recognized
a derivative liability at fair value on the date of issuance and at each reporting date.
During 2014, $45,040 of principal
and accrued interest was converted into 34,850,789 shares of common stock.
The outstanding balance at
June 30, 2014 and December 31, 2013 was $135,710 and $171,250, respectively. The unamortized discount at June 30, 2014 and December
31, 2013 was $87,397 and $32,861, respectively.
Interest expense for the three
month period ended June 30, 2014 and 2013 was $3,028 and $2,849, respectively.
Interest expense for the six
month period ended June 30, 2014 and 2013 was $6,606 and $9,304, respectively.
The Company amortized debt
discount for the three month period ended June 30, 2014 and 2013 was $32,037 and $118,599, respectively.
The Company amortized debt
discount for the six month period ended June 30, 2014 and 2013 was $57,464 and $23,130, respectively.
On September 23, 2011, the Company issued a convertible note
to a third party for $155,600. The convertible notes have no maturity date, accrue interest at 2% per year, and convertible at
the option of the note holder into shares of common stock at a 50% discount of the trading price of the stock value.
To properly account for the
convertible note payable, the Company performed a detailed analysis to obtain a thorough understanding of the transaction. The
Company reviewed ASC Topic 815, to identify whether any equity-linked features in the original issue discount convertible notes
are freestanding or embedded. The Company determined that there were no free standing features. The convertible notes payable
was then analyzed in accordance with Topic 815 to determine if the embedded conversion feature should be bifurcated and accounted
for at fair value and remeasured at fair value in income. Due to the variable number of shares that could be issued, the Company
determined that the embedded conversion feature did meet the requirements for bifurcation pursuant to Topic 815. As a result the
Company recognized a derivative liability at fair value on the date of issuance and at each reporting date.
The outstanding balance at
June 30, 2014 and December 31, 2013 was $155,600, respectively. The unamortized discount at June 30, 2014 and December 31, 2013
was $0 and $0, respectively.
Interest expense for the three
month ended June 30, 2014 and 2013 was $776 and $0, respectively.
Interest expense for the six
month ended June 30, 2014 and 2013 was $1,543 and $0, respectively.
On May 14, 2014, the Company
issued a convertible note to a third party for $32,000. The convertible note mature one year from the date of issuance, accrues
interest at 8% per year, is convertible at the option of the note holder into share of common stock at a 45% of the 15 day trailing
trading price of the stock value, and can be repaid within 180 days at 150% of face amount of the convertible note.
To properly account for the
convertible note payable, the Company performed a detailed analysis to obtain a thorough understanding of the transaction. The
Company reviewed ASC Topic 815, to identify whether any equity-linked features in the original issue discount convertible notes
are freestanding or embedded. The Company determined that there were no free standing features. The convertible notes payable was
then analyzed in accordance with Topic 815 to determine if the embedded conversion feature should be bifurcated and accounted for
at fair value and remeasured at fair value in income. Due to the variable number of shares that could be issued, the Company determined
that the embedded conversion feature did meet the requirements for bifurcation pursuant to Topic 815. As a result the Company recognized
a derivative liability at fair value on the date of issuance and at each reporting date.
The outstanding balance at
June 30, 2014 and December 31, 2013 was $32,000 and $0, respectively. The unamortized discount at June 30, 2014 and December 31,
2013 was $28,055 and $0, respectively.
Interest expense for the three
month ended June 30, 2014 and 2013 was $316 and $0, respectively.
Interest expense for the six
month ended June 30, 2014 and 2013 was $316 and $0, respectively.
The Company amortized debt
discount for the three month ended June 30, 2014 and 2013 was $3,945 and $0, respectively.
The Company amortized debt
discount or the six month ended June 30, 2014 and 2013 was $3,945 and $0, respectively.
Original Issue Discount Convertible note payable
On April 4, 2014, the Company issued
an original issue discount convertible note payable to a third party for $25,000. The note matures 6 months from the date of issuance,
and is convertible at the option of the note holder into shares of common stock at a 42% discount from the lowest intra-day trading
price 10 days prior to conversion.
