UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ICT TECHNOLOGIES, INC.
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ---------------- to -------------------
Delaware 13-4070586
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
122 East 42nd Street, 17th Floor, New York, New York 10168
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 551-1085
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 no par value
Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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.
[X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. -0-
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
As of August 11, 2000, there were 7,686,025 shares of the registrant's
common stock, par value $0.001 issued and As of August 11, 2000, the market
value of securities held by non-affiliates is $325,523.75 based on the average
of the high and low bid prices as reported by FinancialWeb.com, Inc. for the 60
day period ending August 11, 2000. These quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commissions, and may not reflect actual
transactions.
<PAGE>
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 7,686,025 shares of common
stock, par value $0.001, as of August 11, 2000
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990). N/A.
Transitional Small Business Disclosure Format (Check one):
Yes [ ]; No [X] .
<PAGE>
TABLE OF CONTENTS
Item Number and Caption
PART I
ITEM 1. Description of Business.................................... 2
ITEM 2. Description of Property.................................... 6
ITEM 3. Legal Proceedings.......................................... 6
ITEM 4. Submission of Matters to a Vote of Security Holders........ 6
PART II
ITEM 5. Market for Common Equity and Related Stockholder Matters... 7
ITEM 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 8
ITEM 7. Financial Statements....................................... 10
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Matters........................... 10
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act........................................................ 10
ITEM 10. Executive Compensation..................................... 12
ITEM 11. Security Ownership of Certain Beneficial Owners
and Management............................................. 13
ITEM 12. Certain Relationships and Related Transactions............. 13
ITEM 13. Exhibits and Reports on Form 8-K........................... 14
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Annual Report on Form
10-KSB for the year ended December 31, 1999 discusses financial projections,
information or expectations about the products or markets of our company, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Annual Report, in "Management's
Discussion and Analysis". Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. In
addition, we disclaim any obligations to update any forward-looking statements
to reflect events or circumstances after the date of this Annual Report. When
considering such forward-looking statements, readers should keep in mind the
risks referenced above and the other cautionary statements in this Annual
Report.
<PAGE>
PART I
Item 1. Description of Business.
a. Business Development.
Our company, ICT Technologies, Inc., was formed under the laws of Delaware
on May 27, 1999 and is authorized to issue 10,000,000 shares of common
stock, $0.001 par value each. Our company was formed to reorganize the
business affairs and the domicile of ICT Technologies, Inc., a corporation
formed under the laws of New York on February 8, 1994, ("ICT NY").
Initially, ICT NY intended to conduct research and development in the area
of computer hardware and software. If such research and development was
successful, it intended to commence production of an optical archive record
storage system, a liquid crystal display visor for use in multimedia and
virtual reality systems and software and computer adapter boards. ICT NY
abandoned this pursuit and shortly thereafter attempted to enter the stem
cell storage business. This also proved unfeasible. Our company entered its
present business during 1995, and presently owns a 15% equity interest in
Frank Lettau Galleries, located at 67 Monroe Avenue, Staten Island, New
York, and owns certain works of art directly as well. Our company desires
to expand its relationship with Frank Lettau Galleries, Inc., and buy and
sell investment grade art and antiques for its own account.
Our principal offices are located at 122 East 42nd Street, 17th Floor, New
York, New York 10168.
b. Business of Issuer.
1. Principal products or services and their markets;
Our company owns a 15% equity interest in Frank Lettau Galleries ("FLG"),
located at 67 Monroe Avenue, Staten Island, New York, and owns certain
works of art directly. FLG's operating space is a large warehouse from
which FLG has contracted with various New York City galleries to obtain art
on consignment. FLG has represented hundreds of pieces of art from many
sellers and galleries. FLG was founded by Frank Lettau, who has been in the
art and frame business for twenty-five years, and has owned and/or managed
galleries in Manhattan and Rochester, New York, and Charleston, South
Carolina.
Based on our experience with FLG, we intend to market art products in the
wholesale and/or retail art and framing markets. We intend to operate
and/or purchase equity positions in operators of fine art galleries in key
vacation and/or upscale communities. Our company would also like to enter
into licensing agreements with third parties in order to produce
lithographic reprints of art, which our company owns, for resale.
In addition, we want to enter into contracts with artists, including those
who are new and unknown. The purpose of these contracts would be for the
artists to create artworks on an exclusive basis for our company. We would
then market and distribute their original works and publish limited edition
reproductions of certain of their works. We envision a typical project to
involve signing an exclusive contract with an artist, printing an art work
in an edition of approximately two thousand prints, and retailing the
prints at a to-be-determined-price per print. Our company hopes that as the
artist becomes more recognized, the price of these prints would increase,
as would our profits. Once a number of artists have signed on, we believe
that one of our focuses would be to review and evaluate art and artists
that would fit the our marketing profile and business plan. We plan to
search for and identify potential artists and to publish their art works.
