UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 10-Q/A

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☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from :

 

ICON VAPOR, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		000-55284		46-1471251
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

8525 Arjons Drive, Suite A

San Diego, CA 92126

(Address of principal executive offices)

 

(858) 564-9513

(Registrant’s telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes    ☐ 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 (Not required)

 

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.

 

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☐	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

 

As of May 18, 2015, there were 78,996,163shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

 

EXPLANATORY NOTE

 

On May 20, 2015, Icon Vapor, Inc. (the “Company”) filed its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 (the “Original Form 10-Q”). The Original Form 10-Q was inadvertently filed by the EDGAR agent without the accompanying XBRL Interactive Data. The purpose of this first amendment to the Original 10-Q is to submit the XBRL as required.

 

This Form 10-Q/A speaks as of the original filing date of the Original Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Original Form 10-Q, other than as noted above.

 

ICON VAPOR, INC.

TABLE OF CONTENTS

 

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 4.	CONTROLS AND PROCEDURES	18
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	18
ITEM 1A.	RISK FACTORS	18
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	18
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4.	MINE SAFETY DISCLOSURES	19
ITEM 5.	OTHER INFORMATION	19
ITEM 6.	EXHIBITS	20

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Icon Vapor, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," "ICNV" or “Icon” refers to Icon Vapor, Inc.

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.

CONDENSED FINANCIAL STATEMENTS

 

INDEX	1
Unaudited Consolidated Balance Sheet as of March 31, 2015 and Audited Consolidated Balance Sheet as of December 31, 2014 (restated)	2
Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2015and 2014	3
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014	4
Unaudited Consolidated Statement of Stockholders’ Equity from January 1, 2014 to March 31, 2015	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6

 

 

ICON VAPOR, INC.

 CONSOLIDATED BALANCE SHEETS

 

		March 31,				December 31,
		2015				2014
Assets:						(Restated)
Current Assets
Cash and Cash Equivalents		$	200,101			$	160,353
Accounts Receivable			32,636				487
Inventory			176,971				123,259
Prepaid Expenses			142,848				3,710
Total Current Assets			552,556				287,809
Fixed Assets-net			39,272				35,356
Other assets, Security Deposit			5,414				5,414
Total Assets		$	597,242			$	328,579
Liabilities and Stockholders' Deficit:
Current Liabilities:
Derivative Liability		$	923,159			$	711,721
Accounts Payable and Accrued Expenses			29,741				19,700
Convertible Notes Payable			277,000				174,000
Customer Deposits			48,366				48,366
Note Payable			312,207				64,707
Total Liabilities			1,590,473				1,018,494
Stockholders’ Equity:
Preferred Stock, Par value $0.001, Authorized 10,000,000 shares Issued 0 shares at December 31, 2014 and 2013			-				-
Common Stock, Par value $0.001 Authorized 500,000,000 shares Issued 78,996,163 and 42,696,163 shares respectively			78,996				42,696
Additional Paid in Capital			7,896,729				7,451,899
Common Stock to be Issued			-				33,000
Unearned Services			(268,412	)			(233,333	)
Retained Deficit			(8,700,544	)			(7,984,177	)
Total Stockholders' Equity			(993,231	)			(689,915	)
Total Liabilities and Stockholders' Equity		$	597,242			$	328,579

 

The accompanying notes are an integral part of these financial statements.

 

 

ICON VAPOR, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS

 

		For the Three Months Ended
		March 31,
		2015				2014
Revenues		$	51,177			$	4,912
Costs of Goods			20,048				2,846
Gross Margin			31,129				2,066
Expenses:
Derivative liability			211,438				-
Professional Fees			42,500				21,502
General and Administrative			350,299				102,289
Operating Expenses			604,237				160,551
Loss from operations			(573,108	)			(158,485	)
Interest			(20,000	)			(10,534	)
Loss on Inventory			(123,259	)			-
Total Other Expense			(143,259	)			(10,534	)
Net Loss		$	(716,367	)			(169,019	)
Loss per Share		$	(0.01	)		$	(0.00	)
Weighted Average Shares Outstanding			73,719,952				39,277,137

 

The accompanying notes are an integral part of these financial statements.

