10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2012

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to_________

Commission file number 000-53162

ICONIC BRANDS, INC.

(Exact name of registrant as specified in its charter)

Nevada	13-4362274
State of Incorporation	IRS Employer Identification No.

c/o David Lubin & Associates, PLLC

10 Union Avenue

Suite 5

Lynbrook, New York 11563

(Address of principal executive offices) (Zip Code)

(516) 887-8200

(Registrant's telephone number, including area code)

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. o Yes   x 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 o   No x

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	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a 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 x   No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 49,555,062 shares of common stock, $0.0001 par value, issued and outstanding as of April 15, 2013

TABLE OF CONTENTS

PART I - Financial Information
Item 1.	Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II – Other Information
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24

2

PART I.   FINANCIAL INFORMATIOCN

Item 1.      Consolidated Financial Statements

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Consolidated Balance Sheets

	March 31,			December 31,
	2012			2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	-		$	-
Current assets of discontinued operations (see Note 8)		-			-
Total current assets		-			-
Total assets	$	-		$	-
Liabilities and Stockholders' Deficiency
Current liabilities:
Current portion of debt	$	268,800		$	268,800
Accounts payable		73,187			74,841
Accrued interest on Iconic Brands, Inc. debt		54,910			47,523
Current liabilities of discontinued operations (see Note 8)		3,490,646			3,474,043
Total current liabilities		3,887,543			3,865,207
Long term debt		59,503			55,381
Long term debt of discontinued operations (see Note 8)		1,620,287			1,617,144
Series B preferred stock, $2.00 per share stated value; designated 1,000,000 shares,
issued and outstanding 916,603 and 916,603 shares, respectively		1,833,206			1,833,206
Total liabilities		7,400,539			7,370,938
Stockholders' deficiency:
Preferred stock, $.00001 par value; authorized 100,000,000 shares,
Series A, designated 1 share, issued and outstanding  1 and 1 shares, respectively		1			1
Common stock, $.00001 par value; authorized 100,000,000 shares,
issued and committed to be issued and outstanding 54,361,412 and 54,361,412 shares, respectively		544			544
Additional paid-in capital		8,942,059			8,937,524
Accumulated deficit prior to development stage period		(16,124,330	)		(16,124,330	)
Accumulated losses during the development stage period January 1, 2011 to March 31, 2012		(218,813	)		(184,677	)
Total stockholders' deficiency		(7,400,539	)		(7,370,938	)
Total liabilities and stockholders' deficiency	$	-		$	-

See notes to consolidated financial statements.

3

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,						Development Stage Period January 1, 2011 to March 31,
	2012			2011			2012
Continuing operations:
Sales	$	-		$	-		$	-
Expenses:
Professional fees		-			19,500			37,750
Other general and administrative expenses (including stock-based compensation of $4,535, $4,535 and $22,675, respectively)		2,881			8,844			25,330
Interest expense on Iconic Brands, Inc. debt (including amortization of debt discounts of $4,122, $4,122 and $20,610, respectively)		11,509			10,743			56,816
Total expenses		14,390			39,087			119,896
Loss from continuing operations		(14,390	)		(39,087	)		(119,896	)
Loss from discontinued operations (see Note 8)		(19,746	)		(19,565	)		(98,917	)
Net loss	$	(34,136	)	$	(58,652	)	$	(218,813	)
Net loss per common share - basic and diluted:
Continuing operations	$	(0.00	)	$	(0.00	)	$	(0.00	)
Discontinued operations		(0.00	)		(0.00	)		(0.00	)
Total	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding - basic and diluted		54,361,412			53,992,991			54,292,737

See notes to consolidated financial statements.

4

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Consolidated Statements of Changes in Stockholders' Deficiency

Development Stage Period January 1, 2011 to March 31, 2012

(Unaudited)

	Series A Preferred Stock, $.00001 par				Common Stock, $.00001 par				Additional Paid-In		Accumulated deficit prior to Development Stage			Accumulated losses during the development stage period January 1, 2011 to March 31,
	Shares		Amount		Shares		Amount		Capital		Period			2012			Total
Balance at January 1, 2011 (inception of development stage)		1		1		52,519,307		525		8,915,903		(16,124,330	)		-			(7,207,901	)
Partial conversion of 8% Promissory Note to common stock		-		-		1,842,105		19		3,481		-			-			3,500
Stock option expense		-		-		-		-		18,140		-			-			18,140
Net loss		-		-		-		-		-		-			(184,677	)		(184,677	)
Balance at December 31, 2011		1		1		54,361,412		544		8,937,524		(16,124,330	)		(184,677	)		(7,370,938	)
Stock option expense		-		-		-		-		4,535		-			-			4,535
Net loss		-		-		-		-		-		-			(34,136	)		(34,136	)
Balance at March 31, 2012		1	$	1		54,361,412	$	544	$	8,942,059	$	(16,124,330	)	$	(218,813	)	$	(7,400,539	)

See notes to consolidated financial statements.

5

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,						Development Stage Period January 1, 2011 to March 31,
	2012			2011			2012
Cash flows from operating activities
Net loss	$	(34,136	)	$	(58,652	)	$	(218,813	)
Loss from discontinued operations		19,746			19,565			98,917
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discounts charged to interest expense		4,122			4,122			20,610
Stock -based compensation		4,535			4,535			22,675
Legal, audit and accounting, and consulting fees paid by two lenders on behalf of the Company		-			28,300			49,050
Changes in operating assets and liabilities:
Accounts payable		(1,654	)		(5,500	)		(9,654	)
Accrued expenses and other current liabilities		7,387			6,621			36,206
Net cash used in operating activities - continuing operations		-			(1,009	)		(1,009	)
Net cash provided by operating activities - discontinued operations		-			784			784
Net cash used in operating activities		-			(225	)		(225	)
Cash flows from investing activities
Loans from continuing operations to discontinued operations		-			-			-
Net cash provided by (used in) investing activities - continuing operations		-			-			-
Net cash provided by (used in) investing activities - discontinued operations		-			-			-
Net cash provided by (used in) investing activities		-			-			-
Cash flows from financing activities:
Increases in debt		-			-			-
Repayment of debt		-			-			-
Net cash provided by (used in) financing activities - continuing operations		-			-			-
Net cash provided by (used in) financing activities - discontinued operations		-			-			-
Net cash provided by (used in) financing activities		-			-			-
Decrease in cash and cash equivalents		-			(225	)		(225	)
Cash and cash equivalents, beginning of period		-			225			225
Cash and cash equivalents, end of period		-			-			-
Less cash and cash equivalents of discontinued operations at end of period		-			-			-
Cash and cash equivalents of continuing operations at end of period	$	-		$	-		$	-
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	23,190		$	-
Income taxes paid	$	-		$	-		$	-
Non-cash, operating, investing and financing activities:
Legal, audit and accounting, and consulting fees paid by two lenders on behalf of the Company	$	-		$	28,300		$	49,050
Shares of common stock issued to noteholders in satisfaction of debt and accrued interest	$	-		$	3,500		$	3,500

See notes to consolidated financial statements.

6

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

1. ORGANIZATION AND NATURE OF BUSINESS

Iconic Brands, Inc., formerly Paw Spa, Inc. (“Iconic Brands”), was incorporated in the State of Nevada on October 21, 2005. Our plan was to provide mobile grooming and spa services for cats and dogs. Our services were going to include bathing, hair cutting and styling, brushing/combing, flea and tick treatments, nail maintenance and beautification, ear cleaning, teeth cleaning, hot oil treatments, and massage. We did not have any business operations and failed to generate any revenues. We abandoned this business, as we lacked sufficient capital resources. On June 10, 2009, the Company acquired Harbrew Imports, Ltd. (“Harbrew New York”), a New York corporation incorporated on September 8, 1999 which was a wholly owned subsidiary of Harbrew Imports, Ltd. Corp. (“Harbrew Florida”), a Florida corporation incorporated on January 4, 2007. On the Closing Date, pursuant to the terms of the Merger Agreement, the Company issued to the designees of Harbrew New York 27,352,301 shares of our Common Stock at the Closing, or approximately 64% of the 42,510,301 shares outstanding subsequent to the merger. After the merger, Harbrew New York continued as the surviving company under the laws of the state of New York and became the wholly owned subsidiary of the Company.

In anticipation of the merger between Iconic Brands, Inc. and Harbrew New York, on May 1, 2009 the Board of Directors and a majority of shareholders of Harbrew New York approved the amendment of its Articles of Incorporation changing its name to Iconic Imports, Inc. (“Iconic Imports”). On June 22, 2009, this action was filed with the New York State Department of State.

Prior to the merger on June 10, 2009, Iconic Brands had no assets, liabilities, or business operations. Accordingly, the merger has been treated for accounting purposes as a recapitalization by the accounting acquirer Harbrew New York/Iconic Imports and the financial statements reflect the assets, liabilities, and operations of Harbrew New York/Iconic Imports from its inception on September 8, 1999 to June 10, 2009 and are combined with Iconic Brands thereafter. Iconic Brands and its wholly-owned subsidiary Harbrew New York/Iconic Imports are hereafter referred to as the “Company”.

The Company was a brand owner of self-developed alcoholic beverages. Furthermore, the Company imported, marketed and sold these beverages throughout the United States and globally.

Effective June 10, 2009, prior to the merger, Harbrew Florida affected a 1-for-1,000 reverse stock split of its common stock, reducing the issued and outstanding shares of common stock from 24,592,160 to 24,909, which includes a total of 317 shares resulting from the rounding of fractional shares. All share information has been retroactively adjusted to reflect this reverse stock split.

On August 20, 2010 (see Note 6), the Company and Seven Cellos LLC terminated the License Agreement relating to the distribution of an alcoholic beverage known as “Danny DeVito’s Premium Limoncello”. In the year ended December 31, 2010, this brand accounted for approximately 96% of total sales.

On August 20, 2010, Capstone Capital Group I, LLC, a holder of a Promissory Note with a then remaining balance of approximately $233,000, delivered a Formal Notice of Default to the Company demanding payment of the balance on or before September 1, 2010. On September 16, 2010, Capstone delivered a Notification of Disposition of Collateral to the Company notifying the Company of its attachment of the Collateral (including cash, accounts receivable, inventories, equipment, and contract rights) and its intent to sell the Collateral to the highest qualified bidder in a public sale on September 28, 2010. On September 28, 2010, Capstone acquired the Collateral in exchange for the Promissory Note at the public auction sale; there were no other bidders.

On September 14, 2010 (see Note 6), the Second District Court of Suffolk County New York issued a Warrant of Eviction removing the Company from its Lindenhurst, New York office and the Company ceased its business operations.