As of the date of this Annual Report, our company is not negotiating any
rights to publish art works.
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Our company's long term goal is to develop a national chain of galleries to
sell fine artwork and to provide high-quality art framing services while
taking advantage of the economies of scale through regional framing
centers. We are planning to implement a program whereby our company will
work with entrepreneurs in establishing and operating galleries and
converting frame-shops into galleries in exchange for an ownership interest
in the gallery. We intend to convert art framing retail outlets into a
chain of fine art gallery space and art framing sales offices with all art
framing operations to be performed in regional framing centers located
throughout the country. By moving all framing operations to regional
framing centers, our company believes it will realize substantial economies
of scale while providing its customers with consistent high-quality framing
services. Our company further believes that by combining the art framing
business with the fine art gallery business, our company will increase the
exposure of its individual artists while providing its customers with
exceptional artwork and consistent high-quality framing services at
reasonable prices. We anticipate that these programs will not only provide
fee income through sales generated by individual galleries and shops, but
will also increase our profit capabilities as a whole.
It is not clear whether our company's concept will prove to be successful
and whether our company can develop this concept into a chain of galleries.
2. Distribution methods of the products or services;
We intend to utilize direct marketing methods. Our company believes that
the chosen marketing method(s) will depend upon the amount of funds that we
will be able to raise or borrow, if any, and may include direct mail,
radio, infomercials and 60-second television spots. In addition, our
company intends to develop a "cyber gallery". This gallery is intended to
provide an opportunity for our company to sell art work we hope to be able
to publish as well as consigned art work.
3. Status of any publicly announced new product or service.
There have been no publicly announced new products or services by our
company.
4. Competitive business conditions and the small business issuer's
competitive position in the industry and methods of competition;
Fine art retailing is an intensely competitive industry and our company
competes with a number of competitors at competitive prices. No single
competitor dominates the market, which is made up of numerous small
boutique art houses and galleries. The primary markets that our company
plans to enter into in 2000 and 2001 are the U.S. Northeast and the
Mid-Atlantic. At the present time, our company expects to be an
insignificant participant among art galleries. There are a number of
established galleries, virtually all of which are larger and better
capitalized than our company and/or have greater personnel resources and
technical expertise. In view of our company's extremely limited financial
resources and limited management availability, we believe that we will
continue to be at a significant competitive disadvantage compared to our
competitors. There can be no guarantee that our company will ever generate
substantial revenues or ever be profitable.
4
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5. Sources and Availability of Raw Materials and the Names of Principal
Suppliers.
Our company does not utilize raw materials in our business. The closest
comparison to the utilization of raw materials is FLG's reliance on sources
of art supply to market and sell. FLG has no guaranteed supply
arrangements. Our success is dependent in part on locating art and
initiating and maintaining strong relationships with individual artists.
6. Dependence on one or a few major customers.
We do not depend on one or a few major customers. We will try hard to
assemble a desirable inventory of art products and seek to establish and
maintain loyal a loyal client base.
7. Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration;
We have no patents, trademarks, franchises, concessions, royalty agreements
or labor contracts. As previously discussed, we anticipate entering into
license agreements with various artists. We also plan to file trademark
applications for use in our business, but have not yet done so. However, in
the event we cannot protect our marks, our business may be adversely
affected.
8. Need for any government approval of principal products or services. If
government approval is necessary and the small business issuer has not
yet received that approval, discuss the status of the approval within
the government approval process;
We do not anticipate the need for any Government approval of our art
products or framing services. In connection with the operation of an art
gallery or a framing facility, it may be noted that operating costs are
affected by increases in the minimum hourly wage, unemployment tax rates,
sales taxes and similar costs over which our company will have no control.
It may be further noted that, as a public company, we are subject to the
reporting requirements, anti-fraud and other Federal and State Securities
laws.
9. Effect of existing or probable governmental regulations on the
business;
As previously stated, increases in the minimum wage and taxes could result
in an increase FLG's costs and, ultimately, a decrease in our revenues. Any
such increases could affect the profitability of future operations. With
reference to the requirement to comply with the Federal and State
Securities laws, the failure to comply with any of these laws, rules or
regulations could have a material adverse effect on our company.