 

 

ICON VAPOR, INC.

 STATEMENTS OF CASH FLOWS

 

		For the three Months Ended
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the Period		$	(716,367	)		$	(169,019	)
Shares Issued			138,051				36,760
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and Amortization			4,605				3,160
Changes in Operating Assets and Liabilities: Accounts Payable			10,041				4,751
Decrease (Increase) in Accounts Receivable			(32,149	)
(Increase) Decrease in Prepaids and Deposits			(139,138	)
Increase (Decrease) in Derivative Liability			211,438
(Increase) Decrease in Inventory			(53,712	)			3,166
(Decrease) Increase in Interest			-				10,534
Net Cash Used in Operating Activities			(577,231	)			(109,310	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment			(8,521	)			-
Net cash provided by Investing Activities			(8,521	)			-
CASH FLOW FROM FINANCING ACTIVITIES:
Common Stock issued for Cash			275,000				-
Proceeds from Loans			353,000				110,000
Reduction of Debt			(2,500	)			(5,000	)
Net Cash Provided by Financing Activities			625,500				105,000
Net (Decrease) Increase in Cash			39,748				(4,310	)
Cash at Beginning of Period			160,353				74,843
Cash at End of Period			200,101			$	70,533
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest		$	-			$	-
Franchise and Income Taxes		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accounts Payable Satisfied through Contributed Capital and Property and Equipment		$	-			$	-

 

The accompanying notes are an integral part of these financial statements.

 

 

ICON VAPOR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

JANUARY 1, 2014 TO MARCH 31, 2015

 

										Additional				Common Stock
		Common				Common				Paid in				To be				Unearned				Retained
		Shares				Stock				Capital				issued				Services				Deficit				Total
Balance January 1, 2014			39,263,768			$	39,264				962,627											$	(1,185,919	)		$	(184,028	)
Shares issued for services			1,051,086				1,051				423,209								(233,333	)			-				190,927
Shares issued for cash			2,016,667				2,017				252,983												-				255,000
Shares issued for debt reduction			364,642				364				145,493												-				145,857
Effects of merger and shares to be issued											5,667,587				33,000												5,700,587
Net loss for the year			-				-				-												(6,798,258	)			(6,798,258	)
Balance December 31, 2014			42,696,163			$	42,696				7,451,899				33,000				(233,333	)			(7,984,177	)			(689,915	)
Shares issued			33,000,000				33,000								(33,000	)											-
Shares issued for services			750,000				750				124,800												-				125,550
Shares issued for cash			250,000				250				24,750												-				25,000
Shares issued for services			300,000				300				47,280												-				47,580
Shares issued for cash			2,000,000				2,000				248,000																250,000
Services earned																			100,000								100,000
Services deferred																			(135,079	)							(135,079	)
Net loss for the period			-				-				-												(716,367	)			(716,367	)
Balance March 31, 2015			78,996,163			$	78,996			$	7,896,729				-				(268,412	)		$	(8,700,544	)		$	(993,231	)

 

The accompanying notes are an integral part of these financial statements.

 

 

ICON VAPOR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

 

 

NOTE 1 – ORGANIZATION

 

Icon Vapor, Inc. (“the Company) was originally incorporated under the laws of the state of Nevada. On April 3, 2006 the Company changed its name to Xero Mobile and then in April 2011 to MYEZSMOKES, INC. In February 2014 the name was changed to Icon Vapor, Inc. The Company specializes in the distribution of a smoke free cigarette.

 

On November 3, 2014, The Company purchased all of the outstanding stock of Green Tree Syndicate, Inc. a private company incorporated under the laws of the state of California. Green Tree Syndicate, Inc. became a wholly owned subsidiary of the Company on that date. The subsidiary is in the same business as the Company specializing in the sales of smoke free cigarettes.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(A) Principles of Consolidation

 

The accompanying 2015 consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Green Tree Syndicate, Inc. (from November 3, 2014, merger). All intercompany accounts have been eliminated upon consolidation.