To properly account for the original
issue discount convertible note payable, the Company performed a detailed analysis to obtain a thorough understanding of the transaction.
The Company reviewed ASC Topic 815, to identify whether any equity-linked features in the original issue discount convertible notes
are freestanding or embedded. The Company determined that there were no free standing features. The convertible notes payable was
then analyzed in accordance with Topic 815 to determine if the embedded conversion feature should be bifurcated and accounted for
at fair value and remeasured at fair value in income. Due to the variable number of shares that could be issued, the Company determined
that the embedded conversion feature did meet the requirements for bifurcation pursuant to Topic 815. As a result the Company recognized
a derivative liability at fair value on the date of issuance and at each reporting date.
The outstanding balance at June
30, 2014 and December 31, 2013 was $22,000 and $0, respectively.
Interest expense for the three month
ended June 30, 2014 and 2013 was $0 and $0, respectively.
Interest expense for the six month
ended June 30, 2014 and 2013 was $0and $0, respectively.
The Company amortized debt discount
for the three month ended June 30, 2014 and 2013 was $11,885 and $0, respectively.
The Company amortized debt discount
or the six month ended June 30, 2014 and 2013 was $11,885 and $0, respectively.
On June 12, 2014, the Company
issued an original issue discount convertible note payable to a third party for $50,000. The note matures 6 months from the date
of issuance, and is convertible at the option of the noteholder into shares of common stock at a fixed discount of .00005. However,
if the Company’s share price, at any time before June 12, 2015 loses the bid, then the fixed conversion price resets to .00001.
If the Company gets a “DTC chill”, any time before June 12, 2015, then the discount is reset to 65% off the low of
the previous 5 trading days.
To
properly account for the original issue discount convertible note payable, the Company performed a detailed analysis to obtain
a thorough understanding of the transaction. The Company reviewed ASC Topic 815, to identify whether any equity-linked features
in the original issue discount convertible notes are freestanding or embedded. The Company determined that there were no free
standing features. The convertible notes payable was then analyzed in accordance with Topic 815 to determine if the embedded conversion
feature should be bifurcated and accounted for at fair value and remeasured at fair value in income. Due to the variable number
of shares that could be issued, the Company determined that the embedded conversion feature did meet the requirements for bifurcation
pursuant to Topic 815. As a result the Company recognized a derivative liability at fair value on the date of issuance and at
each reporting date.
The outstanding balance June 30,
2014 and December 31, 2013 was $50,000 and $0, respectively.
Interest expense for the three month
ended June 30, 2014 and 2013 was $0 and $0, respectively.
Interest expense for the six month
ended June 30, 2014 and 2013 was $0 and $0, respectively.
The Company amortized debt discount
for the three month ended June 30, 2014 and 2013 was $5,122 and $0, respectively.
The Company amortized debt discount or the six month ended June
30, 2014 and 2013 was $5,122 and $0, respectively.
8. Derivative Liabilities
The Company determined that the embedded conversion
features in the convertible notes payable resulted in a potential variable number of shares. Due to the variable number of shares
that could be issued, the Company determined that the embedded conversion features were derivatives. As a result, the Company recoginzed
a derivative liability at fair value on the date of issuance and at each reporting date.
The Company used the binomial pricing model
and assumptions that consider, among other factors, the fair value of the underlying stock, risk-free interest rate, volatility,
expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. As
of June 30, 2014, the underlying assumptions were used to compute the derivative laibility:
Risk-free interest rate |
|
|
0.04 % - 0.10 |
% |
Expected dividend yield |
|
|
0.00 |
% |
Expected term (in years) |
|
|
.0.5 - 1.0 |
|
Expected volatility |
|
|
130 % - 690 |
% |
Changes in fair value of the derivative financial
instruments are recognized in the statement of operations as a derivative gain or loss and are included in other income (expense).
The warrant derivative gains (losses) are non-cash income (expenses); and for the three month and six month periods ended June
30, 2014 related derivative gain or loss is included in other income (expense) in the statement of operations.