10. Estimate of the amount spent during each of the last two fiscal years
on research and development activities, and if applicable the extent
to which the cost of such activities are borne directly by customers;
Our company's general and administrative costs aggregated approximately
$49,162 for the year ended December 31, 1999 as compared to $6,203 for the
year ended December 31, 1998 representing a increase of $42,959. This
increase represents essentially consulting fees paid to Joshua Shainberg
for the time spent doing the marketing research, planning and
reorganization of the business for its entry into the art and antiques
field of business.
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11. Costs and effects of compliance with environmental laws (federal,
state and local).
Our company is not impacted directly by the costs and effects of compliance
with environmental laws.
12. Number of total employees and number of full time employees.
As of the date of this filing, our company had two (2) employees, both of
whom are part-time.
(c) Reports to security holders.
As a reporting company, we are required to file annual and quarterly
reports, proxy and information statements, and other information regarding
our company with the Securities and Exchange Commission. The public may
read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements, and other
information regarding issuers, like us, that file electronically with the
SEC at (http://www.sec.gov).
Item 2. Description of Property.
Our company occupies about one hundred square feet of office space in the
offices of its President, Joshua Shainberg, at 122 East 42nd Street, 17th Floor,
New York, NY 10168. We pay no rent for use of this space. FLG's operating space
is a large warehouse, located at 67 Monroe Avenue, Staten Island, New York, from
which FLG has contracted with various New York City galleries to obtain art on
consignment.
Item 3. Legal Proceedings.
In May of 1999, our company and Joshua Shainberg brought a breach of
contract suit against Furio Maglione and 9008-9657 Quebec Corp. (AKA Gyros) in
the United States District Court, District of New Jersey, Docket #C 99
2058(AMW). As a result of this litigation, 300,000 shares previously held by Mr.
Maglione are being held by our transfer agent subject to an order preventing
their transfer until further court order. Although Mr. Maglione has not taken
any action regarding this matter since the date of the court order, we
anticipate that he will attempt to regain control of those shares at some point
in the future. Our company intends to petition the court to have the shares
returned to their original shareholder, Abraham Shainberg, a former director and
former officer of our company, at some as of yet undecided point in the future.
The are no other material legal proceedings pending or, to our knowledge,
threatened against us.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market information.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"ICTT." The following table sets forth the high and low bid prices as reported
by FinancialWeb.com, Inc. for the periods ending December 31, 1999 and prior.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commissions, and may not reflect actual transactions. As of December 31, 1999
there were 253 shareholders of Common Stock.
High Low
----- ----
2000
First Quarter $1.00 $2.00
Second Quarter 0.55 2.00
1999
Fourth Quarter 6.00 1.00
Third Quarter 8.00 3.00
Second Quarter 8.50 2.00
First Quarter 3.75 1.25
1998
Fourth Quarter 3.00 1.00
Third Quarter 3.00 1.25
Second Quarter 3.50 1.00
First Quarter 4.00 1.25
1997
Fourth Quarter 4.85 0.75
Third Quarter 10.00 1.50
Second Quarter 4.50 0.50
First Quarter 4.00 0.75
(b) Holders.
As of December 31, 1999 there were 253 holders of shares of common stock.
(c) Dividends.
Our company has never declared or paid any cash dividends on its capital
stock. We currently intend to retain all available funds and any future earnings
of our business for use in the operation of our business and do not anticipate
paying any cash dividends in the foreseeable future. The declaration, payment
and amount of future dividends, if any, will depend upon the future earnings,
results of operations, financial position and capital requirements of our
company, among other factors, and will be at the sole discretion of our board of
directors.
Under the Delaware General Corporation Law, our company may only pay
dividends out of capital and surplus, or out of certain enumerated retained
earnings, as those terms are defined in the Delaware General Corporation Law.
The payment of dividends on our common stock is, therefore, subject to the
availability of capital and surplus or retained earnings as provided in the
Delaware General Corporation Law.
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(d) Recent sales of securities.
During the past three years the only sale of our securities was the sale in
1997 to our company's resident, Joshua Shainberg, pursuant to Section 4(2) of
the Securities Act of 1933, as amended, of 6,000,000 shares of our common stock
in exchange for an offset of $120,000 in monies due Mr. Shainberg and $60,000 in
consulting fees due Mr. Shainberg.
