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 September 30, 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 November 10, 2015, there were 107,036,163 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

 

 

ICON VAPOR, INC.

TABLE OF CONTENTS

 

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	F-1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7
ITEM 4.	CONTROLS AND PROCEDURES	7
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	8
ITEM 1A.	RISK FACTORS	8
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	8
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	8
ITEM 4.	MINE SAFETY DISCLOSURES	9
ITEM 5.	OTHER INFORMATION	9
ITEM 6.	EXHIBITS	9

 

 

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	F-1
Unaudited Balance Sheet as of September 30, 2015 and Restated Balance Sheet as of December 31, 2014 (restated)	F-2
Unaudited Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014	F-3
Unaudited Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014	F-4
Notes to Condensed Financial Statements (Unaudited)	F-5

 

 

ICON VAPOR, INC.

Balance Sheets

 

		September 30,				December  31,
		2015 (Unaudited)				2014 (Restated)
Assets
Current Assets
Cash and Cash Equivalents		$	69,102			$	159,138
Inventory, lower of cost or market, principally first in, first out			228,108				-
Prepaid Costs			-				3,710
Total Current Assets			297,210				162,848
Fixed Assets-net			9,769				12,062
Other assets, Security Deposit			5,414				5,414
Total Assets		$	312,393			$	180,324
Liabilities and Stockholders' Deficit:
Current Liabilities
Accrued Expenses & Payroll Obligations		$	287,151			$	140,059
Derivative Liability			1,224,521				-
Notes Payable			252,566				8,066
Convertible Debt			541,899				80,000
Related Party Debt			145,434				146,641
Total Current Liabilities			2,451,571				374,766
Total Liabilities			2,451,571				374,766
Stockholders’ Deficit:
Preferred Stock, par $0.001, authorized 10,000,000 none issued			-				-
Common Stock, par value $0.001 authorized 500,000,000 shares Issued 74,036,163 and 42,696,163			74,036				42,696
Additional Paid in Capital			7,689,153				1,795,708
Unearned Services			(44,797	)			(233,333	)
Retained Deficit			(9,857,570	)			(1,799,513	)
Total Stockholders’ Deficit			(2,139,178	)		$	(194,442	)
Total liabilities and Stockholders' Deficit		$	312,393			$	180,324

 

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

 

 

ICON VAPOR, INC.

Statement of Operations

(Unaudited)

 

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2015				2014				2015				2014
Revenues		$	37,285			$	3,369			$	168,304			$	10,765
Costs of Goods Sold			80,183				1,702				201,440				5,756
Gross Margin			(42,898	)			1,667				(33,136	)			5,009
Expenses:
Sales & Marketing			6,151				-				28,043				-
Bad Debt Expense			9,925								34,858
General and Administrative			5,529,214				76,266				6,109,376				392,677
Operating Expenses			5,545,290				76,266				6,172,277				392,677
Operating Income (Loss)			(5,588,188	)			(74,599	)			(6,205,413	)			(387,668	)
Other Income (Expense)
Interest			(74,218	)			(466	)			(171,322	)			(6,522	)
Derivative Expense			(874,979	)							(1,285,758	)
Green Tree Expenses			-				-				(395,566	)			-
Total Other Income (Expense)			(949,197	)			(466	)			(1,852,646	)			(6,522	)
Net Loss		$	(6,537,385	)		$	(75,065	)		$	(8,058,059	)		$	(394,190	)
Loss per Share, Basic & Diluted		$	(0.11	)		$	(0.00	)			(0.16	)			(0.01	)
Weighted Average Shares Outstanding			61,696,815				40,874,732				50,426,897				40,095,011

 

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

 

  

ICON VAPOR, INC.

Statements of Cash Flows

(Unaudited)

 

		Nine Months Ended September 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the Period		$	(8,058,059	)		$	(394,190	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Interest related to Convertible Debt			37,069				-
Bad Debts			23,986				-
Amortization of Debt Discount			51,018				-
Amortized Unearned Services			188,536				-
Depreciation and Amortization			11,691				5,437
Common Stock Issued for Services			5,424,478				99,325
Increase in Derivative Expense			1,285,758				89,554
Changes in Operating Assets and Liabilities
Accounts Receivable			(23,986	)			1,508
Prepaid			3,710				25,000
Accrued Liabilities			147,092				706
Inventory			(228,109	)			(8,883	)
Net Cash Used in Operating Activities			(1,136,816	)			(181,543	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment			(9,398	)			-
Net cash provided by Investing Activities			(9,398	)			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock issued for Cash			275,000				-
Proceeds from Loans			786,885				140,000
Payment of Debt			(4,500	)			(5,000	)
Changes in Related Party Debt			(1,207	)			-
Net Cash Provided by Financing Activities			1,056,178				135,000
Net (Decrease) Increase in Cash			(90,036	)			(46,543	)
Cash at Beginning of Period		$	159,138				74,843
Cash at End of Period			69,102			$	28,300
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest		$	40,000			$	-
Non Cash Investing and Financing Activities
Notes Payable		$	(127,000	)		$	-
Common Stock		$	450			$	-
Additional Paid In Capital		$	187,787			$	-
Derivative Liability		$	(61,237	)		$	-
			-				-

 

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

 

 

ICON VAPOR, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 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.

