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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
_______________________________________
For the quarter ended June 30, 1996
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, 1995
Common Stock, No par Value 1,419,491
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INTER-CONTINENTAL SERVICES CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1.
Independent Accountant's Report 1
Balance Sheets June 30, 1996, December 31, 1995 2
Condensed Statements of Income (Loss) -
Three Months Ended June 30, 1996 and 1995,
and Six Months Ended June, 1996 and 1995 3
Statements of Accumulated Deficit-
Six Months Ended June 30, 1996 and
the Year Ended December 31, 1995 4
Statement of Cash Flows - Six Months Ended
June 30, 1996 and 1995 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 sheet of
Inter-Continental Services Corp. as of June 30, 1996 and December
31, 1995 and the related condensed statements of income, accumulated
deficit and cash flows for the six months ended June 30, 1996 and
1995 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 no 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,
Certified Public Accountants, P.A.
January 02, 1997
1
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INTER-CONTINENTAL SERVICES CORPORATION
BALANCE SHEETS
(Unaudited)
ASSETS
<CAPTION>
June 30, December 31,
____1996____ ____1995____
<S> <C> <C>
CURRENT ASSETS:
Cash $ 16,689 $ 36,145
Accounts receivable, less allowance
for doubtful accounts of $2,275 _____9,610 ____25,045
Total current assets 26,299 61,190
PROPERTY, PLANT AND EQUIPMENT _____7,385 _____9,385
$ 33,684 $ 70,575
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 249,459 $ 527,599
Accrued expenses ___189,090 ___190,716
Total current liabilities 438,549 718,315
LONG TERM DEBT ______-___ ______-___
Total liabilities ___438,549 ___718,315
STOCKHOLDERS' EQUITY:
Common Stock, no par, authorized 3,000,000
shares, issued 1,960,462 shares 1,700,057 1,389,417
Contributed capital in excess of par 63,400 63,400
Accumulated deficit (2,006,584) (1,938,819)
(243,127) (486,002)
Less cost of 340,971 common shares held
in treasury __(161,738) __(161,738)
Total stockholders' equity __(404,865) __(647,740)
$ 33,684 $ 70,575
========== ==========
See accountant's report and notes to financial statements.
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INTER-CONTINENTAL SERVICES CORPORATION
Condensed Statements of Income (Loss)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenue $ 52,745 $ 121,470 $ 95,930 $ 291,612
Operating Expenses ____76,099 ___124,169 ___166,204 ___288,905
Income (Loss) from
Operations (23,354) (2,699) (70,274) 2,707
Other Deductions:
Interest Income 62 77 268 93
Miscellaneous Income -0- -0- 2,489 297
Interest Expense _______-0- ____(3,081) ______(248) ____(6,616)
NET INCOME (LOSS) $ (23,292) $ (5,703) $ (67,765) $ (3,519)
========== ========== ========== ==========
Income (Loss) Per Share of Common Stock:
Net Income (Loss) $ (0.01) $ NIL $ (0.04) $ NIL
========== ========== ========== ==========
Average Shares Outstanding 1,758,685 1,339,491 1,672,604 1,339,491
========== ========== ========== ==========
See accountant's report and notes to financial statements.
</TABLE>
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INTER-CONTINENTAL SERVICES CORPORATION
Statements of Accumulated Deficit
Six Months Ended June 30, 1996 and Year Ended December 31, 1995
(Unaudited)
Balance at December 31, 1994 $(1,775,074)
Net income (loss) ___(163,745)
Balance at December 31, 1995 (1,938,819)
Net income (loss) ____(67,765)
Balance at June 30, 1996 $(2,006,584)
===========
See accountant's report and notes to financial statements.
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INTER-CONTINENTAL SERVICES CORPORATION
Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $_(67,765) $_(3,519)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,999 1,817
Changes in operating assets and liabilities:
Decrease in receivables 15,630 55,054
Increase in allowance-doubtful accounts (195) -
Decrease in other current liabilities (457) -
Increase in accrued expenses ____2,579 ___2,252
Total adjustments ___19,556 __59,123
Net cash provided by (used in) operating
activities __(48,209) __55,604
Cash flows from investing activities:
Capital expenditures _________ __(8,844)
Net cash used in investing activities _________ __(8,844)
Cash flows from financing activities:
Increase (decrease) of notes payable (278,140) 4,600
Increase (decrease) of accrued interest (3,747) -
Increase of deposits - 12,000
Common Stock __310,640 ____-___
Net cash provided by financing activities ___28,753 __16,600
Net increase (decrease) in cash and cash
equivalents (19,456) 63,360
Cash and cash equivalents at beginning of year ___36,145 __35,286
Cash and cash equivalents at end of period $ 16,689 $ 98,646
========= ========
Supplemental disclosures of cash flow information:
Cash paid during the quarter for interest $ -0- $ 6,615
Cash paid during the quarter for income taxes $ 105 $ -
See accountant's report and notes to financial statements.
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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 1996 and 1995.
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 six months ended June 30, 1996 the Company reported a
loss of $67,765 as compared to a loss for the six months ended
June 30, 1995 of $3,519. As a result, as of June 30, 1996, the
Company had an accumulated deficit of $2,006,584.
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>
June 30, December 31,
____1996_____ ____1995____
<S> <C> <C>
Furniture and fixtures $23,213 $23,213
Less: accumulated depreciation _15,827 _13,827
Total $ 7,386 $ 9,386
======= =======
Note 4. Notes Payable
A summary of notes payable is as follows:
<CAPTION>
June 30, December 31,
____1996_____ ____1995____
<S> <C> <C>
Promissory notes payable to stockholders,
interest at prime plus 2%, payable
quarterly $114,759 $232,883
Promissory notes payable to stockholders,
interest at prime plus 2%, payable
quarterly, renewable quarterly 109,700 249,700
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%, _____-0- __20,016
$249,459 $527,599
======== ========
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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 $795,000 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
2010 _162,000
$795,000
========
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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 $54,921 for 1995. Rent expense for the
six months ended June 30, 1996 was $25,201.
The Company is obligated under operating leases for three
office facilities with monthly payments of approximately $4,300.
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
California location is also on a month to month lease.
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 six months of 1996.
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 June 30, 1996, 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, 1996 is $412,250. The excess of current liabilities over
current assets for the same period in 1995 was $529,580.
While the current deficit of $2,006,584 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 six
months of 1996 reflects a decrease over the comparable period in
1995 of $195,682 or 67%.
Operating Expenses - Expenses for the first six months of 1996
reflect a decrease of $122,701 or 42% from the comparable period in
the prior year.
CAPITAL STOCK TRANSACTIONS
During the first quarter of 1996 the Company issued 200,000 shares
of common stock and in exchange received $69,000 of cash and reduced
notes payable to shareholders by $155,640.
During the second quarter of 1996 the Company issued 166,666 shares
of common stock and in exchange reduced notes payable to shareholders by
$121,000.
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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:____________________
BY: Robert N. Meyer, President
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