Item 6. Management's Discussion and Analysis or Plan of Operation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDING
DECEMBER 31, 1998 AND 1999
The following discussion relates to the results of our operations to date,
and our financial condition:
This prospectus contains forward looking statements relating to our
Company's future economic performance, plans and objectives of management for
future operations, projections of revenue mix and other financial items that are
based on the beliefs of, as well as assumptions made by and information
currently known to, our management. The words "expects, intends, believes,
anticipates, may, could, should" and similar expressions and variations thereof
are intended to identify forward-looking statements. The cautionary statements
set forth in this section are intended to emphasize that actual results may
differ materially from those contained in any forward looking statement.
Business activities.
Our company has been dormant since December 31, 1996 except for an equity
investment in the Frank Lettau Galleries, located in New York City. Our company
is in the process of expanding its business activities in the purchasing and
selling of art and antiques for its own account having learned the business as a
result of its business relationship with Frank
Lettau Galleries.
During this period, management has continued to finance is activities
through the resources of management and has devoted the majority of its efforts
to initiating our company's market plans to enter the business of purchasing art
and antiques, obtaining new customers for sale of consulting services,
developing sources of supply, developing and testing its marketing strategy and
finding a management team to begin the process of: completing its marketing
goals; furthering its marketing research and development for its products;
changing the state in which the Company was domiciled from the State of New York
to Delaware completing the documentation for the filing of Form 10 with the
Securities and Exchange Commission to become a fully reporting Company to the
SEC. These activities were funded by our company's management and investments
from stockholders. The Company has not yet generated sufficient revenues during
its limited operating period of reorganization to fund its ongoing operating
expenses, or fund its marketing plans and product development activities. There
can be no assurance that development of the marketing plans will be completed
and fully tested in a timely manner and within the budget constraints of
management and that our company's marketing research will provide a profitable
path to utilize our company's marketing plans. Further investments into market
design and implementation and development, marketing research as defined in our
company's operating plan will significantly reduce the cost of development,
preparation, and processing of purchases and orders by enabling our company to
effectively compete in this market place.
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During this reorganization period, our company has been financed through
officer's loans from Joshua Shainberg with the return of its partial investment
in the Frank Lettau Galleries.
Results of Operations for the year ended December 31, 1998 as compared to
the to December 31, 1997.
For the year ended December 31, 1998, our company generated net sales of
$-0- as compared to $-0- for the year ended December 31, 1997. Our company's
cost of goods sold for the year ended December 31, 1998 was $-0- as compared to
$-0- for the year ended December 31, 1997. Our company's gross profit on sales
was approximately $-0- for the year ended December 31, 1998 as compared to $-0-
for the year ended December 31, 1997.
Our company's general and administrative costs aggregated approximately
$6,203 for the year ended December 31, 1998 as compared to $120,798 for the year
ended December 31, 1997 representing an decrease of $120,595. These expenses
represent bank charges and the payment of fees to the stock transfer agent and
other expenses necessary for the continuation of the business.
Results of Operations for the year ended December 31, 1999 as compared to
the year ended December 31, 1998.
For the year ended December 31, 1999, our company generated net sales of
$-0- as compared to $-0- for the year ended December 31, 1998. Our company's
cost of goods sold for the year ended December 31, 1999 was $-0- as compared to
$-0- for the year ended December 31, 1998. Our company's gross profit on sales
was $-0- for the year ended December 31, 1999 as compared to $-0- for the year
ended December 31, 1998.
Our company's general and administrative costs aggregated approximately
$49,162 for the year ended December 31, 1999 as compared to $6,203 for the year
ended December 31, 1998 representing a increase of $42,959. This increase
represents essentially consulting fees paid to Joshua Shainberg for the time
spent doing the marketing research, planning and reorganization of the business
for its entry into the art and antiques field of business.
Liquidity and Capital Resources.
Our company increased cash from $345 at December 31, 1998 to a cash balance
of $5,988 at December 31, 1999. Working capital at December 31, 1999 was
negative at $65,537. For the year ended December 31, 1999, working capital was
provided by management for the payment of expenses. At December 31, 1999, our
company continued to be funded through officer loan balances aggregating
$59,525. Management believes that it will be able to fund the Company through
the continuation of our company's reorganization process until our company's
Marketing strategy of entering the art and antique business is in place.
Known trends, events or uncertainties that could be reasonably likely to
have a material adverse effect on the businesses of our company and may thereby
materially impact our company's short-term or long-term liquidity and/or net
sales, revenues or income from continuing operations are expected to be seasonal
and the continuation and availability of inventory from present and future
vendors at prices that will permit our company to operate at and improved gross
profit levels; Federal Securities regulations that may effect the ability the
ability for our company to complete its marketing strategy and a favorable
environment in which our company will conduct its consulting activities.