 

(B) Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and derivative instruments and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution of services and interest.

 

(C) Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At March 31, 2015 and December 31, 2014, the Company had no cash equivalents.

 

(D) Loss Per Share

 

In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The computation of basic and diluted loss per share at March 31, 2015 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

		March 31, 2015
Convertible Debt (Exercise price - $0.674-0.0782)			77,124,742
Total			77,124,742

 

(E) Operating Leases

 

The Company leases approximately 5,300 square feet of space under a 5 1/4-year lease commencing on January 1, 2015 at a base rent of $3,710.

 

 

(F) Business Segments

 

The Company operates in one segment and therefore segment information is not presented.

 

(G) Allowance for Doubtful Accounts

 

The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customers ability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debts based on historical experience. The company has historically experienced limited bad debts and thus has not established a reserve. At March 31, 2015 Accounts Receivable consisted of $32,636 and at December 2014 $487.

 

(H)Inventory

 

The Company’s inventory consists of finished electronic cigarettes and flavors of vapor, valued under the FIFO method, stated and the lower of cost or market value. At March 31, 2015 the inventory value at lower of cost or market was $176,971 and at December 31, 2014 $123,259. In 2015 the Company decided to slightly change the type of vapor cigarette it sells to a more modern look and wrote off the inventory of $123,259 as it was no longer going to sell this product.

 

(I) Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company mainly sells to retailers. There are no price incentives and the product can only be returned if defective. As the Company does not believe defective merchandise is likely an allowance has not been recognized. Revenue is recognized on a gross basis with corresponding costs of goods as a reduction to revenue in cost of sales. Revenue is recognized when the product is shipped to the customer.

 

(J) Fair Value of Financial Instruments

 

The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

 

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

 

	●	Level 1 - quoted market prices in active markets for identical assets or liabilities.
	●	Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	●	Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company's financial instruments consist of accounts payable, accrued expenses, notes payable, loan payable - related party, and convertible notes payable. The carrying amount of the Company's financial instruments approximates their fair value as of December 31, 2014 and 2013, due to the short-term nature of these instruments.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3 (see Note 8).

 

(K) Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.

 

 

(L) Derivative Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

(M) Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

 

(N) Debt Issue Costs and Debt Discount

 

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

(O) Stock-Based Compensation - Non Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

 

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

 

●

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.  The Company uses historical data to estimate holder’s expected exercise behavior.  If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

 

	●	Expected volatility of the entity’s shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
	●	Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

●

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

 

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

 

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

 

(P) Recent Accounting Pronouncements

 

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company adopted this pronouncement for the three months ended August 31, 2014.

 

 

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation (Topic 718 ); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.  We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

NOTE 3 – PROPERTY AND EQUIPMENT

  

		March 31, 2015				December 31, 2014				Estimated Useful Life
Furniture and Fixtures and Equipment			30,943				30,902			5-7 years
Leasehold Improvements			14,729				6,249			5.25 years
Computer Equipment			5,764				5,764			3 years
Auto			27,958				27,958			3 years
			79,394				70,873
Less: Accumulated Depreciation			(40,122	)			(35,517	)
Property and Equipment, Net		$	39,272			$	35,356

 

Depreciation expense was $4,605 in 2015 and $3,160 in 2014.

 

 

NOTE 4 – NOTES PAYABLE

 

The Company has the following non-convertible notes:
		March 31, 2015				December 31, 2014
Notes Payable to an individual, originating in 2011, interest imputed at 6%, payable on demand			3,207				5,707
Note Payable to an individual, without interest Renegotiated in 2009 from convertible to non-convertible Payable on demand			59,000				59,000
Note Payable to an individual for $250,000 due July 19, 2015 Interest only payments of $10,000 per month, guaranteed by receivables And the personal guarantee of the President			250,000				-
Total		$	312,207			$	64,707

 

NOTE 5 – CONVERTIBLE NOTES

 

The Company at March 31, 2015 has five convertible notes payable in the amount of $277,000.

