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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
_______________________________________
For the quarter ended September 30, 1995
Commission File Number 0-4519
____________________INTER-CONTINENTAL SERVICES CORPORATION___________________
(Exact name of registrant as specified in its charter)
____________Missouri___________ _________44-0628974________
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
5700 Broadmoor, Suite 904__________Mission,_Kansas_____________66202___
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code_____(913) 262-1604__
Indicate by check mark whether the registrant (1) has filed reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or for
such shorter period that the registrant was required to file such
report), and (2) has been subject to such filing requirements for
the past 90 days.
Yes__X__ No_____
Indicate the number of shares outstanding of each of the issuer's
class of common stock, as of the close of the latest practical
date.
__________Class___________ Outstanding at December 31, 1994
Common Stock, No par Value 1,339,491
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INTER-CONTINENTAL SERVICES CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1.
Independent Accountant's Report 1
Balance Sheets September 30, 1995, December 31, 1994 2
Condensed Statements of Income (Loss) -
Three Months Ended September 30, 1995 and 1994,
and Nine Months Ended September 30, 1995 and 1994 3
Statements of Accumulated Deficit-
Nine Months Ended September 30, 1995 and
the Year Ended December 31, 1994 4
Statement of Cash Flows - Nine Months Ended
September 30, 1995 and 1994 5
Notes to Financial Statements 6-8
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - OTHER INFORMATION
Signatures 10
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INDEPENDENT ACCOUNTANT'S REPORT
Board of Directors
Inter-Continental Services Corp.
We have compiled the accompanying balance sheets of
Inter-Continental Services Corp. as of September 30, 1995 and December
31, 1994 and the related condensed statements of income,
accumulated deficit and cash flows for the nine months ended September
30, 1995 and 1994 in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of
financial statements information that is the representation of
management. We have not audited or reviewed the accompanying
financial statements, and, accordingly, do not express an opinion or
any other form of assurance on them.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company has a net working capital and capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Richter & Reda, C.P.A., P.A.
October 24, 1995
1
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INTER-CONTINENTAL SERVICES CORPORATION
BALANCE SHEETS
(Unaudited)
ASSETS
<CAPTION>
September 30, December 31,
____1995____ ____1994____
<S> <C> <C>
CURRENT ASSETS:
Cash $ 73,211 $ 35,286
Accounts receivable, less allowance
for doubtful accounts of $2,470 18,403 81,852
---------- ----------
Total current assets 91,614 117,138
PROPERTY, PLANT AND EQUIPMENT 11,460 5,539
OTHER ASSETS 4,500 4,500
---------- ----------
$ 107,574 $ 127,177
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 487,186 $ 502,886
Accrued expenses 134,194 133,286
---------- ----------
Total current liabilities 621,380 636,172
LONG TERM DEBT - -
---------- ----------
Total liabilities 621,380 636,172
---------- ----------
STOCKHOLDERS' EQUITY:
Common Stock, no par, authorized 3,000,000
shares, issued 1,760,462 shares 1,389,417 1,389,417
Contributed capital in excess of par 63,400 63,400
Accumulated deficit (1,819,885) (1,775,074)
---------- ----------
(367,068) (322,257)
Less cost of 320,971 common shares held
in treasury (146,738) (186,738)
---------- ----------
Total stockholders' equity (513,806) (508,995)
---------- ----------
$ 107,574 $ 127,177
========== ==========
See accountant's report and notes to financial statements.
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2
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INTER-CONTINENTAL SERVICES CORPORATION
Condensed Statements of Income (Loss)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenue $ 44,868 $ 117,310 $ 336,480 $ 301,544
Operating Expenses 84,481 99,378 373,386 307,824
---------- ---------- ---------- ----------
Income (Loss) from
Operations (39,613) 17,932 (36,906) (6,280)
Other Deductions:
Interest Income 258 26 351 245
Miscellaneous Income 383 3 680 110
Interest Expense (2,322) (1,101) (8,937) (2,816)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (41,294) $ 16,860 $ (44,812) $ (8,741)
========== ========== ========== ==========
Income (Loss) Per Share of Common Stock:
Net Income (Loss) $ (0.03) $ 0.02 $ (0.03) $ (0.01)
========== ========== ========== ==========
Average Shares Outstanding 1,339,491 1,047,102 1,339,491 1,047,102
========== ========== ========== ==========
See accountant's report and notes to financial statements.
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3
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INTER-CONTINENTAL SERVICES CORPORATION
Statements of Accumulated Deficit
Nine Months Ended September 30, 1995 and Year Ended December 31, 1994
(Unaudited)
Balance at December 31, 1993 $(1,687,475)
Net income (loss) (87,599)
-----------
Balance at December 31, 1994 (1,775,074)
Net income (loss) (44,812)
Rounding (1)
-----------
Balance at September 30, 1995 $(1,819,885)
===========
See accountant's report and notes to financial statements.
4
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INTER-CONTINENTAL SERVICES CORPORATION
Statements of Cash Flows
Nine Months Ended September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (44,812) $ (8,741)
--------- --------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,923 1,109
Changes in operating assets and liabilities:
(Increase) decrease in receivables 63,449 (46,337)
Decrease in other current assets - 1,798
Increase in accrued expenses 909 1,472
--------- --------
Total adjustments 67,281 (41,958)
--------- --------
Net cash provided by (used in) operating
activities 22,469 (50,699)
--------- --------
Cash flows from investing activities:
Increase in other assets - (4,500)
Capital expenditures (8,844) (3,405)
--------- --------
Net cash used in investing activities (8,844) (7,905)
--------- --------
Cash flows from financing activities:
Increase (decrease) in notes payable (15,700) 10,000
Sale of Treasury Stock 40,000 -
--------- --------
Net cash provided by financing activities 24,300 10,000
--------- --------
Net increase (decrease) in cash and cash
equivalents 37,925 (48,604)
Cash and cash equivalents at beginning of year 35,286 52,073
--------- --------
Cash and cash equivalents at end of year $ 73,211 $ 3,469
========= ========
Supplemental disclosures of cash flow information:
Cash paid during the quarter for interest $ 8,938 $ 2,816
Cash paid during the quarter for income taxes $ - $ -
See accountant's report and notes to financial statements.