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Thereafter, if cash generated from operations is insufficient to satisfy
our company's working capital and capital expenditure requirements, the Company
may be required to sell additional equity or debt securities or obtain
additional credit facilities. There can be no assurance that such financing, if
required, will be available on satisfactory terms, if at all.
Item 7. Financial Statements.
The financial statements of our company and supplementary data are included
beginning immediately following the signature page to this report. See Item 13
for a list of the financial statements and financial statement schedules
included.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
There have been no changes in, and no disagreements with, our company's
public accountants.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
(a) Executive Officers and Directors
The names, ages, positions and offices held by each of our officers and
directors are shown on the following table.
Age Position
--- --------
Joshua Shainberg 43 President, Director
Bindiya Mooriani Ph.D. 33 Secretary, Treasurer Director
Our board of directors is comprised of only one class of director. Each
director is elected to hold office until the next annual meeting of shareholders
and until his successor has been elected and qualified. Officers are elected
annually by our board of directors and hold office until successors are duly
elected and qualified. Our president, Joshua Shainberg has held office since
February 1997. Bindiya Mooriani has held office since August 21, 2000. She
replaced our former secretary, treasurer and director, Abraham Shainberg who
served our company from February 10, 1994 to August 21, 2000. Mr. Abraham
Shainberg resigned on August 20, 2000 due to time restraints and his full time
commitments to other business ventures. The following is a brief account of the
business experience during the past five years of each director and executive
officer of our company
Joshua Shainberg has been the president of our company since February 1997.
He has served as a director since February 1997. Mr. Shainberg has also been
engaged is real estate development, primarily in Quebec, Canada, and Florida,
and is a director of Global Real Estate Venture Corp. since January 1997. From
1984 to 1996, Mr. Shainberg also was a stock broker.
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Bindiya Mooriani has been the director, secretary and treasurer of our
company since August 20, 2000. This year, Ms. Mooriani was a awarded a Ph.D. in
biomedical sciences from the Fishberg Research Center for Neurobiology, Mount
Sinai School of Medicine, New York University. From 1993 through 1999, Ms.
Mooriani was a graduate researcher at the Mount Sinai School of Medicine in the
doctoral program concentrating on neurobiology. Ms. Mooriani received her M.A.
in biopyschology in 1993 from Rockefeller University/ City University of New
York, Hunter College and her B.A. in psychology and experimental research from
the University of Bombay, Bombay, India.
At December 31, 2000, Abraham Shainberg served as director, secretary and
treasurer of our company and a director since inception. Mr. Shainberg's tenure
spanned from February 10, 1994 to August 20, 2000. Mr. Shainberg has been
involved as a consultant and entertainment lawyer specializing in motion
pictures. He was previously a principal in the Art Gallery of Neuman/Shainberg
Galleries. Mr. Shainberg was involved in public relations and vice president of
marketing for Alperin and Kovant Ad Agency, from August, 1992 to July, 1993,
served as executive director of The Diamond Dealers Club from June, 1978 to
June, 1992. Mr. Shainberg holds a Juris Doctor Degree from Saint John's
University, New York, 1978.
(b) Significant Employees.
The participation of Joshua Shainberg in our company is significant to our
success. Our company presently does not have an employment agreement with Mr.
Shainberg.
(c) Family relationships.
Joshua Shainberg and former officer and director, Abraham Shainberg, are
brothers.
(d) Involvement in certain legal proceedings
In December 1998, Joshua Shainberg submitted an Offer of Settlement to the
National Association of Securities Dealers pursuant to which he was censured and
barred from association with an NASD member. On November 10, 1999, Joshua
Shainberg became a co-defendant in an action by the Securities and Exchange
Commission in the United States District Court for the Eastern District of New
York alleging violations of sections 10(b) and 17(a) of the Securities Act.
(e) Compliance with Section 16(a) of the Exchange Act.
To our company's knowledge, no officers, directors, beneficial owners of
more than ten percent of any class of our company's equity securities registered
pursuant to Section 12 of the Exchange Act or any other person subject to
Section 16 of the Exchange Act with respect to our company, failed to file on a
timely basis reports required by Section 16(a) of the Exchange Act during the
most recent fiscal year, which ended December 31, 1999.
Item 10. Executive Compensation.
The following table sets forth the compensation paid during the fiscal year
ended December 31, 1999, to our company's Chief Executive Officer and each of
our company's officers and directors. No person received compensation equal to
or exceeding $100,000 in fiscal 1999 and no bonuses were awarded during fiscal
1999.
