<PAGE>
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 June 30, 1997
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 712_____________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, 1996
Common Stock, No par Value 1,896,572
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1
Balance Sheets - June 30, 1997 and December 31, 1996 1
Condensed Statements of Income (Loss) -
Three Months Ended June 30, 1997 and 1996 and
Six Months Ended June 30,1997 and 1996 2
Statement of Cash Flows -
Six Months Ended June 30, 1997 and 1996 3
Notes to Financial Statements 4
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operation 7
PART II - OTHER INFORMATION
Signatures 8
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
BALANCE SHEETS
(Unaudited)
ASSETS
June 30,1997 December 31, 1996
CURRENT ASSETS:
Cash $ 6,329 $ 3,210
Accounts Receivable, less allowance
for doubtful accounts of $2,300 35,591 44,010
Prepaid Expenses 10,600 0
----------- -----------
Total current assets $ 52,520 $ 47,220
PROPERTY, PLANT AND EQUIPMENT (Note 3) $ 3,487 $ 5,485
OTHER ASSETS (Note 4) $ 32,700 $ 0
----------- -----------
$ 88,707 $ 52,705
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 6,249 $ 37,000
Customer Deposits 5,000 0
Deposits for Unissued Stock (Note 5) 30,125 25,250
Accrued Expenses (Note 6) 210,600 2,414
Notes Payable (Note 7) 349,150 176,700
----------- -----------
Total current liabilities $ 601,124 $ 241,364
STOCKHOLDERS' EQUITY:
Common Stock, no par, authorized 3,000,000 $ 1,787,817 $ 1,787,817
Shares, issued 1,896,572 shares
Less cost of 340,971 common shares held (161,738) (161,738)
In treasury
Contributed capital in excess of par 63,400 63,400
Accumulated deficit (Note 8) (2,201,896) (1,878,138)
----------- -----------
Total stockholders equity $ (512,417) $ (188,659)
$ 88,707 $ 52,705
See notes to financial statements.
1
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
Condensed Statements of Income (Loss)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Operating Revenue $ 62,391 $ 52,745 $ 125,021 $ 95,930
Cost of Goods Sold 13,574 0 21,524 0
Operating Expenses 135,956 76,099 427,255 166,204
------- ------ ------- -------
Income (Loss) from
Operations $ (87,139) $ (23,354) $ (323,758) $ (70,274)
Other Deductions:
Interest Income 0 62 0 268
Miscellaneous Income 0 0 0 2,489
Interest Expense 0 0 0 (248)
NET INCOME (Loss) $ (87,139) $ (23,292) $(323,758) $ (67,765)
Income (Loss) Per Share of Common Stock:
Net Income (Loss) $ (0.05) $ (0.01) $ (0.17) $ (0.04)
Average Shares Outstanding 1,896,572 1,758,685 1,896,572 1,672,604
See notes to financial statements.
2
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996
(Unaudited)
1997 1996
Cash Flows from Operating Activities:
Net Income (loss) $(323,758) $ (67,765)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization 1998 1,999
Changes in operating assets and liabilities:
Decrease in Receivables 8,419 15,630
Increase in Allowance for Doubtful Accounts (195)
Increase in Prepaid Expenses (10,600) (457)
Decrease in Accounts Payable (30,751)
Increases in Deposits for Unissued Stock 4,875
Increase in Customer Deposits 5,000
Increases in Accrued Expenses 208,186 2,579
--------- ---------
Total Adjustments $ 187,127 $ 19,556
Net Cash Provided by (used in) Operating Activities $(136,631) $ (48,209)
Cash Flows from Investing Activities:
Net Cash Issued in Investing Activities: $ (32,700) $ 0
Cash Flows from Financing Activities:
Increase (decrease) of Notes Payable $ 172,450 $ 28,753
Net cash provided by financing activities:
Cash and Cash Equivalents at Beginning of Year $ 3,210 $ 36,145
Cash and Cash Equivalent at the End of Period $ 6,329 $ 16,689
Supplemental disclosures of cash flow information:
Cash Paid Year to Date for Interest 0 $ 0
Cash Paid Year to Date for Income Taxes 0 $ 105
See notes to financial statements.
3
<PAGE>
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 and cardholder contact.
Property, Plant, and Equipment - Property, Plant, and Equipment are stated
at cost less accumulated depreciation. They are depreciated using
accelerated methods over the estimated useful lives of the assets which
range from five to twenty-five years. Additions, major renewals, and
betterments are capitalized. Maintenance and repair are charged to expense
as occurred.
Cash Flows - For the 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 common share is based on
the weighted average number of shares outstanding.
Concentrations of Credit Risk - Financial instruments that potentially
expose the Company to concentrations of credit risk, consist primarily of
accounts receivable. To limit this risk, the Company has established an
allowance for doubtful accounts based upon factors surrounding the credit
risk of clients, historical trends, and other information.
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 amounts reported. Actual results
could differ from the estimates, but management does not believe such
differences will materially effect the Company's financial position or cash
flows.