Changes in the derivative warrant liability
for the three and six month periods June 30, 2014 are as follows:
| |
Three Months
Ended June 30, 2014 | | |
Six Months Ended June 30, 2014 | |
Balance at beginning period | |
$ | 131,072 | | |
$ | 177,761 | |
Fair value of embedded conversion features | |
| 296,616 | | |
| 267,498 | |
Reclassification of derivative liabilities to APIC | |
| (34,850 | ) | |
| (34,850 | ) |
Increase (decrease) in the fair value of warrant liability | |
| 222,133 | | |
| 204,562 | |
Balance at end of period | |
| 614,971 | | |
| 614,971 | |
10. Equity
Preferred Stock
On
October 31, 2012, the Company's Board of Directors approved the amendment of the Company's Certificate of Incorporation to change
the Company's name to IC Punch Media, Inc. and to provide for a class of "blank check" preferred stock.
The Company is authorizing five hundred million (500,000,000) shares of
preferred stock, par value $.00001. The Board of Directors
is expressly vested with the authority to divide any or all of the Preferred Stock into series in addition to those set forth
below and to fix and determine the relative rights and preferences of the shares of each series so established, provided, however,
that the rights and preferences of various series may vary only with respect to:
* |
the rate of dividend; |
* |
whether the shares may be called and, if so, the call price and the terms and conditions of call; |
* |
the amount payable upon the shares in the event of voluntary and involuntary liquidation; |
* |
sinking fund provisions, if any, for the call or redemption of the shares; |
* |
the terms and conditions, if any, on which the shares may be converted; |
* |
voting rights; and |
* |
whether the shares will be cumulative, noncumulative, or partially cumulative as to dividends and the dates from which any cumulative dividends are to accumulate. |
Our board of directors has authorized 240,000,000
shares of Series A Convertible Preferred Stock (“Series A”). Except as otherwise provided in the Certificate of Designation
of the Series A (the “Designation”) or our by-laws, each holder of shares of Series A shall have voting rights equal
to 10 shares of common stock. The holders of Series A are entitled to receive dividends when, and if, declared by the board.
At June 30, 2014, the Series A
is convertible at any time and from time to time after the issue date at the holder’s option at a rate of 10 shares
of Series A for 1 share of common stock. As of September 11, 2014, per amendment 2 to Series A this provision has
been changed where as reverse stock splits do not change Preferred share holdings.
The conversion price of the Series A Preferred
(the “Conversion Price”) shall be proportionately reduced for a stock dividend, stock split, subdivision , combination
or similar arrangements.
The holders of Series A will receive an amount
per share equal of (i) $1.00, adjusted for any recapitalization, stock combinations, stock dividends, stock options and the like
with respect to such shares, plus and accumulated but unpaid dividends, and (ii) the amount such holder would receive if such
holder has converted its shares of SeriesA to common stock, subject to but immediately prior to such holder has converted its
shares of Series A to common stock, subject to but immediately prior to such Liquidation (the “Liquidation Preference”).
The Liquidation Preference was $240,000,000 at June 30, 2014 and December 31, 2013.
Common Stock
The Company, pursuant to its 2010 Equity Compensation
Plan, which has been approved by the Company's Board of Directors, as filed with the Securities and Exchange Commission on February
26, 2010, will issue up to 25,000,000 shares of common stock. The 2010 Equity Compensation Plan is hoped to further provide a method
whereby the Company's current employees and officers and non-employee directors and consultants may be stimulated and allow the
Company to secure and retain highly qualified employees, officers, directors and non-employee directors and consultants. As of
June 30, 2014 and December 31, 2013, the outstanding number of shares was 25,000,000.
On
March 27, 2014, a 100:1 reverse stock split approved by the Company's Board of Directors and majority stockholder on December 11,
2005 became effective. The financial statements have been
formatted to reflect the retro-application of this event.
On
May 7, 2014, the Company’s President returned an aggregate
of 10,914,616 shares of common stock to the Company’s treasury
at par value or $0.0001 per share.