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During the past three years the only sale of securities by our company was the
sale in 1997 to our company's President, Joshua Shainberg, pursuant to Section
4(2) of the Securities Act of 1933, as amended, of 6,000,000 shares of our
company's common stock in exchange for an offset of $120,000 in monies due Mr.
Shainberg and $60,000 in consulting fees due Mr. Shainberg. $180,000. The debt
arose from monies due to Mr. Shainberg for consulting services.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Anual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
===============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
-------- ---- ------ ----- ------------ ---------- ------------- ------- -------------
Joshua 1999 -0- -0- -0- -0- -0- -0- -0-
Shainberg*#
President and
Director 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
Abraham 1999 -0- -0- -0- -0- -0- -0- -0-
Shainberg#
Secretary,
Treasurer and 1998 -0- -0- -0- -0- -0- -0- -0-
Director
1997 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
* In 1997, our company issued 6,000,000 shares of our common stock to our
president, Joshua Shainberg, pursuant to Section 4(2) of the Securities Act
of 1933, in exchange for an offset of $120,000 in monies due Mr. Shainberg
and $60,000 in consulting fees due Mr. Shainberg.
# No Board of Directors' fees have been paid.
12
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Shares Beneficially Owned
-------------------------
Percentage
Directors and Executive Officers Shares Held(1) Owned (2)
-------------------------------- -------------- -----------
Joshua Shainberg (3)
122 East 42nd Street
New York, NY 6,000,000 78.1%
Bindiya Mooriani Ph.D. 0 0.0%
Secretary/Treasurer
Director
122 East 42nd Street
New York, NY
As a group 7,500,000 78.1%
(2 persons)
--------------------------
(1) All shares held are of our common stock.
(2) Percentage of ownership is based on 7,686,025 shares of our common stock
issued and outstanding as of December 31, 1999.
(3) At December 31, 1999, Mr. Abraham Shainberg was a director, secretary and
treasurer of our company. He resigned on August 21, 2000. He holds
1,500,000 shares of our common stock. Note that this includes 300,000
shares which had been transferred to Furio Maglione but are now being held
by our transfer agent pursuant to a court order pending final resolution.
Without the Maglione shares, Mr. Shainberg's interest in our company would
be 15.6% (1,200,000). With the Maglione shares, Mr. Shainberg's interest in
our company would be 19.5% See Item 2 of Part II, Legal Proceedings
Item 12. Certain Relationships and Related Transactions.
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which our
company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any director or executive officer, or any
security holder who is known to our company to own of record or beneficially
more than five percent of our company's Common Stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
13
<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Thomas P. Monahan, Independent Certified Public Accountant
Balance Sheet as of December 31, 1999
Statement of Operations for the years ended December 31, 1999, and 1998
Statement of Cash Flows for the years ended December 31, 1999 and 1998
Statement of Stockholders' Equity for the years ended December 31, 1999 and
1998
Notes to Financial Statements
2. Exhibits
(a) The following exhibits are included as part of this report:
EXHIBIT
NUMBER DESCRIPTION LOCATION
------- ---------------------------------------------------------
(3) Articles of Incorporation and Bylaws:
3(i) Articles of Incorporation*
3(ii) Bylaws*
(8) Consents - Experts:
(8(i) Consent of Thomas P. Monahan Filed electronically herewith
27 Financial Data Schedule
* Incorporated by reference to the registration statement on Form 10-SB
filed March 6, 2000.
14
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(201) 790-8775
Fax (201) 790-8845
To The Board of Directors and Shareholders of ICT Technologies, Inc.:
I have audited the accompanying balance sheet of ICT Technologies, Inc. as
of December 31, 1999 and the related statements of operations, cash flows and
shareholders' equity for the years ending December 31, 1998 and 1999. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ICT Technologies, Inc. as of
December 31, 1999 and the results of its operations, shareholders equity and
cash flows for the years ending December 31, 1998 and 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that ICT
Technologies, Inc. (a development stage company) will continue as a going
concern. As more fully described in Note 2, the Company has incurred operating
losses since the date of reorganization and requires additional capital to
continue operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans as to these
matters are described in Note 2. The financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the possible inability of ICT Technologies, Inc. to continue as
a going concern.
/s/Thomas Monahan
-----------------------
Thomas P. Monahan, CPA
June 30, 2000
Paterson, New Jersey
15
<PAGE>
ICT TECHNOLOGIES, INC.