 

Notes 1 and 2 occurred on July 24, 2013 for $20,000 and July 26, 2013 for $70,000. The notes bear interest at 3% and are convertible anytime after December 31, 2014 at a 50% discount off the market price. The Company has calculated a derivative expense using the Black Scholes module of $646,882 based on a volatility rate of 141.08% and a cumulative rate of 71% with an imputed interest rate of 10%.

 

Note 3 occurred on December 15, 2014 for $84,000, interest at 8% with a discount of 42% due September 15, 2015. The Company has calculated a derivative expense of $143,238.

 

Note 4 occurred on January 30, 2015 for $43,000, interest at 8% due in six months, convertible at a discount of 42%. The Company recorded a derivative expense of $55,959.

 

Note 5 occurred on March 3, 2015 for $60,000, interest at 10% due in eight months convertible at the lesser of.25 or market price. The Company has recorded a derivative of $71,080.

 

The Company calculated the derivative expense using the black schools module under the same parameters as was calculated in methods 1 and 2.

 

NOTE 6 – CUSTOMER DEPOSITS

 

At March 31, 2015 the Company recorded a customer deposit $48,366 for an order which was shipped in April and May of 2015.

 

NOTE 7 – GOING CONCERN

 

As reflected in the accompanying financial statements, the Company had a significant retained deficit at March 31, 2015 and had a net loss of $716,367 for the three months ended March 31, 2015.

 

Management intends to raise additional funds now that it has merged thru a private placement or thru the public process. Management believes that the actions presently being taken to further implement its business plan will enable the Company to continue as a going concern. While the Company believes in the viability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate funds

 

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 8 – DERIVATIVE LIABILITIES

 

The Company identified conversion features embedded within convertible debt issued. The Company has determined that the features associated with the embedded conversion option, should be accounted for at fair value, as a derivative liability.

 

As discussed in note 5 the Company has calculated a liability at March 31, 2015 of $923,159. The assumptions utilized were a volatility rate of 141.08%, risk free interest of 10% and a cumulative volatility of 71%. The stock prices on the grant dates were .5360 and .56 for the two notes in question. The stock price at December 31, 2014 was .1493 with the effective price at 50% of .1493 or $.0747. The stock price at March 31, 2015 was .134 with an effective price at $.0782 or $.067

 

Total Derivative Liability @ 03/31/2015			923,159
Total Derivative Liability @ 12/31/2014			711,721
Derivative Expense		$	211,438

 

 

NOTE 9 – STOCKHOLDERS’ EQUITY

 

(A) Preferred Stock

 

The Company’s Articles of Incorporation authorize 10,000,000 shares of preferred stock with a par value of $.001 with rights and preferences to be determined by the Board of Directors.

 

(B) Common Stock

 

In January 2013 the Company issued 175,000 shares for cash of $105,000.

 

On August 28, 2013 the Company issued 600,000 shares for cash of $135,000.

 

On August 30 2013 the Company issued 16,393 shares for marketing services rendered valued at market price on the date of issuance of .6199 resulting in an expense of $10,162.

 

On November 8, 2013 the Company issued 120,000 shares for marketing services rendered valued at market of .40 per share resulting in an expense of $48,000.

 

On December 26, 2013 the Company issued 62,500 shares valued at market of .40 resulting in a total cost of $25,000. The issuance of these shares was for marketing services to be completed in the first six months of 2014 and thus the Company has recognized a prepaid expense at March 31, 2014 of $12,500

 

On March 6 and 19^th 2014 the Company issued 21, 818 and 29,268 shares which equal 51,086 shares for marketing services valued at market which was .5150 and .4450 per share resulting in a stock for services expense of $24,260.

 

On July 24, 2014 the Company issued 1,000,000 shares for services for marketing to be earned over 12 months. The Company expensed 166,667 and deferred 233,333 for services not yet earned. This amount is shown in the equity section as unearned services.

 

On August 12, 2014 the Company issued 100,000 shares for cash of $15,000.