On September 23, 2011, Iconic Imports, Inc. (“Imports”), a wholly owned subsidiary of Iconic Brands, Inc., filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. The Bankruptcy case is being administered under case No. 8-11-76814.  The petition indicated that Imports had no assets and had liabilities of approximately $3,354,000. The case is still pending before the court.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The consolidated financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as of March 31, 2012, the Company had negative working capital of $3,887,543 and a stockholders’ deficiency of $7,400,539. Further, from inception to March 31, 2012, the Company incurred losses of $16,343,143. These factors create substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by reorganizing and acquiring a new business. However, there is no assurance that the Company will be successful in accomplishing this objective. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

7

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

(b) Interim Financial Statements

The unaudited financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments necessary to present fairly the financial position as of March 31, 2012 and the results of operations and cash flows for the periods ended March 31, 2012 and 2011. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2012. The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in our Form 10-K filed March 26, 2013.

(c) Net Income (Loss) per Share

Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants, and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.

For the three months ended March 31, 2012 and 2011, diluted common shares outstanding excluded the following dilutive securities as the effect of their inclusion was anti-dilutive:

	Three Months Ended March 31,
	2012		2011
7% convertible notes and accrued interest		659,566		624,476
6% convertible notes and accrued interest		3,353,200,000		3,172,600,000
12% convertible notes and accrued interest		8,647,700,000		7,805,500,000
10% convertible notes and accrued interest		233,236		218,194
8% convertible note and accrued interest		102,202,778		31,152,451
Series B preferred stock owned by Capstone Capital Group I, LLC		1,615,159,471		450,973,186
Stock Options		-		300,000
Warrants		19,322,184		19,522,184
Total equivalent shares of common stock		13,738,477,235		11,480,890,491

(d) Recently Issued Accounting Pronouncements

Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

(e) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

8

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

3. DEBT

Debt relating to continuing operations:

Debt relating to Iconic Brands, Inc. consisted of the following at March 31, 2012 and December 31, 2011:

		2012			2011
Convertible promissory note, interest at 7%, due September 13, 2014, net of unamortized discount of $40,497 and $44,619, respectively	(A)	$	59,503		$	55,381
Loans payable, interest at 0%, due on demand (see Note 9)	(C)		112,300			112,300
Convertible promissory note, interest at 6%, due June 30, 2010 (see Note 9)	(B)		30,000			30,000
Convertible promissory notes, interest at 12%, due June 30, 2010 (see Note 9)	(B)		70,000			70,000
Convertible promissory note, interest at 8% (default rate of 22%), due February 7, 2011 (in default)	(A)		56,500			56,500
Total			328,303			324,181
Less current portion of debt			(268,800	)		(268,800	)
Long term debt		$	59,503		$	55,381

(A) The $100,000 face value of the 7% convertible note outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a price of $0.50 per share. The $56,500 face value of the 8% convertible note outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a variable conversion price equal to 60% of the Market Price, as defined.

(B) These promissory notes were issued to the same entity lender on April 15, 2010. The notes provide that upon an event of default that is not cured within the allotted time, the holder shall have the option to convert the outstanding principal and interest into shares of common stock at a conversion price of $0.00001 per share. The Company has defaulted on all three notes and has failed to cure the defaults within the time allotted specified in the note default provisions.

While the Company has not received any notice or indication from the lender of its intention to convert the $100,000 debt (or a portion thereof), if the lender does elect to convert the $100,000 of debt and related accrued interest at March 31, 2012 at the $0.00001 per share conversion rate it would require the Company to issue 12,000,900,000 common shares to this lender (or over 99% of the 12,055,261,412 shares of Company Common Stock outstanding after this lender’s conversion). However, by virtue of his ownership of the 1 share of Series A Preferred Stock, Mr. DeCicco would retain voting control of the Company.

Also, the notes provided for the grant of a total of 1,200,000 warrants exercisable at an exercise price of $0.20 per share for 3 years. The $51,600 fair value of the warrants (valued using the Black-Scholes option pricing model and the following assumptions: stock price of $0.092 per share, exercise price of $0.20 per share, term of 3 years, risk-free interest rate of 1.62%, and expected volatility of 100%) and the remaining $45,400 intrinsic value of the beneficial conversion feature arising from the default provisions in the three promissory notes due to this lender described in the two preceding paragraphs (the total debt discounts are limited to the amount of proceeds allocated to the convertible instrument) were recorded initially as a debt discount and amortized as interest expense over the term of the notes ended June 30, 2010.

9

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

(C) In 2011, the two entity lenders described in Note 9 paid legal, audit and accounting, and consulting fees totaling $49,050 on behalf of the Company (no additional payments made on behalf of the Company in the three months ended March 31, 2012), as follows:

Legal fees	$	27,500
Audit and accounting fees		17,500
Consulting fees		4,050
Total	$	49,050

At March 31, 2012, the debt relating to Iconic Brands, Inc. is due as follows:

Past due	$	268,800
Year ending March 31, 2013		-
Year ending March 31, 2014		-
Year Ending March 31, 2015		100,000
Total		368,800
Less debt discounts		40,497
Net	$	328,303

Accrued interest payable on debt relating to Iconic Brands, Inc. consisted of:

	March 31, 2012		December 31, 2011
Convertible note, interest at 7%	$	17,815	$	16,070
Convertible note, interest at 6%		3,532		3,083
Convertible notes, interest at 12%		16,477		14,383
Convertible note, interest at 8% (default rate of 22%)		17,086		13,987
Total	$	54,910	$	47,523

10

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

Debt relating to discontinued operations:

Debt relating to the Company’s wholly-owned subsidiary Iconic Imports consisted of the following at March 31, 2012 and December 31, 2011:

		2012			2011
Promissory note, interest at 20%, due January 29, 2009 (in default)		$	100,000		$	100,000
Convertible promissory notes, interest at 10%, due October 25, 2007 to November 27, 2007 (in default)	(A)		75,000			75,000
Promissory notes, interest at 13%, due May 31, 2010 (in default)	(B)		220,000			220,000
Due Donald Chadwell (5% stockholder at December 31, 2011), interest at 0%, no repayment terms			763,000			763,000
Due Richard DeCicco (officer, director and 30% stockholder at December 31, 2011) and affiliates, interest at 0%, no repayment terms			714,338			714,338
Convertible notes, interest at 7% (default rate of 14%), due August 27, 2012 to November 27, 2012, net of unamortized discounts of $7,051 and $10,194, respectively	(A)		142,949			139,806
Total			2,015,287			2,012,144
Less current portion of debt			(395,000	)		(395,000	)
Long term debt		$	1,620,287		$	1,617,144

(A) $225,000 total face value of convertible notes outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a price of $0.50 per share.

(B) The 13% promissory notes specify that the loan proceeds were for the purpose of purchasing containers of Danny DeVito’s Premium Limoncello and that the holder will be repaid the principal from the receivables of the sales of the Danny DeVito Premium Limoncello product as they are collected by the Company.

At March 31, 2012, the debt relating to Iconic Imports, Inc. is due as follows:

Past due	$	395,000
Year ending March 31, 2013		150,000
No repayment terms (due two significant stockholders)		1,477,338
Total		2,022,338
Less debt discounts		7,051
Net	$	2,015,287

11

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

Accrued interest payable on debt relating to Iconic Imports, Inc (included in current liabilities of discontinued operations in the accompanying consolidated balance sheets) consisted of:

	March 31, 2012		December 31, 2011
Convertible note, interest at 7%	$	61,968	$	59,351
Promissory note, interest at 20%		55,012		50,026
Promissory notes, interest at 13%		66,188		59,058
Convertible promissory notes, interest at 10%		41,618		39,748
Total	$	224,786	$	208,183

4. STOCKHOLDERS’ EQUITY

On June 10, 2009, pursuant to the terms of the Merger Agreement, the Company issued to the designees of Harbrew New York 27,352,301 shares of Common Stock at the Closing. Of this amount:

1)   24,909 shares were issued to Harbrew Florida stockholders,

2)   19,634,112 shares valued at $1,963,411 were issued to Company management and employees for services, including 15,972,359 shares to the Company’s Chief Executive Officer, 100,000 shares to the Company’s Chief Financial Officer, and 2,586,753 shares to Donald Chadwell,

3)   2,086,973 shares valued at $208,697 were issued to Danny DeVito and affiliates for services,

4)   4,606,307 shares were issued to noteholders in satisfaction of $2,125,625 of debt and $177,529 of accrued interest, and

5)   1,000,000 shares were issued to Capstone as part of the Termination Agreement.

Also, pursuant to the terms of the Merger Agreement, the Company issued 1 share of Series A Preferred Stock valued at $100,000 to the Company’s Chief Executive Officer for services and 916,603 shares of Series B Preferred Stock valued at $1,833,206 to Capstone as part of the Termination Agreement.

The one share of Series A Preferred Stock entitles the holder to two votes for every share of Common Stock Deemed Outstanding and has no conversion or dividend rights. Each share of the Series B Preferred Stock has a liquidation preference of $2.00 per share, has no voting rights, and is convertible into Common Stock at the lower of (1) $2.00 per share or, (2) the volume weighted average price per share (“VWAP”) for the 20 trading days immediately prior to the Conversion Date. The Series B Preferred Stock has been classified as a liability (pursuant to ASC 480-10-25-14(a)) since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception.

On January 6 and 13, 2010, the Company issued a total of 200,000 shares of common stock, 100,000 five year warrants exercisable at $0.22 per share, and 100,000 five year warrants exercisable at $0.23 per share, along with two promissory notes in the amount of $110,000 each (one due March 31, 2010 and one due May 31, 2010), to an investor in exchange for a $200,000 loan. The fair value of the common stock ($45,000) and warrants ($33,930), along with the $20,000 discount, were recorded as debt discounts, which are being amortized over the terms of the notes as interest expense. The warrants were valued using the Black-Scholes option pricing model and the following assumptions: risk free interest rates of 2.6% and 2.55%, volatility of 100%, and terms of five years.

12

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

On January 15 and 25, 2010, the Company issued a total of 152,546 shares of common stock to three investors in satisfaction of a total of $62,500 of convertible debt and approximately $13,773 of accrued interest.

On February 8, 2010, the Company issued 250,000 shares of common stock and 1,000,000 warrants to Tony Siragusa pursuant to the License Agreement described in Note 6.

On February 24, 2010, the Company issued 300,000 shares of common stock to CorProminence pursuant to a 45 day consulting agreement dated January 4, 2010. The $69,000 fair value of the common stock at date of issuance was expensed in full in the three months ended March 31, 2010 and included in professional fees.

On March 16, 2010, the Company issued 2,000,000 shares of common stock and 2,000,000 five year warrants exercisable at $0.25 per share to Cresta Capital Strategies pursuant to a one year extension of a consulting agreement. The fair value of the common stock ($350,000) and warrants ($246,000) at date of issuance was capitalized as a prepaid expense (see note 5) and is being amortized over the one year term as professional fees. The warrants were valued using the Black-Scholes option pricing model and the following assumptions: risk free interest rate of 2.37%, volatility of 100%, and term of five years.

