<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, 1999
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.)
Incorruption or organization)
4101 Westerly Place, Suite 108, Newport Beach, Ca, 92660
- ----------------------------------------------------------------------
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949 629-4120
--------------------------
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 No X
--- ---
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the close of the last practical date.
Class Outstanding at December 31, 1998
- -------------------------- 1,896,572
Common Stock, No par Value
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1
Balance Sheets - June 30, 1999 and December 31, 1998 1
Condensed Statements of Income (Loss) -
Three Months Ended June 30, 1999 and 1998 and
Six Months Ended June 30,1999 and 1998 2
Statement of Cash Flows -
Six Months Ended June 30, 1999 and 1998 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
</TABLE>
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
<S> <C> <C>
CURRENT ASSETS:
Cash $ 20,167 $ 16,777
Accounts Receivable, less allowance
for doubtful accounts of $2,300 22,902 34,262
------ -------
Total current assets $ 43,069 $ 51,039
PROPERTY, PLANT AND EQUIPMENT (Note 3) $ 0 $ 0
OTHER ASSETS (Note 4) $ 107,205 $ 107,205
- -------- - --------
TOTAL ASSETS $ 150,274 $ 158,244
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 67,082 $ 60,459
Deposits for Unissued Stock (Note 5) 30,125 30,125
Accrued Expenses (Note 6) 302,600 193,400
Interest Payable (Note 7) 81,294 62.948
Notes Payable (Note 8) 901,410 864,761
---------------- ---------------
Total Current Liabilities $ 1,382,511 $ 1,211,693
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 9) (2,921,716) (2,742,928)
---------------- ---------------
Total Stockholders Equity $ (1,232,237) $ (1,053,449)
$ 150,274 $ 158,244
</TABLE>
See notes to financial statements.
1
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
Condensed Statements of Income (Loss)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Revenue $ 19,646 $ 40,580 $ 70,351 $ 91,264
Cost of Goods Sold 647 0 36,339 2,188
Operating Expenses 88,943 128,128 194,454 237,040
--------- ------- -------- -------
Income (Loss) from
Operations $ (69,945) $ (87,548) $ (160,442) $(147,965)
Other Deductions:
Interest Expense (9,603) (9,629) (18,346) (18,476)
--------- ------- -------- -------
NET INCOME (Loss) $ (79,548) $ (97,177) $ (178,788 $(166,441)
Income (Loss) Per Share of Common Stock:
Net Income (Loss) $ (0.04) $ (0.05) $ (0.09) $ (0.09)
Average Shares Outstanding 1,896,572 1,896,572 1,896,572 1,896,572
Net Income (Loss):
fully diluted $ (0.03) $ (0.04) $ (0.06) $ (0.06)
Shares Outstanding
with Full Dilution 2,815,972 2,815,972 2,815,972 2,815,972
</TABLE>
See notes to financial statements.
2
<PAGE>
INTER-CONTINENTAL SERVICES CORPORATION
Statements of Cash Flows
Three Months and Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
------------ ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) $ (79,548) $ (178,788)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization 0 0
Changes in operating assets and liabilities:
Decreases in Receivables 12,865 11,360
Increases in Accounts Payable 2,127 6,623
Increases in Accrued Expenses 54,600 109,200
------ -------
Total Adjustments $ 69,592 $ 127,183
Net Cash Provided by (used in)
Operating Activities: $ (9,956) $ (51,605)
Cash Flows from Investing Activities:
Net Cash Issued in Investing Activities $ 0 $ 0
Cash Flows from Financing Activities:
Increase (decrease) of Notes Payable $ 11,245 $ 36,649
Increase (decrease) of Interest Payable 9,603 18,346
------ -------
Net cash provided by financing activities $ 20,848 $ 54,995
Cash and Cash Equivalents at Beginning of Period $ 9,275 $ 16,777
Cash and Cash Equivalent at the End of Period $ 20,167 $ 20,167
Supplemental disclosures of cash flow information:
Cash Paid Year to Date for Interest 0 0
Cash Paid Year to Date for Income Taxes 0 0
</TABLE>
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
that 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, 1999, the Company reported a loss
of $79,548. As a result of this loss, the Company has an accumulated
deficit of $2,921,716 on June 30, 1999.