 

On August 14, 2014 the Company issued 200,000 shares for cash of $30,000.

 

On August 29, 2014 the Company issued 364,642 shares for a reduction in debt for monies advance during 2014 of $140,000 plus interest of $5,857 or a total of $145,857.

 

On September 15, 2014 the company issued 233,334 shares for cash of $35,000.

 

On September 24, 2014 the Company issued 200,000 shares for cash of $30,000.

 

On October 16, 2014 the Company issued 333,333 shares for cash of $50,000

 

On December 11, 2014 the Company issued 950,000 shares for cash of $95,000.

 

On January 8, 2015 the Company issued 33,000,000 shares for the merger completed in the prior year.

 

On February 13, 2015 the Company issued 750,000 shares valued at market on that day of $0.1674 for services from January 15, 2015 to January 15, 2016 for a total cost of $125,550 prorated over the term of the agreement.

 

On March 19, 2015 the Company issued 250,000 shares for cash of $25,000.

 

On March 19, 2015 the Company issued 300,000 shares for services to be earned thru June of 2015 valued at market of 0.1586 for a total cost of $47,580 which is prorated over the term of the agreement.

 

On March 27, 2015 the Company issued 2,000,000 shares for cash of $250,000.

 

All shares issued were to non-related third party individuals.

 

 

NOTE 10 – COMMITMENT AND CONTINGENCIES

 

The Company leases approximately 5300 square feet of space under a 5and a 1/4-year lease executed on January 1, 2015.

 

Future minimum lease commitments are as follows:

 

Year		Amount
2015		$	33,390
2016			44,520
2017			44,520
2018			44,520
2019			44,520
2020			11,130
Total			222,600

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

 

The Company is also liable, should it raise funds, for $2,000,000 to be paid as part of the merger agreement.

 

NOTE 11 – RELATED PARTY TRANSACTIONS

 

The Company in 2015 paid its chief executive officer $30,000 in fees.

 

NOTE 12 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that one material subsequent event existed. 

 

1.

In April 2015 the Company received $50,000 in the form of a convertible note.

 

 

NOTE 13 – RESTATED FINANCIAL STATEMENTS

 

The Company restated its December 31, 2014 financial statements to effect for a deposit and costs related to a convertible debenture received in the last week of December and not recorded both for cash and derivative expense. The effects on this financial statement is as follows:

 

ICON VAPOR, INC.
BALANCE SHEETS
		December 31, 2014
		Originally
ASSETS		Reported				Restated				Difference
Current Assets:
Cash			79,867				160,353				80,486
Other		$	127,456			$	127,456				-
Total current assets			207,323				287,809				80,486
Other			40,770				40,770				-
Total Assets		$	248,093			$	328,579				80,486
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Derivative Liability		$	579,583			$	711,721				132,138
Accounts Payable			19,700				19,700				-
Convertible Notes Payable			90,000				174,000				84,000
Customer Deposits			48,366				48,366				-
Notes Payable			64,707				64,707				-
Accrued interest payable			-				-				-
			802,356				1,018,494				216,138
Total current liabilities			802,356				1,018,494				216,138
STOCKHOLDERS' DEFICIT
Preferred stock: $0.001 par value; 10,000,000 shares authorized;
none issued or outstanding at December 31, 2014			-				-				-
Common stock: $0.001 par value; 500,000,000 shares authorized;
42,696,163  shares issued and outstanding			42,696				42,696				-
Additional Paid in Capital			7,451,899				7,451,899				-
Common Stock issuable and unearned			(200,333	)			(200,333	)			-
Accumulated deficit			(7,848,525	)			(7,984,177	)			(135,652	)
Total stockholders' deficit			(554,263	)			(689,915	)			(135,652	)
Total liabilities and stockholders' deficit		$	248,093			$	328,579				80,486

 

The accompanying notes are an integral part of these financial statements.

 

End of Notes to Financial Statements

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following Management's Discussion and Analysis should be read in conjunction with Icon Vapor, Inc. financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

 

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on April 14, 2015.