On April 19, 2010, the Company satisfied debt totaling $455,635 through its commitment to issue to the respective 5 creditors a total of 4,556,350 shares of its common stock and 4,556,350 three year warrants exercisable at $0.20 per share. The Company expects to issue these shares and warrants in the near future.

On April 19, 2010, the Company agreed to issue to a note holder 250,000 shares of its common stock in consideration of the note holder’s extension of the due date (from March 31, 2010 to May 31, 2010) of a $110,000 promissory note. The $21,400 fair value of the common stock at date of commitment was expensed in the three months ended June 30, 2010 and included in interest expense. The Company expects to issue these shares in the near future.

On January 18, 2011, the Company issued 1,842,105 shares of Iconic common stock to Asher Enterprises, Inc. (“Asher”) pursuant to Asher’s Notice of Conversion to convert $3,500 debt at a price of $0.0019 per share, resulting in the reduction of debt due to Asher from $60,000 to $56,500.

5. INCOME TAXES

No provision for income taxes was recorded in the three months ended March 31, 2012 and 2011 since the Company incurred net losses in these periods.

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of the net operating loss carryforward as of March 31, 2012 will be realized. Accordingly, the Company has maintained a 100% valuation allowance against the deferred tax asset in the consolidated financial statements at March 31, 2012. The Company will continue to review this valuation allowance and make adjustments as appropriate.

Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

6. COMMITMENTS AND CONTINGENCIES

Lease – Company Evicted from Facility

The Company occupied its facilities in Freeport, New York up until March 2009 under a month to month agreement at a monthly rent of $14,350. In March 2009, the Company moved its facilities to Lindenhurst, New York pursuant to a three year lease agreement providing for annual rentals ranging from $85,100 to $90,283. Provided certain conditions were met, the Company had an option to renew the lease for an additional two years at annual rentals ranging from $92,991 to $95,781. On September 14, 2010, the Second District Court of Suffolk County issued a Warrant of Eviction removing the Company from its facilities. At March 31, 2012 and December 31, 2011, accounts payable of Iconic Imports, Inc. (discontinued operations) includes $22,913 of unpaid rent due to the former Lindenhurst landlord and $450,021 of unpaid rent and penalties due the Freeport landlord.

13

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

For the three months ended March 31, 2012 and 2011, rent expense was $0 and $0, respectively.

Licensing Agreements

Danny DeVito Brand

On April 26, 2007 and as amended November 1, 2007, the Company entered into an exclusive License Agreement with Seven Cellos, LLC (“DDV”), pursuant to which the Company was granted a limited license of certain rights in and to Danny DeVito’s name, likeness and biography for use by the Company in connection with the Danny DeVito Premium Limoncello brand. The term of the Agreement was to continue through perpetuity unless otherwise terminated. In consideration for the license, the Company agreed to pay royalties as follows: a) 5% of Net Profits (as defined) to Behr Abrahamson & Kaller, LLP (“BAK”), (b) a payment of 50% of the remaining Net Profits to DDV after the payment described above; and (c) a payment of 2% of Net Profits to Sichenzia Ross Friedman Ference LLP after payment of 50% of Net Profits to DDV.

On August 20, 2010, the Company and DDV terminated the License Agreement.

For the periods presented, the Company calculated agreement defined cumulative “Net Profits” from the brand to be negative and thus did not pay or accrue any royalty expense under the License Agreement. The Termination Agreement provides that DDV has not waived or otherwise prejudiced any of its rights with respect to the Company’s past conduct with respect to the brand, including DDV’s right to accrued and unpaid royalties based upon its right to inspect Company records and conduct an audit of the Company reported agreement defined net profit.

Godfather Brand

On June 12, 2009, Iconic Imports, Inc., the wholly-owned subsidiary of the Company, entered into a merchandising license agreement (the “License Agreement”) with Paramount Licensing Inc. (“PLI”) granting Iconic Imports the non-exclusive right to use the title of the theatrical motion picture “The Godfather” in connection with the development, importation, marketing, and distribution of an Italian organic vodka and Scotch whiskey throughout the United States. Under the terms of the License Agreement, which had a term of 5 years ending on June 30, 2014 and could have been extended to June 30, 2019 upon certain conditions unless it was sooner terminated, the Company agreed to pay PLI a royalty fee of five percent (5%) and guaranteed a total of $400,000 in royalties due as follows; (1) $60,000 as an advance payment due upon signing of the License Agreement, (2) $100,000 due on or before November 1, 2010, (3) $100,000 due on or before November 1, 2011, and (4) $140,000 due on or before November 1, 2012. In addition, PLI was granted warrants to purchase shares of the Company’s common stock in substantially the same form as other warrants previously issued, which is (a) a five-year warrant to purchase 1,000,000 shares of our common stock at an exercise price of $1.00 per share; and (b) a five-year warrant to purchase 1,333,334 shares of our common stock at an exercise price of $1.50 per share. On August 12, 2009, the Company paid $60,000 to PLI as the advance royalty due under the License Agreement. The License Agreement became effective on this date as the advance payment was a condition precedent to the effectiveness of the License Agreement.

The Company never commenced sales of the product named “The Godfather”. The second royalty payment of $100,000 due on November 1, 2010 was not paid. On February 23, 2011, PLI terminated the License Agreement due to nonpayment.

Tony Siragusa Brand

On January 15, 2010, we entered into an exclusive License Agreement with Tony Siragusa, pursuant to which we were granted a limited license to certain rights in and to Tony Siragusa’s name, likeness and biography for use by us in connection with Tony Siragusa’s YO Vodka. The term of the agreement was four (4) years. In consideration for the license, we agreed to distribute net profits of the venture as follows: 42.5% to the Company, 42.5% to the licensor, 10% to William Morris Endeavor Entertainment, LLC and 5% to Brian Hughes. In addition, we issued 250,000 shares of the Company’s common stock, 5 year warrants to purchase 500,000 shares of our Common Stock at a price of $1.00 per share, and 5 year warrants to purchase 500,000 shares of our Common Stock at a price of $1.50 per share. Tony Siragusa agreed to use reasonable efforts to be available for a reasonable number of promotional appearances during each consecutive 12 months period, the duration of each will not exceed six days. On September 28, 2010 (see Note 1), Capstone acquired the License Agreement rights.

14

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

For the periods presented, the Company calculated agreement defined net profits from the brand to be negative and thus did not pay or accrue any royalty expense under the License Agreement. The product was never introduced to the market.

Under the License Agreement, Tony Siragusa had the right to terminate the agreement, upon 10 days written notice to the Company, if the Company fails to launch the distribution of and secure availability to the general public of the beverage throughout the United States prior to June 1, 2010. The License Agreement did not provide for financial penalties that would be accruable by the Company in the event of a default.

Chief Executive Officer Employment Agreement

On January 23, 2008, the Company entered into an employment agreement with its chief executive officer Richard DeCicco. The agreement provided for a term of 5 years, commencing on January 1, 2008. The term could be extended by a written agreement of the parties. The agreement provided for annual compensation ranging from $265,000 to $350,000. In addition, if the Company entered into an agreement and further sold any brand in the Company’s portfolio, Mr. DeCicco would receive 5% of such sale. Mr. DeCicco was also entitled to incentive bonus compensation, stock and/or options in accordance with Company policies established by the Board of Directors. The agreement provided for the grant of a non-qualified ten year option to purchase up to 1,000,000 shares of common stock of the Company at an exercise price which shall represent a discount to the market price. Mr. DeCicco had the right to terminate the agreement upon 60 days notice to the Company for any reason. Pursuant to the terms of the agreement, if Mr. DeCicco was absent from work because of illness or incapacity cumulatively for more than 2 months in addition to vacation time in any calendar year, the Company could terminate the agreement upon 30 days written notice. The agreement also provided that the agreement could be terminated upon 90 days notice to Mr. DeCicco if: (A) there was a sale of substantially all of the Company’s assets to a single purchaser or group of associated purchasers; (B) there was a sale, exchange or disposition of 50% of the outstanding shares of the Company’s outstanding stock; (C) the Company terminated its business or liquidated its assets; or (D) there was a merger or consolidation of the Company in which the Company’s shareholders received less than 50% of the outstanding voting shares of the new or continuing corporation. Mr. DeCicco was entitled to severance pay in the amount of 2 years compensation and medical and other benefits in the event of a termination of the agreement under certain circumstances.

At March 31, 2012 and December 31, 2011, accrued expenses and other current liabilities of Iconic Imports, Inc. (discontinued operations) includes approximately $528,000 in unpaid compensation due the Chief Executive Officer. For the three months ended March 31, 2012 and 2011, selling, general and administrative expenses of Iconic Imports, Inc. (discontinued operations) includes approximately $0 and $0 in compensation for the Chief Executive Officer.

Former Chief Financial Officer Employment Agreement

On October 1, 2007, the Company entered into an employment agreement with its then chief financial officer William Blacker. The agreement provided for a term of 3 years, commencing on October 1, 2007. The term could be extended by a written agreement of the parties. The Company agreed to issue options to purchase shares of its common stock to Mr. Blacker if and when the common stock becomes publicly traded, as follows: (A) upon execution of the agreement, 100,000 options at an exercise price of $0.05 per share; (B) on October 1, 2008, 100,000 options at an exercise price of $0.15 per share; and (C) on October 1, 2009, 100,000 options at an exercise price of $0.75 per share. Pursuant to the terms of the agreement, Mr. Blacker was to receive an annual salary of $150,000. Mr. Blacker had the right to terminate the agreement upon 60 days notice to the Company for any reason. The agreement further provided that if the agreement was terminated for any reason other than willful malfeasance by Mr. Blacker, Mr. Blacker was entitled to receive severance pay in the amount of 6 months or the balance of the agreement’s term of existence, whichever was greater, and was to receive all benefits under the agreement. Mr. Blacker resigned September 15, 2010.

The $16,850 estimated fair value of the 300,000 options (using the Black-Scholes option pricing model and the following assumptions: $0.10 stock price, 4% risk free interest rate, 100% volatility, and term of 3.5 years) was amortized over the 3 year term of the employment agreement.

At March 31, 2012 and December 31, 2011, accrued expenses and other current liabilities of Iconic Imports, Inc. (discontinued operations) includes approximately $233,000 in unpaid compensation due the Chief Financial Officer. For the three months ended March 31, 2012 and 2011, selling, general and administrative expenses of Iconic Imports, Inc. (discontinued operations) includes approximately $0 and $0 in compensation for the former Chief Financial Officer.