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:
<TABLE>
<CAPTION>
June 30, 1999
<S> <C>
Furniture and fixtures $ 23,212
Less: accumulated depreciation 23,212
--------
Total $ 0
</TABLE>
Note 4 Other Assets
In an effort to diversify and reduce dependence on the credit card
industry, the Company made an investment in a privately held
telecommunications company, American Telecommunications Holdings. The
total investment is $70,855 as of June 30, 1999.
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 $4,875 for the issuance of
4000 shares.
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 $379,600 as of March 31, 1999, and
$434,200 as of June 30, 1999.
Note 7 Interest Payable
The accrued interest payable as of December 31, 1998 and June 30, 1999
includes interest due to employees and a former employee based on their
employment agreements with the Company. In addition, the Company has
accrued interest on Notes Payable - Other.
5
<PAGE>
Note 8 Notes Payable
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
<S> <C> <C>
Due to Shareholders $ 42,000 $ 42,000
Convertible Notes Payable 459,700 459,700
convertible @ $.50/share
Note Payable to Bank 25,000 25,000
interest at prime plus 2%
(loan is currently in question)
Notes Payable - Other 374,710 338,061
-------- -----------
interest due @ 8% per year
Total $ 901,410 $ 864,761
</TABLE>
Note 9 Accumulated Deficit
<TABLE>
<S> <C>
As of December 31, 1997 $ 2,364,925
Net Income - 1998 (378,003)
As of December 31, 1998 2,742,928
Net Income -six months 1999 (178,788)
As of June 30, 1999 $ 2,921,716
</TABLE>
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
that have effected the Company's earnings and financial position during the
first six months of 1999 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 30,1999
and the results of operations and cash flows for the six months then ended.
LIQUIDITY AND CAPITAL RESOURCES
The excess of current liabilities over current assets, as of June
30, 1999 is $1,339,442. 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 1998 was $928,091.
The current deficit of $2,921,716 is also significant. It is
however, not substantially greater than 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, 1998 was $2,531,365. The
Company continues to seek a capital infusion and is actively pursuing a
merger with Meyer Group Limited, a private telecommunications company.
RESULTS OF OPERATIONS
Operating Revenue - Operating revenues for the first six months of
1999 were $70,351. This was a 23% reduction from the same period in 1998.
Marketing efforts to attract new customers in the credit card industry have
not been successful and the real opportunity for revenue and profit growth
will likely come from diversification into other businesses.
Operating Expenses - Operating expenses decreased substantially over
the same period in 1998. Most of the reduction is a result of lower costs in
the credit services operation because of reduced volume. Corporate office
expenses were also lower but remain the reason for operating losses.
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: January 14, 2000
---------------------------------
By: /s/ Barry J. Weidenhammer
-----------------------------------
Barry J. Weidenhammer, Vice
President, Chief Financial
Officer
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 20,167
<SECURITIES> 0
<RECEIVABLES> 25,202
<ALLOWANCES> 2,300
<INVENTORY> 0
<CURRENT-ASSETS> 43,069
<PP&E> 23,212
<DEPRECIATION> 23,212
<TOTAL-ASSETS> 150,274
<CURRENT-LIABILITIES> 1,382,511
<BONDS> 0
0
0
<COMMON> 1,787,817
<OTHER-SE> (3,020,054)
<TOTAL-LIABILITY-AND-EQUITY> 150,274
<SALES> 19,646
<TOTAL-REVENUES> 19,646
<CGS> 647
<TOTAL-COSTS> 88,943
<OTHER-EXPENSES> 9,603
<LOSS-PROVISION> 2,300
<INTEREST-EXPENSE> 9,603
<INCOME-PRETAX> (79,548)
<INCOME-TAX> 0
<INCOME-CONTINUING> (79,548)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,548)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
