I2CORP COM (ITOO.OB) Quarterly Report


Dormant account
Dec 12, 2000
November 22, 2002

Quarterly Report (SEC form 10QSB)
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operation
Forward Looking Statements

Statements which are not historical facts, including statements about our confidence and strategies and our expectations about our product, technologies and opportunities, market and industry segment growth, demand and acceptance of our products are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These risks include, but are not limited to, product demand and market acceptance risks; the impact of competitive products; the results of financing raising activities; the effects of economic conditions and trade, legal, social and economic risks, such as regulations, governmental licensing issues, foreign qualifications and ability to conduct our method of business and the results our business plan.

Critical Accounting Policies

We entered into licensing agreements with a customer that has not yet raised sufficient capital to commence operations. Therefore, collection of related receivables is not yet reasonably assured, and uncollected revenue on these contracts of $1,689,900 as of September 30, 2002, has not been recognized and is offset against the related receivable as a valuation allowance. The comparable amount as of March 31, 2002, is $85,800.

Financial Condition

During the six-month period ended September 30, 2002, accrued compensation to and advances by officers/stock holders, were contributed by the officers/stock holders resulting in additional paid-in capital of $557,356.

Results of Operations


We are in the initial stages of realizing licensing revenues as result of the efforts of our sales and marketing. During the six months ended September 30, 2002 the company recorded limited revenues of $12,000 in conjunction with licensing activities.


We incurred selling, general and administrative expenses of $192,350 and $279,370 for the six months ended September 30, 2002 and 2001, respectively. The decrease in selling, general and administrative expenses was due primarily to management's effort to reduce our expenses by such measures as reducing overhead, and scaling back paid marketing efforts. Although we have decreased our selling, general and administrative expenses, we expect to incur marketing expenses for product positioning that will cause us to incur additional losses in the near future. In addition, salaries, professional fees and occupancy costs will continue to contribute to our losses.

Net Loss

For the six months ended September 30, 2002 and 2001, we incurred a net loss, of $184,627 and $282,666, respectively. The decrease in net loss was due primarily to the reduction in selling, general and administrative expenses.

Liquidity and Capital Resources

At September 30, 2002, we had cash of $910 and a working capital deficit of $322,586. Due to our limited cash-on-hand and our limited sources of liquidity, we are in constant need of additional working capital. Our accumulated deficit was $3,043,114 at September 30, 2002 and $2,712,512 at March 31, 2002. The increase was due to our continued net losses and our inability to generate sufficient revenue to sustain our operations.

Although we started to generate limited cash flows from operating activities during the fiscal year ending March 31, 2002, our current cash on hand is not sufficient to meet our ongoing operating expenses. The license agreement that has been executed with Broadcasting Concepts is currently in default due to non-payment and all revenue booked from that license agreement has been deferred. Broadcasting Concepts has been notified of its breach. If Broadcasting Concepts fails to cure the breach we will be required to seek a judicial enforcement of the license agreement.

It is management's plan to use various methods to promote our product including field visits to potential customers, speaking engagements at industry functions, live product demonstrations, advertising in trade journals, participation in trade shows and a worldwide Internet presence. We believe that these methods to include live proof of concept demonstrations have been extremely well received and, as a sales and marketing tool, will help propel i2corp forward as we move to deliver live gaming platforms that incorporate the patent. We intend to market our Patent to name brand, land-based wagering entities, offshore Internet wagering entities, Native American Indian tribes and foreign governments.

Management continuously strives to execute revenue-generating licensing agreements and obtain additional financing from private or public debt or equity placements, loans from banks or officers, directors, stockholders or traditional funding sources interest, or a combination of these. Additionally management is seeking partners and or industry related entities to take equity positions in the company in exchange for financing and or licensing rights. Management has no assurance that these efforts will meet with success and will scale operations in accordance with the success of these efforts.

Our ability to enter into additional revenue-generating licensing agreements will depend, in part, on the constantly changing legislative climate and legal entrance into the Internet gambling market of gaming and wagering operators. In addition, our ability to raise additional working capital will depend, in part, on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. Though we believe that we will obtain financing, there can be no assurances that financing in the amount and on terms acceptable to us will be available within the time frame required. Due to our limited cash resources, our ability to continue operations may be severely limited requiring us to postpone or cancel certain operating plans until further capital is available.


We are subject to a high degree of risk as we are considered to be in unsound financial condition. The following risks, if any one or more occurs, could materially harm our business, financial condition or future results of operations. If that occurs, the trading price of our common stock could decline.

Risks Related to i2corp

We have a history of significant operating losses and anticipate continued operating losses for the foreseeable future. For the six months ended September 30, 2002 and the years ended March 31, 2002 and 2001, we have incurred net losses of $330,167, $1,048,600 and $1,354,840, respectively, and our operations have used $10,456, $176,309 and $989,319 of cash, respectively. As of September 30, and March 31, 2002, we had accumulated deficits of $3,043,114 and $2,712,512, respectively. If our revenues decline or grow at a slower rate than we anticipate, or if our spending levels exceed our expectations or cannot be adjusted to reflect slower revenue growth, our business would be severely harmed. We cannot assure you that revenues will grow in the future or that we will generate sufficient revenues for profitability, or that profitability, if achieved, can be sustained on an ongoing basis.