 

On September 5, 2015, the majority of the members of the Board of Directors of Icon Vapor, Inc., a Nevada corporation (the “Company”), voted to terminate and unwind the Asset Acquisition Agreement (the “Acquisition Agreement”), by and between the Company, Green Tree Syndicate, Inc., a California corporation (“Green Tree”) and the controlling shareholders of Green Tree (the “Green Tree Shareholders”), which was originally reported on Form 8-K filed with the Commission on November 13, 2014. Pursuant to the Acquisition Agreement, the Company acquired 100% of the assets of Green Tree and, in exchange, issued 33,000,000 restricted shares of its common stock to the Green Tree Shareholders (the “Icon Vapor Shares”), plus agreed to pay Green Tree $2,000,000 in cash. Additionally, and pursuant to the Acquisition Agreement, the Company appointed two Green Tree Shareholders as members of the Board of Directors of the Company.

 

As a result of the Termination of the Acquisition Agreement:

 

(a) The 33,000,000 restricted shares of common stock of the Company issued to the Green Tree Shareholders were cancelled and returned to treasury.

 

(b) The Company disbursed a cash payment of $233,022.54 of the agreed $2,000,000 cash price. The Company has made a demand for the return of the cash disbursed to Green Tree.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited interim financial statements of the Company 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 annual report filed with the SEC on its 10-K. 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 our interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the year ended December 31, 2014, as reported in the Form 10-K, have been omitted.

 

NOTE 3 – NOTES PAYABLE

 

The Company has four notes payable totaling $252,566 the largest of which is for $249,000 due to an individual and maturing on July 19, 2015.  The note is personally guaranteed by the Chief Executive officer as well as by the receivables of the Company.  Payment terms are interest only payments of $10,000 a month. The note has been extended for six months with a new maturity date of January 19, 2016.    

  

 

 

NOTE 4 – CONVERTIBLE NOTES

 

The Company at September 30, 2015 has ten convertible notes payable in the amount of $541,899, which is shown net of deferred costs of $36,850. 

 

At September 30, 2015 the derivative liability is $1,224,521.

 

The Company has ten (10) convertible loans outstanding all of which have default covenants contained within their respective agreements. As a result of the later filing of this 10-Q for the period ending September 30, 2015, the Company is in default of the filing covenant on each of these loans, which can result in the notes becoming due and payable if not cured by the Company within a prescribed period of time. Additionally, the makers of the Typenex loan have issued a demand letter to the Company to cure the covenant breach of late filing. The filing of this Form 10-Q will cure the aforementioned defaults.

 

NOTE 5 – GOING CONCERN

 

As reflected in the accompanying financial statements, the Company had a significant retained deficit at September 30, 2015 and had a net loss for the nine months ended September 30, 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 6 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

For the Period from January 1, 2015 through September 30, 2015

 

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.

 

On May 20, 2015, the Company issued 50,000 shares to an individual for sales services thru December 31, 2015. The shares were valued at market on that day at $0.40, for a total cost of $20,000.

 

All shares issued above for this period were to non-related third party individuals.

 

On July 8, 2015, the Company issued 150,000 shares to Catalyst Funding LLC, as part of a conversion to a note held by Catalyst. The shares were valued at $0.10.

 

 

On July 15, 2015, the Company issued 300,000 shares to Catalyst Funding LLC, as part of a conversion to a note held by Catalyst. The shares were valued at $0.06.

 

On August 11, 2015, the Company issued 40,000 shares for services earned through July of 2015. The shares were valued at $0.01 per share.

 

On August 11, 2015, the Company issued 27,500,000 common shares to Daniel Balsiger, CEO for services rendered to the Company.

 

Material Subsequent Issuances and Cancellations subsequent to September 30, 2015

 

On October 16, 2015, the Company retired 7,500,000 shares held by Bashar Ballo, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

On October 16, 2015, the Company retired 7,500,000 shares held by Rawi Ballo, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

On October 16, 2015, the Company retired 15,000,000 shares held by Sater Tommka, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

On October 16, 2015, the Company retired 3,000,000 shares held by Everest Capitol, LLC, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

  

NOTE 7 – SUBSEQUENT EVENTS

 

None 

 

 

NOTE 8 – RESTATED FINANCIAL STATEMENTS

 

The Company restated its December 31, 2014 balance sheet. The differences are as follows:

 

ICON VAPOR, INC.