15

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

Litigation

The Company is party to a variety of legal proceedings brought by suppliers and creditors. We accrue for these items as losses become probable and can be reasonably estimated. Most of the amounts sought have already been provided for through previous charges to operations and are included in Company liabilities at March 31, 2012 and December 31, 2011. While the results of these legal proceedings, which principally involve debt and lease default obligations and vendor disputes, cannot be predicted with certainty, management believes that the final outcome of these proceedings will have a material adverse effect on the Company’s future consolidated results of operations and financial position.

Chapter 7 Bankruptcy Filing of Wholly – Owned Subsidiary

On September 23, 2011, Iconic Imports, Inc. (“Imports”), a wholly owned subsidiary of Iconic Brands, Inc., filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. The Bankruptcy case is being administered under case No. 8-11-76814. The case is still pending before the court.

7. STOCK OPTIONS AND WARRANTS

A summary of stock option and warrant activity for the three months ended March 31, 2012 follows:

	Stock
	Options		Warrants
Outstanding at December 31, 2011		1,000,000		19,322,184
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Outstanding at March 31, 2012		1,000,000		19,322,184

Stock options outstanding at March 31, 2012 consist of:

Date	Number		Number		Exercise			Expiration
Granted	Outstanding		Exercisable		Price			Date
January 1, 2008		1,000,000		-	$	0.10	(a)	June 30, 2013
Total		1,000,000		-

_____________

(a) Estimated since exercise price is to be determined based on future stock price

16

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

As of March 31, 2012, there was $13,607 of total unrecognized compensation cost relating to the 1,000,000 unexpired stock options granted to the Company’s Chief Executive Officer Richard DeCicco pursuant to the employment agreement described in Note 6. That cost is expected to be recognized in 2012.

The aggregate intrinsic value of the 1,000,000 fully vested stock options at March 31, 2012 is $0.

Warrants outstanding at March 31, 2012 consist of:

Date		Number		Number		Exercise		Expiration
Issued		Outstanding		Exercisable		Price		Date
July 2, 2007			500,000		500,000	$	1.00	July 2, 2012
July 2, 2007			500,000		500,000	$	1.50	July 2, 2012
August 27, 2007			550,000		550,000	$	1.00	August 27, 2012
August 27, 2007			550,000		550,000	$	1.50	August 27, 2012
November 8, 2007			811,250		811,250	$	1.00	November 8, 2012
November 8, 2007			811,250		811,250	$	1.50	November 8, 2012
March 5, 2008			192,500		192,500	$	1.00	March 5, 2013
March 5, 2008			192,500		192,500	$	1.50	March 5, 2013
June 10, 2008			27,500		27,500	$	1.00	June 10, 2013
June 10, 2008			27,500		27,500	$	1.50	June 10, 2013
June 10, 2008			25,000		25,000	$	1.00	December 10, 2013
June 10, 2008			25,000		25,000	$	1.50	December 10, 2013
June 11, 2008			30,000		30,000	$	1.00	December 10, 2013
June 11, 2008			30,000		30,000	$	1.50	December 10, 2013
July 2, 2008			110,000		110,000	$	1.00	January 2, 2014
July 2, 2008			110,000		110,000	$	1.50	January 2, 2014
July 23, 2008			50,000		50,000	$	1.00	January 23, 2014
July 23, 2008			50,000		50,000	$	1.50	January 23, 2014
August 11, 2008			1,000,000		1,000,000	$	1.00	August 11, 2013
June 10, 2009			1,000,000		1,000,000	$	0.50	June 10, 2012
July 23, 2009			20,000		20,000	$	1.00	July 23, 2012
July 23, 2009			20,000		20,000	$	1.50	July 23, 2012
August 12, 2009	(A)		400,000		400,000	$	1.00	August 12, 2014
August 12, 2009	(A)		533,334		533,334	$	1.50	August 12, 2014
August 19, 2009			1,000,000		1,000,000	$	0.01	August 19, 2014
August 19, 2009			1,000,000		1,000,000	$	1.00	August 19, 2014
September 14, 2009			200,000		200,000	$	1.00	September 14, 2014
September 14, 2009			200,000		200,000	$	1.50	September 14, 2014
September 16, 2009			200,000		200,000	$	1.00	July 2, 2012
September 16, 2009			200,000		200,000	$	1.50	July 2, 2012
January 6, 2010			100,000		100,000	$	0.22	January 4, 2015
January 13, 2009			100,000		100,000	$	0.23	January 13, 2015
February 8, 2010			500,000		500,000	$	1.00	February 8, 2015
February 8, 2010			500,000		500,000	$	1.50	February 8, 2015
March 16, 2010			2,000,000		2,000,000	$	0.25	March 16, 2015
April 15, 2010			1,200,000		1,200,000	$	0.20	April 15, 2013
April 19, 2010			4,556,350		4,556,350	$	0.20	April 14, 2013
Total			19,322,184		19,322,184

_____________

(A) These warrants were granted to Paramount Licensing Inc. in connection with a license agreement which was terminated on February 23, 2011 (see Note 6). 933,334 (40%) of the 2,333,334 warrants vested on August 12, 2009 and August 12, 2010. The remaining 1,400,000 (60%) of the 2,333,334 warrants will now never vest and were forfeited on February 23, 2011. 

17

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

8. DISCONTINUED OPERATIONS

On September 14, 2010 (see Note 1), the Company ceased operations of the Company’s wholly owned subsidiary Iconic Imports. Accordingly, the assets and liabilities and operations of Iconic Imports, Inc. have been presented as discontinued operations in the accompanying consolidated financial statements for the periods presented.

For the three months ended March 31, 2012 and 2011, loss from discontinued operations consisted of:

	2012			2011
Revenues	$	-		$	-
Cost of goods sold		-			-
Gross profit		-			-
Selling, general and administrative expenses		-			-
Operating income		-			-
Interest expense (including amortization of debt discounts of $3,143 and $3,143, respectively)		19,746			19,565
Loss before income tax provision		(19,746	)		(19,565	)
Income tax provision		-			-
Loss from discontinued operations	$	(19,746	)	$	(19,565	)

The assets and liabilities of Iconic Imports at March 31, 2012 and December 31, 2011 consisted of:

	2012			2011
Assets
Current assets	$	-		$	784
Total assets	$	-		$	784
Liabilities
Current portion of debt	$	395,000		$	395,000
Accounts payable		1,219,768			1,219,768
Accrued interest payable		224,786			208,183
Other accrued expenses and other current liabilities		1,651,092			1,651,092
Current liabilities		3,490,646			3,474,043
Long – term debt		1,620,287			1,617,144
Total liabilities		5,110,933			5,091,187
Net liabilities	$	(5,110,933	)	$	(5,091,187	)

18

Iconic Brands, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

March 31, 2012

(Unaudited)

9. SUBSEQUENT EVENTS

Legal, Audit and Accounting, and Consulting Fees Paid on Behalf of the Company

For the period from April 1, 2012 through March 20, 2013, two entity lenders (one holding $102,000 of the 0% loans payable aggregating $112,300 and one holding $10,000 of the 0% loans payable aggregating $112,300, the $30,000 6% convertible promissory note and the $70,000 12% convertible promissory notes at March 31, 2012 described in Note 3) paid legal, audit and accounting, and consulting fees on behalf of the Company as follows:

	For the Period from April 1, 2012 through March 20, 2013
Legal fees	$	7,770
Audit and accounting fees		10,000
Consulting fees		2,038
Company’s stock transfer agent		11,766
Total	$	31,574

The amounts advanced bear no interest and are due on demand, but are not evidenced by a promissory note.

On February 14, 2013, the Company issued a Convertible Promissory Note in the amount of $15,000 in exchange for the lender's payment of legal and audit and accounting fees totaling $15,000 on behalf of the Company. The Note bears interest at 9%, is due January 31, 2014, and is convertible at holder's option into Company common stock at a conversion price of $.02 per share (or a total of 750,000 shares of common stock). Additionally, in consideration for making this loan, the Company shall pay to the holder a Lender Fee equal to 10% of the original principal amount ($1,500) of this Note on the Maturity Date, which is also convertible at a conversion price of $.02 per share (or a total of 75,000 shares of common stock).

19

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Form 10-Q, references to “Iconic Brands,” “Company,” “we,” “our” or “us” refer to Iconic Brands, Inc. unless the context otherwise indicates.

Forward-Looking Statements

The following discussion and analysis and results of operations should be read in conjunction with our unaudited financial statements and accompanying notes and the other financial information which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.

Business Overview

Iconic Brands, Inc., formerly Paw Spa, Inc., was incorporated in the State of Nevada on October 21, 2005.

We are now considered a blank check company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”), we also qualify as a “shell company,” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

Under SEC Rule 12b-2 under the Securities Act, we also qualify as a “shell company,” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of shell companies in their respective jurisdictions. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

Our current business plan is to attempt to identify and negotiate with a business target for the merger of that entity with and into the Company or to acquire assets so that we will no longer be qualified as a shell company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute or sell assets to the Company rather than to merge. No assurances can be given that we will be successful in identifying or negotiating with any target company. We seek to provide a method for a foreign or domestic private company to become a reporting or public company whose securities are qualified for trading in the United States secondary markets.

A business combination with a target company normally will involve the transfer to the target company of the majority of the issued and outstanding common stock of the Company, and the substitution by the target company of its own management and board of directors. No assurances can be given that we will be able to enter into a business combination, or, if we do enter into such a business combination, no assurances can be given as to the terms of a business combination, or as to the nature of the target company.

20

Results of Operations

Comparison of Three Months Ended March 31, 2012 and 2011:

Revenues

The Company did not generate any revenues for the three months ended March 31, 2012 or for the three months ended March 31, 2011.

Total Operating Expenses

During the three months ended March 31, 2012, total operating expenses were $14,390, which included $2,881 for general and administrative expenses and $11,509 in interest expenses for Company’s debt, compared to total operating expenses of $39,087 for the three months ended March 31, 2011, which included $19,500 in professional fees, $8,844 for general and administrative expenses and $10,743 in interest expenses for Company’s debt. The decrease of $24,697, or approximately 63% from the three months ended March 31, 2012 as compared to the three months ended March 31, 2011 was primarily as a result of no professional fees in March 31, 2012 and reduced general and administrative expenses.

Net loss

For the three months ended March 31, 2012, net loss was $34,136 compared with net loss for the three months ended March 31, 2011 of $58,652, which represents a decrease of $24,516, or approximately 42%.

Liquidity and Capital Resources

As of March 31, 2012 we had no cash or cash equivalents. On March 31, 2012, our total current liabilities were $3,887,543. We had a stockholders’ deficiency of $7,400,539 as of March 31, 2012.

We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. 

