iCoreConnect Inc. - Quarter Report: 2010 March (Form 10-Q)

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Nevada	95-4696799
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

Large accelerated filer      ¨	Accelerated filer                   ¨
Non-accelerated filer        ¨	Smaller reporting company   x
(Do not check if a smaller reporting company)

Part I Financial Information			Page
Item 1.	Financial Statements		1
		Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and June 30, 2009 (audited)	1
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 (unaudited)	2
		Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2010 and 2009 (unaudited)	3
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended  March 31, 2010 and 2009 (unaudited)	4
		Financial Footnotes	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		13
Item 4T.	Controls and Procedures		13
Part II Other Information
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		14
Item 6.	Exhibits		14
Signatures			15

 

		March 31, 2010				June 30, 2009
ASSETS		unaudited				Audited
Current assets:
Cash and cash equivalents –– interest bearing		$	6,744			$	52,615
Advances			3,714				-
Accounts receivable, net of allowance for doubtful accounts of $5,000 at March 31, 2010 and June 30, 2009, respectively			3,214				3,214
Total Current Assets			13,672				55,829
Property and equipment, net			8,603				16,544
Other Assets
Deferred Expenses			60,798				60,798
Technology and Medical Software, net			5,480,478				6,814,563
Goodwill			681,673				681,673
			6,222,949				7,557,035
Total Assets		$	6,245,224			$	7,629,408
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Notes payable –– banks		$	73,267			$	87,354
Current portion of long-term debt			4,098,673				3,624,198
Accounts payable and accrued expenses			1,803,113				1,585,901
Deferred income			60,000				121,620
Total Current Liabilities			6,035,053				5,419,073
Capital long-term liabilities
Long-term notes payable			1,305,198				1,268,996
Total Liabilities			7,304,251				6,688,069
Stockholders’ Equity
Common stock,  par value $001 per share, authorized 200,000,000 Issued and outstanding 150,130,398 and 114,562,000 shares at March 31, 2010 and June 30, 2009, respectively			150,130				114,562
Additional Paid in Capital			33,517,399				30,962,043
Less: Treasury stock, 6,868,195 and 368,407 shares at March 31, 2010 and June 30, 2009, respectively			(1,158,195	)			(508,195	)
Accumulated deficit			(33,604,361	)			(29,627,071	)
Total Stockholders’ Equity (Deficit)			(1,095,027	)			941,339
Total Liabilities and Stockholders’ Equity (Deficit)		$	6,245,224			$	7,629,408

		For the three				For the three
		months ended				months ended
		March 31, 2010				March 31, 2009
		unaudited				unaudited
Revenues:		$	5,372			$	131,707
Cost of Services			1,325				68,877
Gross Profit			4,047				62,830
Expenses:
Consulting, commissions and travel			16,428				82,556
Operational fees and expenses			263,050				166,676
Professional fees			31,850				94,863
Payroll and related taxes			230,201				259,436
Depreciation and amortization			508,413				518,821
Production, advertising, brochures and public relations			39,508				50,214
Total Expenses			1,089,440				1,172,556
Loss before other income/(expenses)			(1,085,393	)			(1,109,736	)
Other Income/(Expenses):
Common shares returned to treasury			650,000
Extinguishment of debt			270,000
Redemption Fee			(7,500	)			(121,111	)
Interest expense			(114,510	)			(47,458	)
Total Other Income/(Expenses)			797,990	)			(168,596	)
Net loss available to common stockholders		$	(287,403	)		$	(1,278,305	)
Net loss per share, to common stockholders		$	(0.00	)		$	(0.02	)
Weighted average number of shares, basic and diluted			138,785,317				83,093,198

			For the nine				For the nine
			months ended				months ended
			March 31, 2010				March 31, 2009
			unaudited				unaudited
Revenues:			$	136,786			$	293,217
Cost of Services				9,262				92,417
Gross Profit				127,524				200,800
Expenses:
Stock Issued for Fees and Services				611,393				-
Consulting, commissions and travel				38,615				304,060
Operational fees and expenses				608,176				484,217
Professional fees				129,265				91,404
Payroll and related taxes				685,921				773,120
Depreciation and amortization				1,521,277				1,510,496
Production, advertising, brochures and public relations				125,716				84,211
Total Expenses				3,572,144				3,350,964
Loss before other income/(expenses)				(3,592,839	)			(3,150,164	)
Other Income/(Expenses):
Extinguishment of debt				270,000
Interest Income				-				4,128
Redemption Fee				(328,792	)			(129,549	)
Interest expense				(325,659	)			(117,150	)
Total Other Income/(Expenses)				(384,451	)			(242,571	)
Net loss available to common stockholders			$	(3,977,290	)		$	(3,392,735	)
Net loss per share, basic and diluted			$	(0.03	)		$	(0.04	)
Weighted average number of shares, basic and diluted				130,118,307				81,633,645