BALANCE SHEETS

 

	December 31, 2014
	Originally
	Reported				Restated				Difference
ASSETS
Current Assets:
Cash	$	79,867			$	159,138				79,271			(1	)
Inventory		123,259				-				(123,259	)		(2	)
Other	$	4,197			$	3,710				(487	)		(2	)
Total current assets		207,323				162,848				(44,475	)
Equipment, Net		35,356				12,062				(23,294	)		(2	)
Other		5,414				5,414				-
Total Assets	$	248,093			$	180,324				(67,769	)
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Derivative Liability	$	579,583			$	-				(579,583	)		(3	)
Accrued Liabilities		19,700				140,059				120,359			(4	)
Convertible Notes Payable		90,000				80,000				(10,000	)		(1	)
Notes Payable		64,707				8,066				(56,641	)		(1	)
Notes Payable - Related Party		-				146,641				146,641			(1	)
Customer Deposits	$	48,366			$	-				(48,366	)		(2	)
Total Current Liabilities		802,356				374,766				(427,590	)
Total Liabilities	$	802,356			$	374,766				(427,590	)
STOCKHOLDERS' DEFICIT
Preferred stock		-				-				-
Common stock		42,696				42,696				-
Additional Paid in Capital		7,451,899				1,795,708				(5,656,191	)		(5	)
Common Stock to be issued		(33,000	)							(33,000	)		(5	)
Unearned Services		(233,333	)			(233,333	)			-
Retained deficit		(7,848,525	)			(1,799,513	)			6,049,012			(6	)
Total stockholders' deficit		(554,263	)			(194,442	)			359,821
Total liabilities and stockholders' deficit	$	248,093			$	180,324				(67,769	)

 

The explanations of the changes noted above, respectively, are as follows:

 

	(1)	The increase in cash is a result of the Company not properly recording proceeds of an $84,000 note payable (less $4,000 original issue discount) reduced by $1,214 of cash held by Green Tree Syndicate, Inc. (“Green Tree”).
	(2)	The Green Tree acquisition was terminated and the assets and liabilities were removed from the financial statements.

 

 

(3)

The Company had computed derivative liabilities on the $146,641 related party debt; however, this debt was not convertible into common shares according to loan documents. The $84,000 convertible debt was only convertible after one hundred and eighty days (180) had passed, therefore at December 31, 2014 there was no derivative liability as the note was not convertible at that time.

 

(4)

The increase in accounts payable is the result of accrual of wages for an executive employee based on the terms of his employment agreement, offset by a reduction of $4,340 in liabilities related to Green Tree.

 

(5)

Reversal of value assigned to the 33,000,000 shares of common stock issued to owners of Green Tree upon termination of the Green Tree acquisition.

 

(6)

The following summarize the changes in retained deficit:

 

	Balance December 31, 2013		$	1,185,919
	Adjustments –
	Reversal of derivative Liability			(170,870	)
	Accrual of Wages			20,843
	Adjusted Balance December 31, 2013			1,035,892
	Net Loss as reported – 2014			6,662,606
	Adjustments –
	Green Tree Loss			(5,605,038	)
	Change in Derivative Liability			(405,199	)
	Accrual of Expenses			111,252
	Adjusted Net Loss			763,621
	Adjusted Retained Deficit, December 31, 2014		$	1,799,513

  

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, who 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 September 30, 2015 was $37,285, as compared to $3,369 for the three months ended September 30, 2014. Operating expenses in the quarter ended September 30, 2015 were $5,545,290 as compared to $76,266 for the quarter ended September 30, 2014. Total revenue for the nine months ended September 30, 2015 was $168,304, compared to $10,765 for the nine months ended September 30, 2014. Operating expenses in the nine months ended September 30, 2015 were $6,172,277 as compared to $392,677 for the nine months ended September 30, 2014. The adjustments in revenue can be attributed primarily to the acquisition and subsequent divestiture of our wholly owned subsidiary, Green Tree Syndicate, Inc., which was acquired on November 4, 2014, and its recognition of revenue from the merger date to June 30, 2015. However, because of returns of previously sold (prior to acquisition) Green Tree products to our major customer Core-Mark, $290,000 in sales was not recognized because they (Core-Mark) offset that amount against the Green Tree product returns.