On
May 7, 2014, an aggregate of 1,531,450 shares of common stock was returned to the Company’s
treasury by two shareholders for a value of $4,441 or $0.016 per share. The shares outstanding were related to an acquisition that
was rescinded by both parties. As a result, the Company has recorded the value of the shares returned as a gain on the disposal
of assets.
On June 2, 2014, the
Company issued an aggregate of 3,750,000 common shares to consultants as compensation for services provided. The stock was valued
at approximately $24,750 or $0.0066 per share.
At various times during the six month period
ending June 30, 2014, the Company issued an aggregate of 34,850,789 shares in satisfaction of debt and accrued interest for a value
of $45,040, or an average of $0.0013 per share.
11. Related Party Transactions
Employment Contracts
On
November 18, 2005 the Company entered into an employment agreement with Steven Samblis to be our Chief Executive Officer.
The agreement provided (1) the issuance of 35 million shares of its common stock; (2) compensation to be 15% of revenues; (3)
included a provision to authorize the issuance of shares to maintain majority of control; and (4) termination of agreement on
November 18, 2025. On September 23, 2011, the Company
entered into an employment continuation commitment agreement with the Chief Executive Officer, who is the majority shareholder,
whereby the Company’s Board
of Directors declared a $250,000 amount payable for a five (5) year employment commitment. The
amount has been deferred and will be ratably expensed, as compensation, over the length of the agreement. Mr. Samblis has agreed
to defer the compensation as set forth in the Agreement until such time the Company has sufficient funds to cover the expense.
Advances and Loans from Shareholder
The
majority shareholder has advanced funds, since inception, for the purpose of financing working capital and product development.
As of June 30, 2014 and June 30, 2013, these advances amounted to $0 and
$1,200, respectively. There are no formalized agreement or
repayment terms to this advance and the amount is payable upon demand. In
the absence of a formal agreement or stated interest rate, the Company is accruing interest at a minimal variable rate, currently
3%. Management will periodically adjust the rate recognized,
following guidelines of applicable federal rates of interest.
12. Commitments and Contingencies
From time to time, the Company may be a party
to litigation matters involving claims against the Company. Management believes that there are no current matters that would have
a material effect on the Company's financial position or results of operations. Management has considered all events subsequent
to the balance sheet through the date that these financial statements were available, which is the date of our filing with the
SEC.
13. Subsequent Events
Subsequent to the
current period ended June 30, 2014, the Company has identified the following material events:
Subsequent to June
30, 2014, note holders converted $100,582 of principal on convertible notes and $1,900 of accrued interest into 281,331,816 shares
of common stock in satisfaction of debt.
Subsequent to June
30, 2014, the Company issued 316,000,000 shares to individuals as compensation for services to the Company. The shares were valued
at $284,400 in the aggregate.
Item
2. Management’s Discussion and Analysis or Plan
of Operation.
Note Regarding Forward Looking
Statements
This quarterly report on Form 10-Q of IC PLACES,
INC. FKA IC PUNCH MEDIA, INC. for the period ended June 30, 2014 contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which
are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of
historical fact, such statements constitute forward-looking statements which, by definition, involve risks and uncertainties. In
particular, statements under the Sections; Description of Business, Management's Discussion and Analysis of Financial Condition
and Results of Operations contain forward-looking statements. Where, in any forward-looking statement, the Company expresses
an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or
accomplished.
The following are factors that could cause
actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial
and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the costs and effects
of legal proceedings.
You should not rely on forward-looking statements
in this quarterly report. This quarterly report contains forward-looking statements that involve risks and uncertainties.
We use words such as "anticipates," "believes," "plans," "expects," "future,"
"intends," and similar expressions to identify these forward-looking statements. Prospective investors should not
place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. Our actual
results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks
faced by IC PLACES, INC. FKA IC PUNCH MEDIA, INC. For example, a few of the uncertainties that could affect the accuracy
of forward-looking statements include:
(a)
An abrupt economic change resulting in an unexpected downturn in demand;
(b)
Governmental restrictions or excessive taxes on our products;
(c)
Over-abundance of companies supplying computer products and services;
(d)
Economic resources to support the retail promotion of new products and services;
(e)
Expansion plans, access to potential clients, and advances in technology; and
(f)
Lack of working capital that could hinder the promotion and distribution of products and services to a broader based business and
retail population.