5
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INTER-CONTINENTAL SERVICES CORPORATION
Notes to Condensed Financial Statements
Note 1. Summary of Significant Accounting Policies
Business Enterprise - The Company engages primarily in the
service of credit card recovery.
Property, Plant and Equipment - Property, plant and equipment
are stated at cost less accumulated depreciation and are
depreciated using accelerated methods over the estimated useful
lives of the various assets which range from five to twenty-five
years. Additions, major renewals and betterments are capitalized.
Maintenance and repairs are charged to expense as incurred.
Cash Flows - For purposes of the statement of cash flows, the
Company considers all investments with a maturity date of three
months or less to be cash equivalents.
Income Taxes - Investment tax credits are accounted for using
the "flow-through" method.
Income (Loss) Per Common Share - Income (loss) per share is
based on the weighted average number of common shares outstanding
in 1995 and 1994.
Concentrations of Credit Risk - Financial instruments which
potentially expose the Company to concentrations of credit risk
consist primarily of accounts receivable. To limit the amount of
credit risk, the Company has established an allowance for doubtful
accounts based upon factors surrounding the credit risk of certain
clients, historical trends and other information.
Note 2. Continued Existence of the Company
For the nine months ended September 30, 1995 the Company reported a
loss of $44,812 as compared to a loss for the nine months ended September
30, 1994 of $8,741. As a result, as of September 30, 1995, the Company
had an accumulated deficit of $1,819,885.
The ability of the Company to meet its obligations and
continue in existence is dependent on its ability to (1) maintain
profitable operations, or (2) obtain additional sources of
financing or capital and (3) the willingness of creditors to
continue to accept modified payment schedules.
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Note 3. Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
<CAPTION>
September 30, December 31,
____1995_____ ____1994____
<S> <C> <C>
Furniture and fixtures $24,207 $15,363
Less: accumulated depreciation 12,747 9,824
------- -------
Total $11,460 $ 5,539
======= =======
Note 4. Notes Payable
A summary of notes payable is as follows:
<CAPTION>
September 30, December 31,
____1995_____ ____1994____
<S> <C> <C>
Promissory notes payable to stockholders,
interest at prime plus 2%, payable
quarterly $192,470 $188,170
Promissory notes payable to stockholders,
interest at prime plus 2%, payable
quarterly, renewable quarterly 249,700 269,700
Promissory note, payable to bank, interest
at prime plus 2%, backed by the personal
guarantee of two shareholders 25,000 25,000
Promissory note, payable to bank, interest
at prime plus 2%, 20,016 20,016
-------- --------
$487,186 $502,886
======== ========
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Note 5. Income Taxes
The Company has a net operating loss carryforward available to
offset future income tax in the amount of $633,000 on a book and
tax basis. The carryforward of net operating losses are available
as follows:
Net
Year Operating Loss
Expiration Carryforward
---------- --------------
1998 $ 8,000
1999 363,000
2000 6,000
2001 16,000
2003 95,000
2007 59,000
2009 86,000
--------
$633,000
========
7
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Note 6. Commitments and Contingencies
The Company had various operating leases covering office
facilities, real property and personal property. Rent expense
under operating leases was $52,435 for 1994. Rent expense for the
nine months ended September 30, 1995 was $47,704.
The Company is obligated under operating leases for three
office facilities with monthly payments of approximately $3,400.
The Mission, Kansas facility continues to lease on a month to month
basis. The Company has a three year lease, which commenced in
September, 1994, on a two story building in Phoenix, Arizona. The
Company also has moved to a new California location. The new
location is on a month to month lease starting in June, 1995.
Note 7. Interest on Notes Payable
The company has not accrued all interest owed on notes payable
because of the inability of the company to pay the amounts owed at
this time.
8
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Item 2 .
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of
certain significant factors which have affected the Company's
earning and financial position during the first nine months of 1995.
In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the
financial position as of September 30, 1995, and the results of
operations and cash flows for the nine months then ended.
LIQUIDITY AND CAPITAL RESOURCES
The excess of current liabilities over current assets, as of
September 30, 1995 is $519,766. The excess of current liabilities over
current assets for the same period in 1994 was $452,014.
While the current deficit of $1,819,885 is obviously material,
it compares favorably to the deficit of $2,336,758 in effect as of
June 30, 1985. The current deficit continues to be a detriment
though not of the magnitude of previous periods. This is due in
large part to a status quo situation with current vendors as well
as with the major lending bank. Also, the Company continues to
seek a capital infusion with a merger being a priority method.
RESULTS OF OPERATIONS
Operating Revenue - Operating revenues for the first nine
months of 1995 reflects an increase over the comparable period in
1994 of $34,936 or 12% for the third quarter of 1995.
Operating Expenses - Expenses for the first nine months of 1995
reflect an increase of $65,562 or 21% from the comparable period in
the prior year.
9
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INTER-CONTINENTAL SERVICES CORPORATION
PART II - OTHER INFORMATION
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.
Inter-Continental Services
Corporation
DATE: October 31, 1995___
BY: James F. Bell, President
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