 

 

Additionally, another Green Tree client, Ontario 2421519, was shipped Icon product for a total value of approximately $190,000 in the second quarter of 2015. Ontario 2421519 remitted a $48,000 deposit as partial payment for those Icon products and disbursed the funds to a Green Tree bank account, who failed to subsequently transfer the money to Icon.  As a result, the Company was forced to recognize the revenue attributable to the Ontario 2421519 as a consignment sale.

 

The net loss for the quarter ended September 30, 2015 was $6,537,385 as compared to $75,065 for the quarter ended September 30, 2014. This increase in loss was mainly derived from us impairing our acquisition of Green Tree Syndicate in the amount of $395,566 and the recordation of a derivative expense associated with the convertible debentures issued by the Company in the amount of $1,285,758 and the expense associated with the issuance of stock to the CEO in the amount of $5,225,000.

 

Operating Expenses

 

Total operating expenses, including expenses for sales and marketing, services, professional fees and general and administrative services, for the three month period ended September 30,2015 were $5,545,290, which was comprised of $6,151 in sales and marketing costs and $5,529,214 in other general and administrative costs, as compared to $76,266 for the three month period ended September 30, 2014, which was comprised of $73,539 in professional fees and $2,727 in other general and administrative costs. The overall increase in operating expenses can be attributed to expenses incurred from an increase in general and administrative expenses as a result of the issuance of stock to the CEO, becoming a reporting company and an increase in general and administrative costs as a result of the implementation of our marketing and business plans.

 

Liquidity and Capital Resources

 

Our cash, current assets, total assets, current liabilities and total liabilities as of September 30, 2015 and December 31, 2014 (restated) were as follows:

 

		September  30, 2015 (Unaudited)				December 31, 2014 (Restated)
Cash			69,102				159,138
Total current assets			297,210				162,848
Total assets			312,393				180,324
Total Current liabilities			2,451,571				374,766
Total Liabilities			2,451,571				374,766

 

Cash Requirements/ Going Concern

 

As of September 30, 2015, our primary source of liquidity was our cash and cash equivalents on hand of $69,102. 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 $1,500,000 in financing in order to continue as a going concern for the next twelve months from December 31, 2014 forward. 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 nine months ended September 30, 2015, the Company’s operating activities used $1,136,816 as compared to $181,543 used by operating activities for the nine months ended September 30, 2014. The increase in cash used for operating activities is primarily due to the increased loss from the issuance of stock to the CEO and recordation of a derivative liability expense.

 

Cash Flow from Investing Activities

 

During the nine-month period ended September 30, 2015 and 2014, the Company used $9,398 and $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 nine months ended September 30, 2015, the Company received $1,056,178 in cash from financing activities. This consisted of $275,000 in proceeds from the issuance of common stock and a net increase in borrowings of $781,178. This compares with $135,000 provided during the nine months ended September 30, 2014.

 

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 September 30, 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. It should be noted if the Company does reach an acceptable solution with Green Tree Syndicate, it intends to pursue legal proceedings against them and Ontario 2421519, as discussed in the Management Discussion and Analysis herein. An acceptable solution would be the assumption of any additional Core-Mark liabilities and the return of Icon product from Ontario 2421519, which are the issues that caused the Company to rescind the Green Tree acquisition.

 

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 July 8, 2015, the Company issued 150,000 shares to Catalyst Funding LLC, as part of a conversion to a note held by Catalyst. The shares were valued at $0.10.

 

On July 15, 2015, the Company issued 300,000 shares to Catalyst Funding LLC, as part of a conversion to a note held by Catalyst. The shares were valued at $0.06.

 

On August 11, 2015, the Company issued 40,000 shares for services earned through July of 2015. The shares were valued at $0.01 per share.

 

On August 11, 2015, the Company re-issued 27,500,000 previously cancelled shares to Daniel Balsiger, CEO for services rendered to the Company.

 

2.

Subsequent Issuances:

 

On October 16, 2015, the Company retired 7,500,000 shares held by Bashar Ballo, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

On October 16, 2015, the Company retired 7,500,000 shares held by Rawi Ballo, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

 On October 16, 2015, the Company retired 15,000,000 shares held by Sater Tommka, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

 On October 16, 2015, the Company retired 3,000,000 shares held by Everest Capitol, LLC, due to the unwinding of the Asset Purchase Agreement with Green Tree Syndicate.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

N/A.

 

 

ITEM 4.

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: December 31,  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: December 31, 2015	/s/ Daniel W. Balsiger
	Name: Daniel W. Balsiger
	Title: Chief Executive Officer,
	President and Chief Financial Officer, Director
Dated: December 31, 2015	/s/ Michael J. Klepper
	Name: Michael J. Klepper
	Title: Secretary and Director
Dated: December 31, 2015	/s/ Mark Bednarz
	Name: Mark Bednarz
	Title: Director

  

 

 

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