BALANCE SHEET
DECEMBER 31, 1999
December 31,
1999
------------
Assets
Current assets
Cash $ 5,988
---------
Total current assets 5,988
Other assets
Equity investment 150,000
---------
Total other assets 150,000
---------
Total assets $155,988
=========
Liabilities and Stockholders' Equity
Current liabilities
Accrued expenses $12,000
Officer loan payable 59,525
---------
Total current liabilities 71,525
Stockholders' equity
Common Stock authorized 10,000,000 shares,
$0.001 par value each. 7,686
Additional paid in capital 1,168,110
Deficit accumulated during the development stage (1,091,333)
---------
Total stockholders' equity 84,463
Total liabilities and stockholders' equity $155,988
===========
See accompanying notes to financial statements.
16
<PAGE>
ICT TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
For the For the
year ended year ended
December 31, December 31,
1998 1999
----------- -------------
Revenue $-0- $-0-
Costs of goods sold -0- -0-
Gross profit -0- -0-
Operations:
General and administrative 6,203 49,162
Depreciation and amortization -0- -0-
--------- ----------
Total expense 6,203 49,162
Loss from operations (6,203) (49,162)
--------- ----------
Net income (loss) $(6,203) $(49,162)
======== ==========
Net income (loss) per share -basic $(0.00) $(0.01)
Number of shares outstanding-basic 7,686,025 7,686,025
See accompanying notes to financial statements.
17
<PAGE>
ICT TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
For the For the
year ended year ended
December 31, December 31,
1998 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(6,203) $(49,162)
Adjustments to reconcile net loss to
cash used in operating activities
Shares issued for accrued salaries
Depreciation -0- -0-
Accounts payable and accrued expenses 6,000 6,000
---------- ----------
TOTAL CASH FLOWS FROM OPERATIONS (203) (43,162)
CASH FLOWS FROM FINANCING ACTIVITIES
Officer loan payable 792 48,805
---------- ----------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 792 48,805
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES -0- -0-
NET INCREASE (DECREASE) IN CASH (72) 5,643
CASH BALANCE BEGINNING OF PERIOD 417 345
CASH BALANCE END OF PERIOD $345 $5,988
========= ==========
See accompanying notes to financial statements.
18
<PAGE>
ICT TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Deficit
Common Common Additional Accumulated
Common Stock Paid in During
Date Capital Developent Stage Total
---- ------ -------- ---------- ---------------- -------
<S> <C> <C> <C> <C> <C>
Opening balances January 1, 1997 1,686,025 $1,686 $994,110 $(915,174) $ 80,622
Issuance of shares in 6,000,000 6,000 174,000 180,000
Net loss (120,798) (120,798)
Balances December 31, 1997 7,686,025 7,686 1,168,110 (1,035,972) 139,824
Net loss (6,203) (6,203)
Balances December 31, 1998 7,686,025 7,686 1,168,110 (1,042,175) 133,621
Net loss (49,162) (49,162)
Balances December 31, 1999 7,686,025 7,686 $1,168,110 (1,091,333) $ 84,459
========= ===== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
19
<PAGE>
ICT TECHNOLOGIES, INC.
FOOTNOTES TO FINANCIAL STATEMENTS
Note 1 - Organization of Company and Issuance of Common Stock
a. Creation of the Company
ICT Technologies, Inc., (the "Company") was formed under the laws of
Delaware on May 27, 1999 and is authorized to issue 10,000,000 shares of common
stock, $0.001 par value each.
b. Description of the Company
The Company was formed to reorganize the business affairs and the domicile
of ICT Technologies, Inc., a corporation formed under the laws of New York on
February 8, 1994, ("ICT NY"). The Company has an equity ownership in the Frank
Lettau Galleries, Inc., New York, New York and desires to expand the
relationship and buy and sell investment grade art and antiques for its own
account.
c. Issuance of Shares of Common Stock
In 1997, the Company sold 6,000,000 shares of common stock for $0.03 per
share to Joshua Shainberg in Consideration for an offset of $120,000 in monies
due Mr. Shainberg and $60,000 in consulting fees due Mr. Shainberg.
Note 2 - Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred net losses of
$1,091,333 for the period from inception of ICT NY February 8, 1994, to December
31, 1999. These factors indicate that the Company's continuation as a going
concern is dependent upon its ability to obtain adequate financing. To date the
Company's day to day expenses are being paid by the officers of the
Company. The Company is seeking to develop business activities relating to
the buying and selling of art and antiques. The Company has an equity interest
in an art and antique dealer in New York City and is seeking to expand its
business activities. The Company will require substantial additional funds to
finance its business activities on an ongoing basis and will have a continuing
long-term need to obtain additional financing. The Company's future capital
requirements will depend on numerous factors including, but not limited to,
continued progress developing its source of inventory of art and antiques and
initiating marketing penetration. The Company plans to engage in such ongoing
financing efforts on a continuing basis.