		For the nine				For the nine
		months ended				months ended
		March 31, 2010				March 31, 2009
		unaudited				unaudited
Cash Flows From Operating Activities:
Receipts from customers		$	75,166			$	385,554
Payments to suppliers, salaries			(1,363,892	)			(2,274,633	)
Interest Received			-				4,128
Interest paid			(47,386	)			(15,179	)
Net Cash Used in Operating Activities			(1,336,112	)			(1,900,130	)
Cash Flows Used in Investing Activities:
Purchase of Technology & Medical Software			(180,000	)			(640,000	)
Purchase of equipment							(271)
Net Cash Used in Investing Activities			(180,000	)			(640,271	)
Cash Flows From Financing Activities:
Payments on bank loan			(14,087	)			-
Payments on notes payable			(25,000	)			(230,515	)
Short term loans proceeds			1,509,328				1,084,000
Short term loans paid							(212,980	)
Sale of common stock			-				1,700,000
Net Cash Provided by Financing Activities			1,470,241				2,340,505
Net Increase/(Decrease) in Cash			(45,871	)			(199,896	)
Cash at the Beginning of Period			52,615				212,566
Cash at End of Period		$	6,744			$	12,670

Reconciliation of Net Loss to Net Cash:    Used by Operating Activities
Net Loss		$	(3,977,290	)		$	(3,392,735	)
Adjustments to reconcile net income/(loss) to net cash
Used by operating activities
Depreciation & Amortization			1,521,277				1,510,494
Shares issued in exchange for services			611,393
Other income – Extinguishment of debt			(270,000	)
Loan accretion			328,792
Changes in:
Trade Receivables							33,407
Advance							(5,000)
Deferred Expense			-				(91,197	)
Accounts payable and accrued expenses			236,776				(245,551	)
Redemption fee							129,549
Accrued interest			274,560				101,971
Deferred income			(61,620	)			58,930
Net Cash Used by Operating Activities			(1,336,112	)			(1,900,130	)

 

 

No. shares				Expiration				Exercise Price
	778,419				2010			$	1.50
	2,206,666				2010-2011			$	.60
	1,430,000				2011			$	.24
	1,541,667				2011			$	.12
	4,000,000				2013			$	.04
	13,620,000				2013-2014			$	.05
	1,000,000				2014			$	.01
	20,161,667

		3/31/2010				6/30/2009
Technology and medical software		$	10,008,893			$	10,008,893
Less: Accumulated Amortization			4,528415				3,194,330
		$	5,480,478			$	6,814,563

 

Convertible Debentures		$	3,919,537
Notes Payable			1,484,334
Total		$	5,403,871
Less: portion in current liabilities			(4,098,673	)
Balance of long term debt		$	1,305,198
Long term debt matures as follows:
June 30, 2011		$	1,305,198

 

 

 

 

Our sales dropped significantly for the quarter ended March  31, 2010 compared to the quarter ended March  31, 2009 as most of our internal efforts have been devoted to establishing new relationships with strategic partners, developing pharmaceutical marketing sales channels and the redesign of the iMedicor portal and it’s integration with partner sites and the introduction of increased functionality.  Additionally, we have allowed several legacy programs which are not associated with providing service to the healthcare industry to expire, contributing to the significant drop in revenue for the quarter.

 

We are currently seeking up to $3,000,000 in capital through a private placement of preferred stock.  The exact amount of funds raised, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake.  No assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to us.  If we are unable to raise additional capital, we could be required to substantially reduce operations, terminate certain products or services or pursue exit strategies.

 

 

		Three Months Ended March 31
		(unaudited)
		2010				2009
Net Sales and Revenues		$	5,372			$	131,707
Cost of Services			1,325				68,877
Gross Profit			4,047				62,830
Operational General and Administrative Expenses			581,027				590,915
Depreciation and amortization			508,413				518,821
Total Expenses			1,089,440				1,172,556
Loss before other income (expense)		$	(1,085,393	)		$	(1,109,736	)

 

		Nine Months Ended March 31
		(unaudited)
		2010				2009
Revenues		$	136,786			$	293,217
Cost of Services			9,262				92,1740
Gross Profit			127,524				200,800
Operational, General and Administrative Expenses			2,199,095				1,840,468
Depreciation and amortization			1,521,277				1,510,496
Total Expenses			3,720,363				3,350,964
Loss before other income (expense)		$	(3,592,839	)		$	(3,150,164	)

 

 

As previously noted,  the company has entered into a series of convertible promissory notes (the “Notes”) with accredited investors representing an aggregate investment of  $600,000, 140,000 of which had been received in the previous quarter.    The notes represent 12 units of a bridge funding with each unit representing $50,000. Under the bridge funding, the Company may issue  a maximum of 30 units (the “Units”) on or before February 15, 2010; however, the Company may extend the expiration of the offering at its sole discretion.  The Convertible Notes bear interest at the rate of 10% per annum and provide for the repayment, in either cash or stock at the discretion of the investor, of principle and unpaid interest thereon to the Investors within 120 days of receipt of funds.    The Investors may at any time prior to the payment of the Convertible Notes convert all or any portion of the Convertible Notes into shares of common stock in the Company at a conversion rate of $0.05 per share.

31.1	Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a).

31.2	Certification of the Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a).

32	Certification of the President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002.

	Vemics, Inc. (Registrant)
Date: May 24, 2010	By:	/s/ Fred Zolla
		Fred Zolla
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 24, 2010	By:	/s/ Craig Stout
		Craig Stout
		Interim Chief Financial Officer
		(Principal Accounting Officer)