Going Concern Consideration

As of March 31, 2012, the Company had negative working capital of $3,887,543 and a stockholders’ deficiency of $7,400,539. Further, from inception to March 31, 2012, the Company incurred losses of $16,343,143. These factors create substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by reorganizing and acquiring a new business. However, there is no assurance that the Company will be successful in accomplishing this objective.

21

Critical Accounting Estimates and Recently Issued Accounting Standards

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires our management to select and apply accounting policies that best provide the framework to report the results of operations and financial position. The selection and application of those policies requires management to make difficult, subjective and/or complex judgments concerning reported amounts of revenue and expenses during the reporting period and the reported amounts of assets and liabilities at the date of the financial statements. As a result, there exists the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 3.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our Chief Executive and Financial Officer have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of March 31, 2012, the end of the period covered by this report and have concluded that our disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner.

Changes in Internal Controls over Financial Reporting

During the quarter ended March 31, 2012, there was no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

22

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On September 23, 2011, Iconic Imports, Inc. (“Imports”), a wholly-owned subsidiary of Iconic Brands, Inc., filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. The bankruptcy case was being administered under Case No. 8-11-76814. The petition indicated that Imports had no assets and had liabilities of approximately $3,354,000.

On March 13, 2013 the voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York was closed.

As a result of the Bankruptcy being closed all litigation matters as listed in the Company's Form 10-K/A filed with the Securities and Exchange Commission on November 6, 2012 involving Iconic Imports, Inc. were discharged.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 1A.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Item 2. Unregistered Sale of Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other information

None.

23

Item 6. Exhibits

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certifications of Richard DeCicco, President, Principal Executive, Financial and Accounting Officer
32.1	Section 1350 Certifications of Richard DeCicco, President, Principal Executive, Financial and Accounting Officer

101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ICONIC BRANDS, INC.
Dated: April 16, 2013	By:	/s/ Richard DeCicco
	Name:	Richard DeCicco
	Title:	President (Principal Executive, Financial and Accounting Officer)

25

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Richard DeCicco, certify that:

1. I have reviewed the quarterly report on Form 10-Q for the quarterly period ended March 31, 2012 of Iconic Brands, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: April 16, 2013	By:	/s/ Richard DeCicco
	Name:	Richard DeCicco
	Title:	President(Principal Executive, Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Richard DeCicco., President, Principal Executive, Financial and Accounting Officer of Iconic Brands, Inc. (the “Company”), certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 16, 2013	By:	/s/ Richard DeCicco.
		Richard DeCicco
		President (Principal Executive, Financial and Accounting Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2012

Summary Of Significant Accounting Policies

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The consolidated financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as of March 31, 2012, the Company had negative working capital of $3,887,543 and a stockholders’ deficiency of $7,400,539. Further, from inception to March 31, 2012, the Company incurred losses of $16,343,143. These factors create substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by reorganizing and acquiring a new business. However, there is no assurance that the Company will be successful in accomplishing this objective. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

(b) Interim Financial Statements

The unaudited financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments necessary to present fairly the financial position as of March 31, 2012 and the results of operations and cash flows for the periods ended March 31, 2012 and 2011. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2012. The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in our Form 10-K filed March 26, 2013.

(c) Net Income (Loss) per Share

Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants, and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.

For the three months ended March 31, 2012 and 2011, diluted common shares outstanding excluded the following dilutive securities as the effect of their inclusion was anti-dilutive:

	Three Months Ended March 31,
	2012		2011
7% convertible notes and accrued interest		659,566		624,476
6% convertible notes and accrued interest		3,353,200,000		3,172,600,000
12% convertible notes and accrued interest		8,647,700,000		7,805,500,000
10% convertible notes and accrued interest		233,236		218,194
8% convertible note and accrued interest		102,202,778		31,152,451
Series B preferred stock owned by Capstone Capital Group I, LLC		1,615,159,471		450,973,186
Stock Options		-		300,000
Warrants		19,322,184		19,522,184
Total equivalent shares of common stock		13,738,477,235		11,480,890,491

(d) Recently Issued Accounting Pronouncements

Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

(e) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

XML

ORGANIZATION AND NATURE OF BUSINESS

3 Months Ended

Mar. 31, 2012

Organization And Nature Of Business

NOTE 1. ORGANIZATION AND NATURE OF BUSINESS

Iconic Brands, Inc., formerly Paw Spa, Inc. (“Iconic Brands”), was incorporated in the State of Nevada on October 21, 2005. Our plan was to provide mobile grooming and spa services for cats and dogs. Our services were going to include bathing, hair cutting and styling, brushing/combing, flea and tick treatments, nail maintenance and beautification, ear cleaning, teeth cleaning, hot oil treatments, and massage. We did not have any business operations and failed to generate any revenues. We abandoned this business, as we lacked sufficient capital resources. On June 10, 2009, the Company acquired Harbrew Imports, Ltd. (“Harbrew New York”), a New York corporation incorporated on September 8, 1999 which was a wholly owned subsidiary of Harbrew Imports, Ltd. Corp. (“Harbrew Florida”), a Florida corporation incorporated on January 4, 2007. On the Closing Date, pursuant to the terms of the Merger Agreement, the Company issued to the designees of Harbrew New York 27,352,301 shares of our Common Stock at the Closing, or approximately 64% of the 42,510,301 shares outstanding subsequent to the merger. After the merger, Harbrew New York continued as the surviving company under the laws of the state of New York and became the wholly owned subsidiary of the Company.

In anticipation of the merger between Iconic Brands, Inc. and Harbrew New York, on May 1, 2009 the Board of Directors and a majority of shareholders of Harbrew New York approved the amendment of its Articles of Incorporation changing its name to Iconic Imports, Inc. (“Iconic Imports”). On June 22, 2009, this action was filed with the New York State Department of State.

Prior to the merger on June 10, 2009, Iconic Brands had no assets, liabilities, or business operations. Accordingly, the merger has been treated for accounting purposes as a recapitalization by the accounting acquirer Harbrew New York/Iconic Imports and the financial statements reflect the assets, liabilities, and operations of Harbrew New York/Iconic Imports from its inception on September 8, 1999 to June 10, 2009 and are combined with Iconic Brands thereafter. Iconic Brands and its wholly-owned subsidiary Harbrew New York/Iconic Imports are hereafter referred to as the “Company”.

The Company was a brand owner of self-developed alcoholic beverages. Furthermore, the Company imported, marketed and sold these beverages throughout the United States and globally.

Effective June 10, 2009, prior to the merger, Harbrew Florida affected a 1-for-1,000 reverse stock split of its common stock, reducing the issued and outstanding shares of common stock from 24,592,160 to 24,909, which includes a total of 317 shares resulting from the rounding of fractional shares. All share information has been retroactively adjusted to reflect this reverse stock split.

On August 20, 2010 (see Note 6), the Company and Seven Cellos LLC terminated the License Agreement relating to the distribution of an alcoholic beverage known as “Danny DeVito’s Premium Limoncello”. In the year ended December 31, 2010, this brand accounted for approximately 96% of total sales.

On August 20, 2010, Capstone Capital Group I, LLC, a holder of a Promissory Note with a then remaining balance of approximately $233,000, delivered a Formal Notice of Default to the Company demanding payment of the balance on or before September 1, 2010. On September 16, 2010, Capstone delivered a Notification of Disposition of Collateral to the Company notifying the Company of its attachment of the Collateral (including cash, accounts receivable, inventories, equipment, and contract rights) and its intent to sell the Collateral to the highest qualified bidder in a public sale on September 28, 2010. On September 28, 2010, Capstone acquired the Collateral in exchange for the Promissory Note at the public auction sale; there were no other bidders.

On September 14, 2010 (see Note 6), the Second District Court of Suffolk County New York issued a Warrant of Eviction removing the Company from its Lindenhurst, New York office and the Company ceased its business operations.

On September 23, 2011, Iconic Imports, Inc. (“Imports”), a wholly owned subsidiary of Iconic Brands, Inc., filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. The Bankruptcy case is being administered under case No. 8-11-76814.  The petition indicated that Imports had no assets and had liabilities of approximately $3,354,000. The case is still pending before the court.

XML

Consolidated Balance Sheets (USD $)	Mar. 31, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 0	$ 0
Current assets of discontinued operations (see Note 8)	0	0
Total current assets	0	0
Total assets	0	0
Liabilities and Stockholders' Deficiency
Current portion of debt	268,800	268,800
Accounts payable	73,187	74,841
Accrued interest on Iconic Brands, Inc. debt	54,910	47,523
Current liabilities of discontinued operations (see Note 8)	3,490,646	3,474,043
Total current liabilities	3,887,543	3,865,207
Long term debt	59,503	55,381
Long term debt of discontinued operations (see Note 8)	1,620,287	1,617,144
Series B preferred stock, $2.00 per share stated value; designated 1,000,000 shares, issued and outstanding 916,603 and 916,603 shares, respectively	1,833,206	1,833,206
Total liabilities	7,400,539	7,370,938
Stockholders' deficiency:
Preferred stock, $.00001 par value; authorized 100,000,000 shares, Series A, designated 1 share, issued and outstanding 1 and 1 shares, respectively	1	1
Common stock, $.00001 par value; authorized 100,000,000 shares, issued and committed to be issued and outstanding 54,361,412 and 54,361,412 shares, respectively	544	544
Additional paid-in capital	8,942,059	8,937,524
Accumulated deficit prior to development stage period	(16,124,330)	(16,124,330)
Accumulated losses during the development stage period January 1, 2011 to March 31, 2012	(218,813)	(184,677)
Total stockholders' deficiency	(7,400,539)	(7,370,938)
Total liabilities and stockholders' deficiency	$ 0	$ 0

XML

Shareholders Equity (Unaudited) (USD $)	Series A Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Losses During The Development Stage	Total
Beginning Balance, Amount at Dec. 31, 2010	$ 1	$ 525	$ 8,915,903	$ (16,124,330)	$ 0	$ (7,207,901)
Beginning Balance, Shares at Dec. 31, 2010	1	52,519,307
Partial conversion of 8% Promissory Note to common stock, Amount	0	19	3,481	0	0	3,500
Partial conversion of 8% Promissory Note to common stock, Shares	0	1,842,105
Stock option expense	0	0	18,140	0	0	18,140
Net loss	0	0	0	0	(184,677)	(184,677)
Ending Balance, Amount at Dec. 31, 2011	1	544	8,937,524	(16,124,330)	(184,677)	(7,370,938)
Ending Balance, Shares at Dec. 31, 2011	1	54,361,412
Stock option expense	0	0	4,535	0	0	4,535
Net loss	0	0	0	0	(34,136)	(34,136)
Ending Balance, Amount at Mar. 31, 2012	$ 1	$ 544	$ 8,942,059	$ (16,124,330)	$ (218,813)	$ (7,400,539)
Ending Balance, Shares at Mar. 31, 2012	1	54,361,412