The financial statements presented consist of the balance sheet of the
Company as at December 31, 1999 and the related statements of operations and
cash flows for the years ending December 31, 1998 and 1999.
b. Cash and cash equivalents
The Company treats cash equivalents which includes temporary investments
with a maturity of less than three months as cash.
20
<PAGE>
c. Revenue recognition
Revenue is recognized when products are shipped or services are
rendered.
d. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
e. Significant Concentration of Credit Risk
At December 31, 1999, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0- which represents the excess of the deposit
liabilities reported by the banks over the amounts that would have been covered
by the federal insurance.
f. Recent Accounting Standards
Accounting for Derivative Instruments and Hedging Activities Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133) was issued in June 1998. It is effective for
all fiscal years beginning after June 15, 1999. The new standard requires
companies to record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the derivatives
and whether they qualify for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. The Company does not
currently engage in derivative trading or hedging activity. The Company will
adopt SFAS 133 in the fiscal year ending December 31, 2000, although no impact
on operating results or financial position is expected.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use.
In March of 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". SOP 98-1 requires
computer software costs associated with internal use software to be charged to
operations as incurred until certain capitalization criteria are met. SOP 98-1
is effective beginning January 1, 1999. The Company is currently assessing the
impact that adoption of this statement will have on consolidated financial
position and results of operations.
Note 3 - Reorganization of the Company
On June 30, 1999, the Company exchanged on a one for one basis shares of
its common stock for all the issued and outstanding shares of common stock of
ICT NY. The transaction has been accounted for as a transfer and is accounted
for as if a pooling of interests had occurred using historic costs with the
recording of the net assets acquired at their historical book value with
restatement of periods prior to the reorganization on a combined basis.
21
<PAGE>
Note 4 - Equity Investment
In 1995, the Company advanced Frank Lettau Galleries ("Gallery") of New
York, New York $300,000. As of December 31, 1995, the Company used this amount
as the purchase price of a 15% equity interest in the Gallery. In 1996, the
Company received a return of $150,000 by Frank Lettau and reduced the value of
its equity interest to $150,000 while still maintaining its 15% equity interest.
Note 5 - Related Party transactions
a. Issuance of Shares of Common Stock
In 1997, the Company sold 6,000,000 shares of common stock for $0.03 per
share to Joshua Shainberg in Consideration for an offset of $120,000 in monies
due Mr. Shainberg and $60,000 in consulting fees due Mr. Shainberg.
b. Office Location
The Company occupies office space at the office of the President located at
122 East 42nd Street, 17th Floor, New York, New York 10168 for a monthly rental
of $250.
c. Corporate Relationships
Joshua Shainberg, President of the Company and Abraham Shainberg, Secretary
Treasurer of the Company are brothers.
Note 6 - Commitments and Contingencies
At December 31, 1999, the Company has not entered into any contracts or
commitments.
Note 7 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 1999, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carryforward and was fully offset by a
valuation allowance.
At December 31, 1999, the Company has net operating loss carry forwards for
income tax purposes of $1,091,333. This carryforward is available to offset
future taxable income, if any, and expires in the year 2010. The Company's
utilization of this carryforward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
22
<PAGE>
The components of the net deferred tax asset as of December 31, 1999 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 371,053
Valuation allowance $(371,053)
-----------
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated in the
period from inception, February 8, 1994, to December 31, 1999. SFAS No. 109
requires that a valuation allowance be provided if it is more likely than not
that some portion or all of a deferred tax asset will not be realized. The
Company's ability to realize benefit of its deferred tax asset will depend on
the generation of future taxable income. Because the Company has yet to
recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.
Note 8 - Business and Credit Concentrations
The amount reported in the financial statements for cash approximates fair
market value. Because the difference between cost and the lower of cost or
market is immaterial, no adjustment has been recognized and investments are
recorded at cost. Financial instruments that potentially subject the company to
credit risk consist principally of trade receivables. Collateral is generally
not required.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
ICT TECHNOLOGIES, INC.
Date: September 19, 2000
By: /s/Joshua Shainberg
--------------------
Joshua Shainberg,
President and Director
Date: September 19, 2000
By: Bindiya Mooriani
------------------
Bindiya Mooriani Ph.D.,
Secretary, Treasurer and Director
24
<PAGE>