Over the last few years, our activities have been limited to analyzing the gaming industry, consulting with persons in the gaming industry and marketing our Patent to the gaming industry. There is no guarantee that we will be able to generate sufficient revenue to sustain our operations. No independent organization has conducted market research providing management with independent assurance from which to estimate potential demand for our business operations.

We are dependent upon the abilities and efforts of certain management personnel, including Chris P. Almida, Jesse D. Molnick and Melvin Molnick. Our future success will depend in part upon our ability to attract and retain qualified personnel to fill key sales, administrative and management positions. There can be no assurance that we will be able to locate and retain key individuals in the event of the loss of such key individuals.

We believe our intellectual property, such as the Patent, is important to our competitive position. If we are unable to protect our intellectual property against unauthorized use by others, our competitive position could be harmed. We enter into confidentiality and/or non-compete agreements with our employees and consultants, and control access to and distribution of our documentation and other proprietary information. Despite these precautions, we cannot assure you that these strategies will be adequate to prevent misappropriation of our intellectual property. We could be required to expend significant amounts to defend our rights to intellectual property.

Risks Related to Our Industry

The gaming industry is highly regulated. Many gaming authorities have broad authority regarding licensing and registration of entities and individuals involved in gaming operations, including the ability to, among other things, revoke the gaming license of any person licensed. Due to the uncertainty regarding Internet gaming and the hesitation of state gaming authorities to sanction Internet gaming, the involvement of a gaming licensee in Internet gaming may cause the revocation of the licensee's gaming license. In addition, for some states, it will be required to pass enabling legislation in order to legalize Internet gaming. Accordingly, there is no assurance that state gaming authorities will permit Internet gaming and, if so, whether such rules or regulations will conflict with federal laws related to Internet gaming. We cannot predict the effects that adoption of and changes in Internet gaming laws, rules and regulations might have on our future operations.

There is significant competition in the Internet gaming industry. Although our technology is applicable to Internet gaming, Internet gaming competes with various forms of gaming, including land-based casinos, riverboat casinos and cruise-to-nowhere floating casinos. In addition, we compete with other companies involved in Internet gaming that are substantially larger, have more substantial histories, backgrounds, experience and records of successful operations, greater financial, technical, marketing and other resources, more employees and more extensive facilities than we now have, or will have in the foreseeable future. In addition, due to the growth potential of Internet gaming, we will face many new competitors in the near future. There is no assurance that we will continue to compete successfully in the marketplace. The inability to compete successfully will adversely affect our operating results.

Although we have generated limited revenues, there is no assurance that we will be successful in commercializing the Patent. In light of the uncertainty surrounding whether Internet gaming will be legalized in the United States and even if Internet gaming were legalized in the United States, there is no assurance that we will be able to market the Patent. Insufficient market acceptance of our Patent will have a materially adverse effect on our business, financial condition and results of operations.

Risks Related to Our Common Stock

We currently anticipate the need to supplement the revenue generated by our operations, if any, from proceeds through private or public offerings of our equity or convertible debt securities. The issuance of additional equity or convertible debt securities will have the effect of reducing the percentage ownership of our current stockholders. In addition, these equity or convertible debt securities may have additional rights, preferences or privileges to those of our common stock, such as registration rights. In the event we are required to raise additional funds to support our operations, we cannot assure our stockholders that the additional funds will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund operations or otherwise continue as a going-concern.

Our executive officers and members of our board of directors beneficially own 23,074,140 shares of common stock, or approximately 62.4% of the outstanding shares of our common stock. These stockholders will have the power to influence all matters requiring approval by our stockholders, including the election of directors and approval of mergers and other significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control of i2corp.

Our common stock is currently quoted on the OTC Bulletin Board under the symbol, "ITOO." On March 22, 2002, the Nasdaq Stock Market, Inc., or Nasdaq, announced the proposed launch of the Bulletin Board Exchange, or the BBX, that is designed to replace the OTC Bulletin Board. Pending approval of the BBX from the Securities and Exchange Commission, Nasdaq proposes to launch the BBX in the first quarter of 2003. From the launch of the BBX and until six months thereafter, Nasdaq will terminate the OTC Bulletin Board and only operate the

The BBX will be a listed marketplace, with qualitative listing standards but with no minimum share price, income, or asset requirements, therefore allowing entrance to a wide array of listings. The key qualitative listing standards include the requirements to, among other things:

o hold annual stockholder meetings, have at least one independent

o maintain an audit committee comprised of, at least, a majority of
independent directors;

o have stockholders approve stock option grants to officers or
directors, below market issuances of stock, acquisitions and changes
of control; and

o engage auditors that are subject to the peer review consistent with
AICPA procedures.

In the event that we elect not to apply for listing on the BBX or in the event that we are not able to meeting the listing requirements of the BBX, our common stock will remain quoted on the OTC Bulletin Board for only six months after the launch of the BBX, and, after the expiration of this six-month period, will not be eligible for quotation on Nasdaq.