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended		15 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Cash flows from operating activities
Net loss	$ (34,136)	$ (58,652)	$ (218,813)
Loss from discontinued operations	19,746	19,565	98,917
Amortization of debt discounts charged to interest expense	4,122	4,122	20,610
Stock -based compensation	4,535	4,535	22,675
Legal, audit and accounting, and consulting fees paid by two lenders on behalf of the Company	0	28,300	49,050
Accounts payable	(1,654)	(5,500)	(9,654)
Accrued expenses and other current liabilities	7,387	6,621	36,206
Net cash used in operating activities - continuing operations	0	(1,009)	(1,009)
Net cash provided by operating activities - discontinued operations	0	784	784
Net cash used in operating activities	0	(225)	(225)
Cash flows from investing activities:
Loans from continuing operations to discontinued operations	0	0	0
Net cash provided by (used in) investing activities - continuing operations	0	0	0
Net cash provided by (used in) investing activities - discontinued operations	0	0	0
Net cash provided by (used in) investing activities	0	0	0
Cash flows from financing activities:
Increases in debt	0	0	0
Repayment of debt	0	0	0
Net cash provided by (used in) financing activities - continuing operations	0	0	0
Net cash provided by (used in) financing activities - discontinued operations	0	0	0
Net cash provided by (used in) financing activities	0	0	0
Decrease in cash and cash equivalents	0	(225)	(225)
Cash and cash equivalents, beginning of period	0	225	225
Cash and cash equivalents, end of period	0	0	0
Less cash and cash equivalents of discontinued operations at end of period	0	0	0
Cash and cash equivalents of continuing operations at end of period	0	0	0
Supplemental disclosures of cash flow information:
Interest paid	0	23,190	0
Income taxes paid	0	0	0
Non-cash operating, investing and financing activities:
Legal, audit and accounting, and consulting fees paid by two lenders on behalf of the Company	0	28,300	49,050
Shares of common stock issued to noteholders in satisfaction of debt and accrued interest	$ 0	$ 3,500	$ 3,500

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Liabilities and Stockholders' Deficiency
Series B preferred stock stated value per share	$ 2.00	$ 2.00
Series B preferred stock, shares designated	1,000,000	1,000,000
Series B preferred stock, shares issued	916,603	916,603
Series B preferred stock, shares outstanding	916,603	916,603
Stockholders' deficiency:
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock Series A, designated	1	1
Preferred stock Series A, shares issued	1	1
Preferred stock Series A, shares outstanding	1	1
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	54,361,412	54,361,412
Common stock, shares outstanding	54,361,412	54,361,412

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 15, 2013
Document And Entity Information
Entity Registrant Name	Iconic Brands, Inc.
Entity Central Index Key	0001350073
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		49,555,062
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2012

XML

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		15 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Continuing operations:
Sales	$ 0	$ 0	$ 0
Professional fees	0	19,500	37,750
Other general and administrative expenses (including stock-based compensation of $4,535, $4,535 and $22,675, respectively)	2,881	8,844	25,330
Interest expense on Iconic Brands, Inc. debt (including amortization of debt discounts of $4,122, $4,122 and $20,610, respectively)	11,509	10,743	56,816
Total expenses	14,390	39,087	119,896
Loss from continuing operations	(14,390)	(39,087)	(119,896)
Loss from discontinued operations (see Note 8)	(19,746)	(19,565)	(98,917)
Net loss	$ (34,136)	$ (58,652)	$ (218,813)
Continuing operations	$ 0.00	$ 0.00	$ 0.00
Discontinued operations	$ 0.00	$ 0.00	$ 0.00
Total	$ 0.00	$ 0.00	$ 0.00
Weighted average number of common shares outstanding - basic and diluted	54,361,412	53,992,991	54,292,737

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2012

Income Taxes

NOTE 5. INCOME TAXES

No provision for income taxes was recorded in the three months ended March 31, 2012 and 2011 since the Company incurred net losses in these periods.

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of the net operating loss carryforward as of March 31, 2012 will be realized. Accordingly, the Company has maintained a 100% valuation allowance against the deferred tax asset in the consolidated financial statements at March 31, 2012. The Company will continue to review this valuation allowance and make adjustments as appropriate.

Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

XML

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2012

Stockholders Equity

NOTE 4. STOCKHOLDERS' EQUITY

On June 10, 2009, pursuant to the terms of the Merger Agreement, the Company issued to the designees of Harbrew New York 27,352,301 shares of Common Stock at the Closing. Of this amount:

1)	24,909 shares were issued to Harbrew Florida stockholders,
2)	19,634,112 shares valued at $1,963,411 were issued to Company management and employees for services, including 15,972,359 shares to the Company’s Chief Executive Officer, 100,000 shares to the Company’s Chief Financial Officer, and 2,586,753 shares to Donald Chadwell,

3)	2,086,973 shares valued at $208,697 were issued to Danny DeVito and affiliates for services,
4)	4,606,307 shares were issued to noteholders in satisfaction of $2,125,625 of debt and $177,529 of accrued interest, and

5)   1,000,000 shares were issued to Capstone as part of the Termination Agreement.

Also, pursuant to the terms of the Merger Agreement, the Company issued 1 share of Series A Preferred Stock valued at $100,000 to the Company’s Chief Executive Officer for services and 916,603 shares of Series B Preferred Stock valued at $1,833,206 to Capstone as part of the Termination Agreement.

The one share of Series A Preferred Stock entitles the holder to two votes for every share of Common Stock Deemed Outstanding and has no conversion or dividend rights. Each share of the Series B Preferred Stock has a liquidation preference of $2.00 per share, has no voting rights, and is convertible into Common Stock at the lower of (1) $2.00 per share or, (2) the volume weighted average price per share (“VWAP”) for the 20 trading days immediately prior to the Conversion Date. The Series B Preferred Stock has been classified as a liability (pursuant to ASC 480-10-25-14(a)) since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception.

On January 6 and 13, 2010, the Company issued a total of 200,000 shares of common stock, 100,000 five year warrants exercisable at $0.22 per share, and 100,000 five year warrants exercisable at $0.23 per share, along with two promissory notes in the amount of $110,000 each (one due March 31, 2010 and one due May 31, 2010), to an investor in exchange for a $200,000 loan. The fair value of the common stock ($45,000) and warrants ($33,930), along with the $20,000 discount, were recorded as debt discounts, which are being amortized over the terms of the notes as interest expense. The warrants were valued using the Black-Scholes option pricing model and the following assumptions: risk free interest rates of 2.6% and 2.55%, volatility of 100%, and terms of five years.

On January 15 and 25, 2010, the Company issued a total of 152,546 shares of common stock to three investors in satisfaction of a total of $62,500 of convertible debt and approximately $13,773 of accrued interest.

On February 8, 2010, the Company issued 250,000 shares of common stock and 1,000,000 warrants to Tony Siragusa pursuant to the License Agreement described in Note 6.

On February 24, 2010, the Company issued 300,000 shares of common stock to CorProminence pursuant to a 45 day consulting agreement dated January 4, 2010. The $69,000 fair value of the common stock at date of issuance was expensed in full in the three months ended March 31, 2010 and included in professional fees.

On March 16, 2010, the Company issued 2,000,000 shares of common stock and 2,000,000 five year warrants exercisable at $0.25 per share to Cresta Capital Strategies pursuant to a one year extension of a consulting agreement. The fair value of the common stock ($350,000) and warrants ($246,000) at date of issuance was capitalized as a prepaid expense (see note 5) and is being amortized over the one year term as professional fees. The warrants were valued using the Black-Scholes option pricing model and the following assumptions: risk free interest rate of 2.37%, volatility of 100%, and term of five years.

On April 19, 2010, the Company satisfied debt totaling $455,635 through its commitment to issue to the respective 5 creditors a total of 4,556,350 shares of its common stock and 4,556,350 three year warrants exercisable at $0.20 per share. The Company expects to issue these shares and warrants in the near future.

On April 19, 2010, the Company agreed to issue to a note holder 250,000 shares of its common stock in consideration of the note holder’s extension of the due date (from March 31, 2010 to May 31, 2010) of a $110,000 promissory note. The $21,400 fair value of the common stock at date of commitment was expensed in the three months ended June 30, 2010 and included in interest expense. The Company expects to issue these shares in the near future.

On January 18, 2011, the Company issued 1,842,105 shares of Iconic common stock to Asher Enterprises, Inc. (“Asher”) pursuant to Asher’s Notice of Conversion to convert $3,500 debt at a price of $0.0019 per share, resulting in the reduction of debt due to Asher from $60,000 to $56,500.

XML

DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2012

Discontinued Operations

NOTE 8. DISCONTINUED OPERATIONS

On September 14, 2010 (see Note 1), the Company ceased operations of the Company’s wholly owned subsidiary Iconic Imports. Accordingly, the assets and liabilities and operations of Iconic Imports, Inc. have been presented as discontinued operations in the accompanying consolidated financial statements for the periods presented.

For the three months ended March 31, 2012 and 2011, loss from discontinued operations consisted of:

	2012			2011
Revenues	$	-		$	-
Cost of goods sold		-			-
Gross profit		-			-
Selling, general and administrative expenses		-			-
Operating income		-			-
Interest expense (including amortization of debt discounts of $3,143 and $3,143, respectively)		19,746			19,565
Loss before income tax provision		(19,746	)		(19,565	)
Income tax provision		-			-
Loss from discontinued operations	$	(19,746	)	$	(19,565	)

The assets and liabilities of Iconic Imports at March 31, 2012 and December 31, 2011 consisted of:

	2012			2011
Assets
Current assets	$	-		$	784
Total assets	$	-		$	784
Liabilities
Current portion of debt	$	395,000		$	395,000
Accounts payable		1,219,768			1,219,768
Accrued interest payable		224,786			208,183
Other accrued expenses and other current liabilities		1,651,092			1,651,092
Current liabilities		3,490,646			3,474,043
Long – term debt		1,620,287			1,617,144
Total liabilities		5,110,933			5,091,187
Net liabilities	$	(5,110,933	)	$	(5,091,187	)

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2012

Commitments And Contingencies

NOTE 6. COMMITMENTS AND CONTINGENCIES

Lease – Company Evicted from Facility

The Company occupied its facilities in Freeport, New York up until March 2009 under a month to month agreement at a monthly rent of $14,350. In March 2009, the Company moved its facilities to Lindenhurst, New York pursuant to a three year lease agreement providing for annual rentals ranging from $85,100 to $90,283. Provided certain conditions were met, the Company had an option to renew the lease for an additional two years at annual rentals ranging from $92,991 to $95,781. On September 14, 2010, the Second District Court of Suffolk County issued a Warrant of Eviction removing the Company from its facilities. At March 31, 2012 and December 31, 2011, accounts payable of Iconic Imports, Inc. (discontinued operations) includes $22,913 of unpaid rent due to the former Lindenhurst landlord and $450,021 of unpaid rent and penalties due the Freeport landlord.