 

Overview

 

We are an electronic cigarette company headquartered in San Diego, California, that designs, markets and sells electronic cigarettes, cigars, cartomizers and related accessories under the Icon Vapor brand. We have commercially launched our Icon Vapor products which are now being sold online. Our initial sales campaign began in August of 2012, but sales are not to the point that our operations are profitable.

 

Our initial strategy has been to drive online sales through our Icon Vapor eCommerce website. We do not intend to compete with larger, significantly greater capitalized e-cigarette companies in the brick-and-mortar retail environment, which we believe would require substantial advertising, particularly direct television marketing, advertisements in trade magazines, point of sale materials, display, price promotions, in-store and on-premise promotions and slotting fees. We intend to launch a network marketing sales program which we believe will result in a more dedicated sales program and produce stronger results.

 

We intend to distribute and sell our Icon Vapor products through a network of independent members using the direct selling channel. We believe that this strategy will enhance consumer awareness and the demand for our products for smokers who are looking for, and shifting to, a potentially more healthy “smoking” choice. We believe that these selling channels are ideally suited to marketing our products because sales of electronic and vapor cigarettes involves an education process strengthened by ongoing personal contact between members of the network and their customers. We expect that our members will consume Icon Vapor products themselves and, therefore, would provide first-hand testimonials of our products to their customers, which we believe can serve as a powerful sales tool.

 

Results of Operations

 

Total revenue for the three months ended March 31, 2015was $51,177, as compared to $4,912for the three months ended March 31, 2014. Operating expenses in the quarter ended March 31, 2015amounted to $604,237as compared to $160,551 for the quarter ended March 31, 2014. The increase in revenue can be attributed primarily to the asset acquisition of our wholly owned subsidiary, Green Tree Syndicate, Inc, on December 4, 2014 and its recognition of revenue from the merger date to March 31, 2015.

 

The net loss for the quarter ended March 31, 2015 was $716,367 as compared to $169,019 for the quarter ended March 31, 2014. This is due to an increase in derivative expense of $211,438 compared to zero, stock for services of $138,501 compared to$36,760 higher consulting expenses and we expand the business of $64, 872 compared to $30,600 and a write down of obsolete inventory of $123, 259. The net loss for the twelve months ended December 31, 2014 was $6,798,258 as compared to $603,334 for the twelve month period ending December 31, 2013. This increase in loss was mainly derived from us impairing our acquisition of our subsidiary of $5,553,314.

 

 

Operating Expenses

 

Total operating expenses, including expenses for derivative liability, services, professional fees and general and administrative services, for the three month period ended March 31, 2015 were $604,237, which was comprised of $211,438 for derivative liability, $42,500in professional fees and $350,299 in other general and administrative costs, as compared to $160,551 for the three month period ended March 31, 2014, which was comprised of $NIL for derivative liability, $21,502 in professional fees and $102,289 in other general and administrative costs. The overall increase in operating expenses can be attributed to expenses incurred from the derivative of $237,843, professional expenses of $68,043 as we became a reporting company and $189,283 in general and administrative costs that increased as a result of the implementation of our marketing and business plans.

 

Liquidity and Capital Resources

 

Our cash, current assets, intangible assets, total assets, current liabilities and total liabilities as of March 31, 2015 and December 31, 2014 (restated) were as follows:

 

		March 31, 2015				December 31, 2014 (Restated)				$ Change				% Change
Cash			200,101				160,353				39,748				24.79	%
Total current assets			552,556				287,809				264,747				91.99	%
Total assets			597,242				328,579				268,663				81.77	%
Accounts payable and accrued expenses			29,741				19,700				10,041				50.97	%
Notes payable			589,207				238,707				350,500				146.83	%
Total liabilities			1,590,473				1,018,494				571,979				56.16	%

 

Cash Requirements/Going Concern

 