Financial
information provided in this Form 10-Q for periods subsequent to June 30, 2014 is preliminary and remains subject to audit.
As such, this information is not final or complete, and remains subject to change, possibly materially.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Three months ending June 30, 2014 as
compared to June 30, 2013
The Company had $0 and $0 from advertising
revenue for the three month period ended June 30, 2014 and 2013, respectively.
General and administrative expenses for the
three months ended June 30, 2014 were $36,059 compared to $56,247 for the three months ended June 30, 2013. General and Administrative
expenses decreased as a result of decreased travel expense and professional fees. The Company has realized a loss from continued
operations of $518,231 for the three months ended June 30, 2014 compared to a net loss of $255,991 for the three months ended June
30, 2013. The increase in the Company’s loss is primarily due to increases in professional fees and the loss on the change
in our derivative financing offset by a decrease in stock compensation expense, The Company’s stock compensation expense
for the three months ending June 30, 2014 was offset by a correction to amortization of unearned stock compensation for the period
in the amount of approximately $50,000.
Six months ending June 30, 2014 as compared
to June 30, 2013
The Company had $0 and $0 from advertising
revenue for the six month period ended June 30, 2014 and 2013, respectively.
General and administrative expenses for the
six months ended June 30, 2014 were $92,518 compared to $162,113 for the six months ended June 30, 2013. General and Administrative
expenses decreased as a result of decreased travel expense and professional fees. The Company has realized a loss from continued
operations of $523,819 for the six months ended June 30, 2014 compared to a net loss of $242,799 for the six months ended June
30, 2013. The overall increase is largely attributed to the loss associated with derivative financing offset by a decrease in
stock compensation expense. The Company’s stock compensation expense for the six months ending June 30, 2014
was offset by a correction to amortization of unearned stock compensation for the period in the amount of $50,000.
CONTRACTUAL OBLIGATIONS
Employment Contracts
On
November 18, 2005 the Company entered into an employment agreement with Steven Samblis to be our Chief Executive Officer.
The agreement provided (1) the issuance of 35 million shares of its common
stock; (2) compensation to be 15% of revenues; (3) included a provision to authorize the issuance of shares to maintain majority
of control; and (4) termination of agreement on November 18, 2025. On
September 23, 2011, the Company entered into an employment continuation commitment agreement with the Chief Executive Officer,
who is the majority shareholder, whereby the Company’s Board
of Directors declared a $250,000 amount payable for a five (5) year employment commitment. The
amount has been deferred and will be ratably expensed, as compensation, over the length of the agreement. Mr. Samblis has agreed
to defer the compensation as set forth in the Agreement until such time the Company has sufficient funds to cover the expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently financing its operations
primarily through loans and advances from outside parties. These advances are being made to implement the Company’s
business plan. We believe we can currently satisfy our cash requirements for the next twelve months with our current expected
increase in revenue, and the expected capital to be raised in private placement and sales of our common stock. Additionally,
we will begin to use our common stock as payment for certain obligations and secure work to be performed. Management plans
to increase revenue in order to sustain operations for at least the next twelve months.
At June 30, 2014, the Company did not have
adequate cash resources to meet current obligations. Management believes that financial support from the majority shareholder
to pay minimal and necessary incurred expense will allow the Company to benefit from advertising revenue streams, currently in-place,
to produce the anticipated cash flow necessary to support operations.
At June 30, 2014, the Company had negative
working capital of approximately $832,011 as compared to negative $413,774 at December 31, 2013. Working capital as of both
dates consisted entirely of cash, accounts receivable, and prepaid expenses, net of current liabilities.