For the three months ended March 31, 2012 and 2011, rent expense was $0 and $0, respectively.

Licensing Agreements

Danny DeVito Brand

On April 26, 2007 and as amended November 1, 2007, the Company entered into an exclusive License Agreement with Seven Cellos, LLC (“DDV”), pursuant to which the Company was granted a limited license of certain rights in and to Danny DeVito’s name, likeness and biography for use by the Company in connection with the Danny DeVito Premium Limoncello brand. The term of the Agreement was to continue through perpetuity unless otherwise terminated. In consideration for the license, the Company agreed to pay royalties as follows: a) 5% of Net Profits (as defined) to Behr Abrahamson & Kaller, LLP (“BAK”), (b) a payment of 50% of the remaining Net Profits to DDV after the payment described above; and (c) a payment of 2% of Net Profits to Sichenzia Ross Friedman Ference LLP after payment of 50% of Net Profits to DDV.

On August 20, 2010, the Company and DDV terminated the License Agreement.

For the periods presented, the Company calculated agreement defined cumulative “Net Profits” from the brand to be negative and thus did not pay or accrue any royalty expense under the License Agreement. The Termination Agreement provides that DDV has not waived or otherwise prejudiced any of its rights with respect to the Company’s past conduct with respect to the brand, including DDV’s right to accrued and unpaid royalties based upon its right to inspect Company records and conduct an audit of the Company reported agreement defined net profit.

Godfather Brand

On June 12, 2009, Iconic Imports, Inc., the wholly-owned subsidiary of the Company, entered into a merchandising license agreement (the “License Agreement”) with Paramount Licensing Inc. (“PLI”) granting Iconic Imports the non-exclusive right to use the title of the theatrical motion picture “The Godfather” in connection with the development, importation, marketing, and distribution of an Italian organic vodka and Scotch whiskey throughout the United States. Under the terms of the License Agreement, which had a term of 5 years ending on June 30, 2014 and could have been extended to June 30, 2019 upon certain conditions unless it was sooner terminated, the Company agreed to pay PLI a royalty fee of five percent (5%) and guaranteed a total of $400,000 in royalties due as follows; (1) $60,000 as an advance payment due upon signing of the License Agreement, (2) $100,000 due on or before November 1, 2010, (3) $100,000 due on or before November 1, 2011, and (4) $140,000 due on or before November 1, 2012. In addition, PLI was granted warrants to purchase shares of the Company’s common stock in substantially the same form as other warrants previously issued, which is (a) a five-year warrant to purchase 1,000,000 shares of our common stock at an exercise price of $1.00 per share; and (b) a five-year warrant to purchase 1,333,334 shares of our common stock at an exercise price of $1.50 per share. On August 12, 2009, the Company paid $60,000 to PLI as the advance royalty due under the License Agreement. The License Agreement became effective on this date as the advance payment was a condition precedent to the effectiveness of the License Agreement.

The Company never commenced sales of the product named “The Godfather”. The second royalty payment of $100,000 due on November 1, 2010 was not paid. On February 23, 2011, PLI terminated the License Agreement due to nonpayment.

Tony Siragusa Brand

On January 15, 2010, we entered into an exclusive License Agreement with Tony Siragusa, pursuant to which we were granted a limited license to certain rights in and to Tony Siragusa’s name, likeness and biography for use by us in connection with Tony Siragusa’s YO Vodka. The term of the agreement was four (4) years. In consideration for the license, we agreed to distribute net profits of the venture as follows: 42.5% to the Company, 42.5% to the licensor, 10% to William Morris Endeavor Entertainment, LLC and 5% to Brian Hughes. In addition, we issued 250,000 shares of the Company’s common stock, 5 year warrants to purchase 500,000 shares of our Common Stock at a price of $1.00 per share, and 5 year warrants to purchase 500,000 shares of our Common Stock at a price of $1.50 per share. Tony Siragusa agreed to use reasonable efforts to be available for a reasonable number of promotional appearances during each consecutive 12 months period, the duration of each will not exceed six days. On September 28, 2010 (see Note 1), Capstone acquired the License Agreement rights.

For the periods presented, the Company calculated agreement defined net profits from the brand to be negative and thus did not pay or accrue any royalty expense under the License Agreement. The product was never introduced to the market.

Under the License Agreement, Tony Siragusa had the right to terminate the agreement, upon 10 days written notice to the Company, if the Company fails to launch the distribution of and secure availability to the general public of the beverage throughout the United States prior to June 1, 2010. The License Agreement did not provide for financial penalties that would be accruable by the Company in the event of a default.

Chief Executive Officer Employment Agreement

On January 23, 2008, the Company entered into an employment agreement with its chief executive officer Richard DeCicco. The agreement provided for a term of 5 years, commencing on January 1, 2008. The term could be extended by a written agreement of the parties. The agreement provided for annual compensation ranging from $265,000 to $350,000. In addition, if the Company entered into an agreement and further sold any brand in the Company’s portfolio, Mr. DeCicco would receive 5% of such sale. Mr. DeCicco was also entitled to incentive bonus compensation, stock and/or options in accordance with Company policies established by the Board of Directors. The agreement provided for the grant of a non-qualified ten year option to purchase up to 1,000,000 shares of common stock of the Company at an exercise price which shall represent a discount to the market price. Mr. DeCicco had the right to terminate the agreement upon 60 days notice to the Company for any reason. Pursuant to the terms of the agreement, if Mr. DeCicco was absent from work because of illness or incapacity cumulatively for more than 2 months in addition to vacation time in any calendar year, the Company could terminate the agreement upon 30 days written notice. The agreement also provided that the agreement could be terminated upon 90 days notice to Mr. DeCicco if: (A) there was a sale of substantially all of the Company’s assets to a single purchaser or group of associated purchasers; (B) there was a sale, exchange or disposition of 50% of the outstanding shares of the Company’s outstanding stock; (C) the Company terminated its business or liquidated its assets; or (D) there was a merger or consolidation of the Company in which the Company’s shareholders received less than 50% of the outstanding voting shares of the new or continuing corporation. Mr. DeCicco was entitled to severance pay in the amount of 2 years compensation and medical and other benefits in the event of a termination of the agreement under certain circumstances.

At March 31, 2012 and December 31, 2011, accrued expenses and other current liabilities of Iconic Imports, Inc. (discontinued operations) includes approximately $528,000 in unpaid compensation due the Chief Executive Officer. For the three months ended March 31, 2012 and 2011, selling, general and administrative expenses of Iconic Imports, Inc. (discontinued operations) includes approximately $0 and $0 in compensation for the Chief Executive Officer.

Former Chief Financial Officer Employment Agreement

On October 1, 2007, the Company entered into an employment agreement with its then chief financial officer William Blacker. The agreement provided for a term of 3 years, commencing on October 1, 2007. The term could be extended by a written agreement of the parties. The Company agreed to issue options to purchase shares of its common stock to Mr. Blacker if and when the common stock becomes publicly traded, as follows: (A) upon execution of the agreement, 100,000 options at an exercise price of $0.05 per share; (B) on October 1, 2008, 100,000 options at an exercise price of $0.15 per share; and (C) on October 1, 2009, 100,000 options at an exercise price of $0.75 per share. Pursuant to the terms of the agreement, Mr. Blacker was to receive an annual salary of $150,000. Mr. Blacker had the right to terminate the agreement upon 60 days notice to the Company for any reason. The agreement further provided that if the agreement was terminated for any reason other than willful malfeasance by Mr. Blacker, Mr. Blacker was entitled to receive severance pay in the amount of 6 months or the balance of the agreement’s term of existence, whichever was greater, and was to receive all benefits under the agreement. Mr. Blacker resigned September 15, 2010.

The $16,850 estimated fair value of the 300,000 options (using the Black-Scholes option pricing model and the following assumptions: $0.10 stock price, 4% risk free interest rate, 100% volatility, and term of 3.5 years) was amortized over the 3 year term of the employment agreement.

At March 31, 2012 and December 31, 2011, accrued expenses and other current liabilities of Iconic Imports, Inc. (discontinued operations) includes approximately $233,000 in unpaid compensation due the Chief Financial Officer. For the three months ended March 31, 2012 and 2011, selling, general and administrative expenses of Iconic Imports, Inc. (discontinued operations) includes approximately $0 and $0 in compensation for the former Chief Financial Officer.

Litigation

The Company is party to a variety of legal proceedings brought by suppliers and creditors. We accrue for these items as losses become probable and can be reasonably estimated. Most of the amounts sought have already been provided for through previous charges to operations and are included in Company liabilities at March 31, 2012 and December 31, 2011. While the results of these legal proceedings, which principally involve debt and lease default obligations and vendor disputes, cannot be predicted with certainty, management believes that the final outcome of these proceedings will have a material adverse effect on the Company’s future consolidated results of operations and financial position.

Chapter 7 Bankruptcy Filing of Wholly – Owned Subsidiary

On September 23, 2011, Iconic Imports, Inc. (“Imports”), a wholly owned subsidiary of Iconic Brands, Inc., filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. The Bankruptcy case is being administered under case No. 8-11-76814. The case is still pending before the court.

XML

STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2012

Stock Options And Warrants

NOTE 7. STOCK OPTIONS AND WARRANTS

A summary of stock option and warrant activity for the three months ended March 31, 2012 follows:

	Stock
	Options		Warrants
Outstanding at December 31, 2011		1,000,000		19,322,184
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Outstanding at March 31, 2012		1,000,000		19,322,184

Stock options outstanding at March 31, 2012 consist of:

Date	Number		Number		Exercise			Expiration
Granted	Outstanding		Exercisable		Price			Date
January 1, 2008		1,000,000		-	$	0.10	(a)	June 30, 2013
Total		1,000,000		-

_____________

(a) Estimated since exercise price is to be determined based on future stock price

As of March 31, 2012, there was $13,607 of total unrecognized compensation cost relating to the 1,000,000 unexpired stock options granted to the Company’s Chief Executive Officer Richard DeCicco pursuant to the employment agreement described in Note 6. That cost is expected to be recognized in 2012.

The aggregate intrinsic value of the 1,000,000 fully vested stock options at March 31, 2012 is $0.