Note 2 Continued Existence of the Company
For the three months ended June 30, 1997, the Company reported a loss of
$87,139. As a result of this loss, the Company has an accumulated deficit
of $2,201,896 on June 30, 1997
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.
4
<PAGE>
Note 3 Property, Plant, and Equipment
Property, plant, and equipment are summarized as follows:
March 31, 1997 June 30, 1997
Furniture and fixtures $ 23,212 $ 23,212
Less: accumulated depreciation 18,726 19,725
------- ------
Total $ 4,486 $ 3,487
Note 4 Other Assets
In an effort to diversify and reduce dependence on the credit card
industry, during this financial period, the Company made an additional
investment of $10,000 in a privately held telecommunications company,
American Telecommunications Holdings. The total investment is $32,700 as of
June 30, 1997
Note 5 Deposits for Unissued Stock
During the fourth quarter of 1996, the Company collected $25,250 from
investors for the issuance of 27,000 shares. During the first quarter of
1997, the Company collected an additional $4,375 for the issuance of 4000
shares. An additional $500 for the issuance of 500 shares was collected
during the second quarter. Non of the shares were issued as of March 31,
1997.
Note 6 Accrued Expenses
Accrued expenses represent payroll obligation incurred but not paid. The
majority of this obligation is to Company officers that are differing
payment until the Company's financial position will support payment. This
obligation was $140,400 as of March 31, 1997 and $210,600 as of June 31,
1997.
Note 7 Notes Payable
June 30, 1997 December 31, 1997
Due to Shareholders $ 42,500 $ 42,000
Convertible Notes Payable 109,700 109,700
convertible @ $.50/share
Note Payable to Bank 25,000 25,000
interest at prime plus 2%
(loan is currently in question)
Notes Payable to Meyer Group Limited 171,950 0
------- ------
interest due @ 1%/ month
Total $ 349,150 $ 176,700
5
<PAGE>
Note 8 Accumulated Deficit
As of December 31, 1995 $ 1,938,819
Net Income - 1996 60,681
As of December 31, 1996 1,878,138
Net Income -six months 1997 (323,758)
As of June 30, 1997 $ 2,201,896
Note 9 Income Taxes
The Company has a net loss carryforward to offset future income tax in the
amount of $795,000. This carryforward are available as follows:
Year of expiration Carryforward
1998 $ 8,000
1999 363,000
2000 6,000
2001 16,000
2003 95,000
2007 59,000
2009 86,000
2010 162,000
-------
$795,000
6
<PAGE>
Item 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following is management's discussion and analysis of significant factors
which have effected the Company's earnings and financial position during the
first six months of 1997. In the opinion of the Company, the accompanying
unaudited, condensed financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of June 30,1997 and the
results of operations and cash flows for the three months then ended.
LIQUIDITY AND CAPITAL RESOURCES
The excess of current liabilities over current assets, as of June 30, 1997
is $548,604. While this is definitely material, most of the liability is due to
shareholders, which have a vested interest in the success of the Company. The
excess of current liabilities over current assets for the same period in 1996
was $412,250, and in 1995 was $529,580
The current deficit of $2,201,896 is also significant. It does however
compare favorably with the $2,336,758 deficit as of June 30, 1985 and
demonstrates the Company's ability to successfully conduct business with such a
deficit. The deficit as of June 30, 1996 was $2,006,584. The Company continues
to seek a capital infusion and is actively searching for beneficial merger or
acquisition opportunities.
RESULTS OF OPERATIONS
Operating Revenue - Operating revenues for the first six months of 1997
were $125,021 and were a 30% improvement over the same period in 1996. Marketing
efforts are underway to attract new customers in the credit card industry but
the real opportunity for revenue growth will likely come from diversification
into other businesses.
Operating Expenses - Operating expenses increased substantially over the
same period in 1996. Although expenses in the credit card operations were
reduced so as to provide a profit from that operation, staff additions at the
corporate level, to work on diversification and financing efforts, added
materially to total operating expenses.
CAPITAL STOCK TRANSACTIONS
No additional stock was issued during this quarter.
7
<PAGE>
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: 14 Aug 1997
------------
By: Robert N. Meyer
-------------------------------
Robert N. Meyer, President
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,329
<SECURITIES> 0
<RECEIVABLES> 35,591
<ALLOWANCES> 2,300
<INVENTORY> 0
<CURRENT-ASSETS> 52,520
<PP&E> 23,212
<DEPRECIATION> 19,725
<TOTAL-ASSETS> 88,707
<CURRENT-LIABILITIES> 601,124
<BONDS> 0
0
0
<COMMON> 1,787,817
<OTHER-SE> (2,300,234)
<TOTAL-LIABILITY-AND-EQUITY> 88,707
<SALES> 62,391
<TOTAL-REVENUES> 62,391
<CGS> 13,574
<TOTAL-COSTS> 13,574
<OTHER-EXPENSES> 135,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 62,391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (87,139)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