As of March 31, 2015, our primary source of liquidity was our cash and cash equivalents on hand of $200,101. However, we believe our current cash balances, together with the net product revenues are not sufficient to meet our anticipated cash requirements to fund our further commercialization of our Icon Vapor product line and to develop and implement a network marketing sales plan which are critical to driving sales to bring our business operations to profitability for the next twelve months. Given our existing sources of liquidity and expected cash burn, we believe that we will need approximately $3,500,000 in financing in order to continue as a going concern for the next twelve months from December 31, 2014, of which we expect to use approximately $2,000,000 to fund our acquisition of Green Tree Syndicate, Inc., an electronic cigarette sales and distribution company, $700,000 to purchase inventory, $300,000 for marketing and trade shows, $200,000 for consultant compensation and $300,000 for administrative and operational expense. We plan to obtain this financing through private placement offerings of the Company’s securities.

  

Our forecast of the period of time through which our financial resources and capital requirements will be adequate to support our operations, further expand the commercialization of Icon Vapor are forward-looking statements and involve risks and uncertainties, and actual results could vary materially and negatively as a result of a number of factors. A copy of applicable “Risk Factors” can be found in our registration statement on Form 10, originally filed with the Commission on September 16, 2014 and most recently amended on April 23, 2015. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

 

Due to the numerous risks and uncertainties associated with the development and commercialization of Icon Vapor, we are unable to estimate precisely the amounts of capital outlays and operating expenditures necessary to complete the development of our network marketing strategy and continued deployment of our online sales strategy sufficient to achieve profitability in our operations. Our funding requirements will depend on many factors, including, but not limited to, the following:

 

	●	The rate of progress and cost or our commercialization activities;
	●	The expenses we incur in marketing and selling Icon Vapor products and accessories;
	●	The revenue generated by sales of Icon Vapor;
	●	The success of our investment in our network marketing channel; and
	●	The costs of defending any patent claims and other intellectual property rights.

 

We may, from time to time, consider additional funding through a combination of new collaborative arrangements, strategic alliances, and additional equity and debt financings or from other sources. We will continue to manage our capital structure and to consider all financing opportunities, whenever they may occur, that could strengthen our long-term liquidity profile. Any such capital transactions may or may not be similar to transactions in which we have engaged in the past. There can be no assurance that any such financing opportunities will also be available on acceptable terms, if at all.

 

 

Cash Flow from Operating Activities

 

During the three months ended March 31, 2015, the Company’s operating activities used $577,231in cash as compared to$109,310 used by operating activities for the three months ended March 31, 2014. The increase in cash used for operating activities is primarily due to the increased loss.

 

Cash Flow from Investing Activities

 

During the three-month period ended March 31, 2015 and 2014, the Company used $8,521and $NIL, respectively, in cash for investing activities. The increase in cash used for investing activities is primarily due to purchase of leasehold improvements.

 

Cash Flow from Financing Activities

 

During the three months ended March 31, 2015, the Company received $625,500 in cash from financing activities. This consisted of $275,000 in proceeds from the issuance of common stock, $353,000 in proceeds from loans, offset by $2,500 in reduction of debt. This compares with $105,000 provided during the three months ended March 31, 2014 which consisted of $110,000 in net financing from loans less $5,000 from the reduction of debt.

 

Future Financings

 

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

 

Off-Balance Sheet Arrangements

 

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance and the performance of our subsidiaries.

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reported periods and related disclosures. These estimates and assumptions, including those related to revenue recognition, inventory valuation, impairment of long-lived assets, income taxes including the valuation allowance for deferred tax assets, research and development and stock-based compensation are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.

 

We believe that our application of the following accounting policies, each of which require significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” of our Notes to Financial Statements, contained herein.

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

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

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2015.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

 

In the ordinary course of business, we may be subject to claims, counter claims, suits and other litigation of the type that generally arise from the conduct of our business. We are not aware of any threatened or pending litigation that we expect will have a material adverse effect on our business operations, financial condition or results of operations.

 

ITEM 1A.

RISK FACTORS

 

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 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

1.