Warrants outstanding at March 31, 2012 consist of:

Date		Number		Number		Exercise		Expiration
Issued		Outstanding		Exercisable		Price		Date
July 2, 2007			500,000		500,000	$	1.00	July 2, 2012
July 2, 2007			500,000		500,000	$	1.50	July 2, 2012
August 27,2007			550,000		550,000	$	1.00	August 27,2012
August 27,2007			550,000		550,000	$	1.50	August 27,2012
November 8 2007			811,250		811,250	$	1.00	November 8 2012
November 8 2007			811,250		811,250	$	1.50	November 8 2012
March 5, 2008			192,500		192,500	$	1.00	March 5, 2013
March 5, 2008			192,500		192,500	$	1.50	March 5, 2013
June 10, 2008			27,500		27,500	$	1.00	June 10, 2013
June 10, 2008			27,500		27,500	$	1.50	June 10, 2013
June 10, 2008			25,000		25,000	$	1.00	December 10, 2013
June 10, 2008			25,000		25,000	$	1.50	December 10, 2013
June 11, 2008			30,000		30,000	$	1.00	December 10, 2013
June 11, 2008			30,000		30,000	$	1.50	December 10, 2013
July 2, 2008			110,000		110,000	$	1.00	January 2, 2014
July 2, 2008			110,000		110,000	$	1.50	January 2, 2014
July 23, 2008			50,000		50,000	$	1.00	January 23, 2014
July 23, 2008			50,000		50,000	$	1.50	January 23, 2014
August 11, 2008			1,000,000		1,000,000	$	1.00	August 11, 2013
June 10, 2009			1,000,000		1,000,000	$	0.50	June 10, 2012
July 23, 2009			20,000		20,000	$	1.00	July 23, 2012
July 23, 2009			20,000		20,000	$	1.50	July 23, 2012
August 12, 2009	(A)		400,000		400,000	$	1.00	August 12, 2014
August 12, 2009	(A)		533,334		533,334	$	1.50	August 12, 2014
August 19, 2009			1,000,000		1,000,000	$	0.01	August 19, 2014
August 19, 2009			1,000,000		1,000,000	$	1.00	August 19, 2014
September 14, 2009			200,000		200,000	$	1.00	September 14. 2014
September 14, 2009			200,000		200,000	$	1.50	September 14. 2014
September 16,2009			200,000		200,000	$	1.00	July 2, 2012
September 16,2009			200,000		200,000	$	1.50	July 2, 2012
January 6, 2010			100,000		100,000	$	0.22	January 4, 2015
January 13, 2009			100,000		100,000	$	0.23	January 13, 2015
February 8, 2010			500,000		500,000	$	1.00	February 8, 2015
February 8, 2010			500,000		500,000	$	1.50	February 8, 2015
March 16,2010			2,000,000		2,000,000	$	0.25	March 16,2015
April 15, 2010			1,200,000		1,200,000	$	0.20	April 15, 2013
April 19, 2010			4,556,350		4,556,350	$	0.20	April 14, 2013
Total			19,322,184		19,322,184

_____________

(A) These warrants were granted to Paramount Licensing Inc. in connection with a license agreement which was terminated on February 23, 2011 (see Note 6). 933,334 (40%) of the 2,333,334 warrants vested on August 12, 2009 and August 12, 2010. The remaining 1,400,000 (60%) of the 2,333,334 warrants will now never vest and were forfeited on February 23, 2011. 

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2012

Subsequent Events

NOTE 9. SUBSEQUENT EVENTS

Legal, Audit and Accounting, and Consulting Fees Paid on Behalf of the Company

For the period from April 1, 2012 through March 20, 2013, two entity lenders (one holding $102,000 of the 0% loans payable aggregating $112,300 and one holding $10,000 of the 0% loans payable aggregating $112,300, the $30,000 6% convertible promissory note and the $70,000 12% convertible promissory notes at March 31, 2012 described in Note 3) paid legal, audit and accounting, and consulting fees on behalf of the Company as follows:

	For the Period from April 1, 2012 through March 20, 2013
Legal fees	$	7,770
Audit and accounting fees		10,000
Consulting fees		2,038
Company’s stock transfer agent		11,766
Total	$	31,574

The amounts advanced bear no interest and are due on demand, but are not evidenced by a promissory note.

On February 14, 2013, the Company issued a Convertible Promissory Note in the amount of $15,000 in exchange for the lender's payment of legal and audit and accounting fees totaling $15,000 on behalf of the Company. The Note bears interest at 9%, is due January 31, 2014, and is convertible at holder's option into Company common stock at a conversion price of $.02 per share (or a total of 750,000 shares of common stock). Additionally, in consideration for making this loan, the Company shall pay to the holder a Lender Fee equal to 10% of the original principal amount ($1,500) of this Note on the Maturity Date, which is also convertible at a conversion price of $.02 per share (or a total of 75,000 shares of common stock).

XML

Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $)	3 Months Ended		15 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Consolidated Statements Of Operations Parenthetical
Other general and administrative expenses including stock-based compensation	$ 4,535	$ 4,535	$ 22,675
Interest expense on debt including amortization of debt discounts	$ 4,122	$ 4,122	$ 20,610

XML

DEBT

3 Months Ended

Mar. 31, 2012

Debt

NOTE 3. DEBT

Debt relating to continuing operations:

Debt relating to Iconic Brands, Inc. consisted of the following at March 31, 2012 and December 31, 2011:

		2012			2011
Convertible promissory note, interest at 7%, due September 13, 2014, net of
unamortized discount of $40,497 and $44,619, respectively	(A)	$	59,503		$	55,381
Loans payable, interest at 0%, due on demand (see Note 9)	(C)		112,300			112,300
Convertible promissory note, interest at 6%, due June 30, 2010 (see Note 9)	(B)		30,000			30,000
Convertible promissory notes, interest at 12%, due June 30, 2010 (see Note 9)	(B)		70,000			70,000
Convertible promissory note, interest at 8% (default rate of 22%), due
February 7, 2011 (in default)	(A)		56,500			56,500
Total			328,303			324,181
Less current portion of debt			(268,800	)		(268,800	)
Long term debt		$	59,503		$	55,381

(A) The $100,000 face value of the 7% convertible note outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a price of $0.50 per share. The $56,500 face value of the 8% convertible note outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a variable conversion price equal to 60% of the Market Price, as defined.

(B) These promissory notes were issued to the same entity lender on April 15, 2010. The notes provide that upon an event of default that is not cured within the allotted time, the holder shall have the option to convert the outstanding principal and interest into shares of common stock at a conversion price of $0.00001 per share. The Company has defaulted on all three notes and has failed to cure the defaults within the time allotted specified in the note default provisions.

While the Company has not received any notice or indication from the lender of its intention to convert the $100,000 debt (or a portion thereof), if the lender does elect to convert the $100,000 of debt and related accrued interest at March 31, 2012 at the $0.00001 per share conversion rate it would require the Company to issue 12,000,900,000 common shares to this lender (or over 99% of the 12,055,261,412 shares of Company Common Stock outstanding after this lender’s conversion). However, by virtue of his ownership of the 1 share of Series A Preferred Stock, Mr. DeCicco would retain voting control of the Company.

Also, the notes provided for the grant of a total of 1,200,000 warrants exercisable at an exercise price of $0.20 per share for 3 years. The $51,600 fair value of the warrants (valued using the Black-Scholes option pricing model and the following assumptions: stock price of $0.092 per share, exercise price of $0.20 per share, term of 3 years, risk-free interest rate of 1.62%, and expected volatility of 100%) and the remaining $45,400 intrinsic value of the beneficial conversion feature arising from the default provisions in the three promissory notes due to this lender described in the two preceding paragraphs (the total debt discounts are limited to the amount of proceeds allocated to the convertible instrument) were recorded initially as a debt discount and amortized as interest expense over the term of the notes ended June 30, 2010.

(C) In 2011, the two entity lenders described in Note 9 paid legal, audit and accounting, and consulting fees totaling $49,050 on behalf of the Company (no additional payments made on behalf of the Company in the three months ended March 31, 2012), as follows:

Legal fees	$	27,500
Audit and accounting fees		17,500
Consulting fees		4,050
Total	$	49,050

At March 31, 2012, the debt relating to Iconic Brands, Inc. is due as follows:

Past due	$	268,800
Year ending March 31, 2013		-
Year ending March 31, 2014		-
Year Ending March 31, 2015		100,000
Total		368,800
Less debt discounts		40,497
Net	$	328,303

Accrued interest payable on debt relating to Iconic Brands, Inc. consisted of:

	March 31, 2012		December 31, 2011
Convertible note, interest at 7%	$	17,815	$	16,070
Convertible note, interest at 6%		3,532		3,083
Convertible notes, interest at 12%		16,477		14,383
Convertible note, interest at 8% (default rate of 22%)		17,086		13,987
Total	$	54,910	$	47,523

Debt relating to discontinued operations:

Debt relating to the Company’s wholly-owned subsidiary Iconic Imports consisted of the following at March 31, 2012 and December 31, 2011:

		2012			2011
Promissory note, interest at 20%, due January 29, 2009 (in default)		$	100,000		$	100,000
Convertible promissory notes, interest at 10%, due October 25, 2007
to November 27, 2007 (in default)	(A)		75,000			75,000
Promissory notes, interest at 13%, due May 31, 2010 (in default)	(B)		220,000			220,000
Due Donald Chadwell (5% stockholder at December 31, 2011),
interest at 0%, no repayment terms			763,000			763,000
Due Richard DeCicco (officer, director and 30% stockholder
at December 31,2011) and affiliates, interest at 0%, no repayment terms			714,338			714,338
Convertible notes, interest at 7% (default rate of 14%), due
to August 27, 2012 November 27, 2012, net of unamortized
discounts of $7,051 and $10,194, respectively	(A)		142,949			139,806
Total			2,015,287			2,012,144
Less current portion of debt			(395,000	)		(395,000	)
Long term debt		$	1,620,287		$	1,617,144

(A) $225,000 total face value of convertible notes outstanding at March 31, 2012 is convertible into shares of the Company’s common stock at a price of $0.50 per share.

(B) The 13% promissory notes specify that the loan proceeds were for the purpose of purchasing containers of Danny DeVito’s Premium Limoncello and that the holder will be repaid the principal from the receivables of the sales of the Danny DeVito Premium Limoncello product as they are collected by the Company.

At March 31, 2012, the debt relating to Iconic Imports, Inc. is due as follows:

Past due	$	395,000
Year ending March 31, 2013		150,000
No repayment terms (due two significant stockholders)		1,477,338
Total		2,022,338
Less debt discounts		7,051
Net	$	2,015,287

Accrued interest payable on debt relating to Iconic Imports, Inc (included in current liabilities of discontinued operations in the accompanying consolidated balance sheets) consisted of:

	March 31, 2012		December 31, 2011
Convertible note, interest at 7%	$	61,968	$	59,351
Promissory note, interest at 20%		55,012		50,026
Promissory notes, interest at 13%		66,188		59,058
Convertible promissory notes, interest at 10%		41,618		39,748
Total	$	224,786	$	208,183