At June 30, 2014, the Company has minimal cash
and tangible assets, increasing accrued liabilities, negligible revenues, and a history of operating losses. Absent an outside
capital infusion, the Company will seek funding from traditional banking and other private sources. There are no assurances
that any manner of securities offering (debt or equity) will be successful, and the Company’s revenues are inadequate to
provide for the growth projected in this filing. We may be reliant on additional shareholder contributions, including from
management, to continue operations. We are hopeful that the market awareness and financial transparency afforded through
becoming a reporting company will assist us in procuring additional investment capital or loans.
As reflected in the unaudited interim financial
statements as of June 30, 2014, we have included an explanatory paragraph related to issues that raise substantial doubt about
the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is
dependent on the Company's ability to become profitable and or attain funding through additional sale of common stock or debt financing. The
unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a
going concern.
Off
Balance Sheet Arrangements
We have no off balance sheet arrangements.
Subsequent Events
Management
has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation the following events
have occurred and require disclosure:
Subsequent to June
30, 2014, note holders converted $100,582 of principal on convertible notes and $1,900 of accrued interest into 281,331,816 shares
of common stock in satisfaction of debt.
Subsequent to June
30, 2014, the Company issued 316,000,000 shares to individuals as compensation for services to the Company. The shares were valued
at $284,400 in the aggregate.
The number of shares of the issuer’s
common stock, par value $.00001 per share, outstanding as of August 16, 2014 is 605,091,318.
Item
3. Quantitative and Qualitative Disclosures About
Market Risk
We are a Smaller Reporting Company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item
4. Controls and Procedures
Item
4(T). Controls and Procedures
(a) Management’s Conclusions
Regarding Effectiveness of Disclosure Controls and Procedures
The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control
over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial
Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
With respect to the period ending June 30,
2014, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the
design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated
under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described in Internal Control
— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based upon our evaluation regarding the period
ending June 30, 2014, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded
that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of
ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management
believes that the financial statements and other information presented herewith are materially correct.
The Company’s disclosure controls and
procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management,
including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures
will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected.
(b) Changes in Internal Controls
There have been no changes in the Company’s
internal control over financial reporting during the period ended June 30, 2014 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal controls over financial reporting.
Part
II. Other Information
Item
1. Legal Proceedings
None.
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds
At various
times during the three month period ending June 30, 2014, the Company issued an aggregate of 29,074,297 shares in satisfaction
of debt and accrued interest for a value of $21,934, or an average of $0.0008 per share.
On
May 7, 2014, an aggregate of 1,531,450 shares of common stock was returned to the Company’s
treasury by two shareholders for a value of $4,441 or $0.016 per share. The shares outstanding were related to an acquisition that
was rescinded by both parties. As a result, the Company has recorded the value of the shares returned as a gain on the disposal
of assets.
On June 2, 2014, the
Company issued an aggregate of 3,750,000 common shares to consultants as compensation for services provided. The stock was valued
at approximately $24,750 or $0.0066 per share.
Item
3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item
5. Other Information
Not applicable.
Item
6. Exhibits
Exhibit
Number |
|
Description |
31.1 |
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
31.2 |
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
101 |
|
Interactive Data Files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.** |
* Filed herein
** In accordance with Regulation S-T,
the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed "furnished" and not "filed."
SIGNATURES
In accordance with Section 13 or 15(d) of the
Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
IC
PLACES, INC., |
|
FKA
IC PUNCH MEDIA, INC. |
|
|
|
Date:
September 12, 2014 |
By: |
/s/
Steven Samblis |
|
|
STEVEN
SAMBLIS, |
|
|
Chief
Executive Officer |
|
|
Chief
Financial Officer |
22
Exhibit 31.1
CERTIFICATION
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13A-14 AND 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Steven Samblis, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
IC Places, Inc.
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; |
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: September 12, 2014
/s/ Steven Samblis
Steven Samblis
Chief Executive Officer
Chief Financial Officer
(Principle Executive and Financial
Offier)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the filing
of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 as filed with the Securities and Exchange Commission
(the "Report") by IC Places, Inc. (the "Registrant"), I, Steven Samblis, hereby certify that:
1. |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of Registrant. |
Date: September 12, 2014
/s/ Steven Samblis
Steven Samblis
Chief Executive Officer
Chief Financial Officer
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