Quarterly Issuances:

 

On January 8, 2015, the Company issued 7,500,000 restricted common stock shares to Bashar Ballo pursuant to the Asset Acquisition Agreement with Green Tree Syndicate, Inc. The Asset Acquisition closed on December 4, 2014. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On January 8, 2015, the Company issued 7,500,000 restricted common stock shares to Rawi Ballo pursuant to the Asset Acquisition Agreement with Green Tree Syndicate, Inc. The Asset Acquisition closed on December 4, 2014. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On January 8, 2015, the Company issued 15,000,000 restricted common stock shares to Sater Tommka pursuant to the Asset Acquisition Agreement with Green Tree Syndicate, Inc. The Asset Acquisition closed on December 4, 2014. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On January 8, 2015, the Company issued 3,000,000 restricted common stock shares to Everest Capitol LLC pursuant to the Asset Acquisition Agreement with Green Tree Syndicate, Inc. The Asset Acquisition closed on December 4, 2014. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

 

On February 13, 2015, the Company issued 750,000 restricted common stock shares to Motivated Minds LLC as compensation for consulting services rendered to the Company; cost basis $0.20 per share. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On March 19, 2015, the Company issued 250,000 restricted common stock shares to Matthew Dana pursuant to a Subscription Agreement, cost basis $0.10.The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On March 19, 2015, the Company issued 150,000 restricted common stock shares to Radius Consulting, Inc. as compensation for consulting services rendered to the Company, cost basis $0.10. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On March 19, 2015, the Company issued 150,000 restricted common stock shares to Sarah R. Speno as compensation for consulting services rendered to the Company, cost basis $0.10. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On March 27, 2015, the Company issued 2,000,000 restricted shares of common stock to one investor pursuant to a subscription and purchases agreement, cost basis $0.13. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

2.

Subsequent Issuances:

 

None.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

N/A.

 

ITEM 5.

OTHER INFORMATION

 

None.

 

 

ITEM 6.

EXHIBITS

 

3.1.1		Articles of Incorporation of Desitv.com		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
3.1.2		Articles of Amendment Desitiv, Inc.		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
3.1.3		Articles of Amendment Xero Mobile, Inc.		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
3.1.4		Articles of Amendment Myezsmokes, Inc.		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
3.2		Amended and Restated Bylaws dated January 7, 2011		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
10.1		Option Agreement		Filed as an exhibit to our registration statement on Form 1-A of the Company, filed with the SEC on November 14, 2013.
10.2		Amendment to Option Agreement		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on December 10, 2014
10.3		Letter of Employment of Daniel Balsiger dated July 1, 2014		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
10.4		Sales Compensation Plan		Filed as an exhibit to our Registration Statement on Form 10-12G of the Company, filed with the SEC on September 16, 2014
31.01		Certification of Principal Executive Officer Pursuant to Rule 13a-14		Filed Herewith.
31.02		Certification of Principal Financial Officer Pursuant to Rule 13a-14		Filed Herewith.
32.01		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act		Filed Herewith.
32.02		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act		Filed Herewith.
101.INS*		XBRL Instance Document		Filed Herewith.
101.SCH*		XBRL Taxonomy Extension Schema Document		Filed Herewith.
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document		Filed Herewith.
101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document		Filed Herewith.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document		Filed Herewith.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document		Filed Herewith.

 

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

 

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.

 

		ICON VAPOR, INC.
Dated: May 20, 2015		/s/ Daniel W. Balsiger
		Name: Daniel W. Balsiger
		Title: Chief Executive Officer,
		President and Chief Financial Officer

 

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

 

Dated: May 20, 2015		/s/ Daniel W. Balsiger
		Name: Daniel W. Balsiger
		Title: Chief Executive Officer,
		President and Chief Financial Officer, Director
Dated: May 20, 2015		/s/ Michael J. Klepper
		Name: Michael J. Klepper
		Title: Secretary and Director
Dated: May 20, 2015		/s/ Mark Bednarz
		Name: Mark Bednarz
		Title: Director
Dated: May 20, 2015		/s/ Bashar Ballo
		Name: Bashar Ballo
		Title: Director
Dated: May 20, 2015		/s/ SaterTommka
		Name: SaterTommka
		Title: Director

 

 

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