<PAGE>
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
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For the quarter ended September 30, 1999
Commission File Number 0-4519
INTER-CONTINENTAL SERVICES CORPORATION
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(Exact Name of registrant as specified in its charter)
Missouri 44-0628974
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
Incorruption or organization)
4101 Westerly Place, Suite 108 Newport Beach, CA, 92660
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(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 629-4120
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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
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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
- -------------------------- --------------------------------
Common Stock, No par Value 1,896,572
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INTER-CONTINENTAL SERVICES CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1
Balance Sheets - September 30, 1999 and December 31, 1998 1
Condensed Statements of Income (Loss) -
Three Months Ended September 30, 1999 and 1998 and
Nine Months Ended September 30,1999 and 1998 2
Statement of Cash Flows -
Nine Months Ended September 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>
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INTER-CONTINENTAL SERVICES CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
September 30, 1999 December 31, 1998
<S> <C> <C>
CURRENT ASSETS:
Cash $ 17,889 $ 16,777
Accounts Receivable, less allowance
for doubtful accounts of $2,300 12,482 34,262
----------- -----------
Total current assets $ 30,371 $ 51,039
PROPERTY, PLANT AND EQUIPMENT (Note 3) $ 0 $ 0
OTHER ASSETS (Note 4) $ 107,205 $ 107,205
----------- -----------
TOTAL ASSETS $ 137,576 $ 158,244
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 66,763 $ 60,459
Deposits for Unissued Stock (Note 5) 30,125 30,125
Accrued Expenses (Note 6) 357,200 193,400
Interest Payable (Note 7) 91,478 62.948
Notes Payable (Note 8) 903,969 864,761
----------- -----------
Total Current Liabilities $ 1,449,535 $ 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) (3,001,438) (2,742,928)
----------- -----------
Total Stockholders Equity $(1,311,959) $(1,053,449)
$ 137,576 $ 158,244
</TABLE>
See notes to financial statements.
1
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INTER-CONTINENTAL SERVICES CORPORATION
Condensed Statements of Income (Loss)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Revenue $ 10,907 $ 25,661 $ 81,257 $ 116,925
Cost of Goods Sold 0 0 36,339 2,188
Operating Expenses 80,446 115,678 274,898 352,718
----------- ----------- ----------- -----------
Income (Loss) from
Operations $ (69,539) $ (90,017) $ (229,980) $ (237,982)
Other Deductions:
Interest Expense (10,184) (10,542) (28,530) (29,018)
----------- ----------- ----------- -----------
NET INCOME (Loss) $ (79,723) $ (100,559) $ (258,510) $ (267,000)
Income (Loss) Per Share of Common Stock:
Net Income (Loss) $ (0.04) $ (0.05) $ (0.14) $ (0.14)
Average Shares Outstanding 1,896,572 1,896,572 1,896,572 1,896,572
Net Income (Loss):
fully diluted $ (0.03) $ (0.04) $ (0.09) $ (0.09)
Shares Outstanding
with Full Dilution 2,815,972 2,815,972 2,815,972 2,815,972
</TABLE>
See notes to financial statements.
2
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INTER-CONTINENTAL SERVICES CORPORATION
Statements of Cash Flows
Three Months and Nine Months Ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
------------ -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) $ (79,723) $(258,510)
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 10,420 21,780
Increases in Accounts Payable (319) 6304
Increases in Accrued Expenses 54,600 163,800
--------- ---------
Total Adjustments $ 64,701 $ 191,884
Net Cash Provided by (used in)
Operating Activities: $ (15,022) $ (66,626)
Cash Flows from Investing Activities:
Net Cash Issued in Investing Activities $ 0 $ 0
Cash Flows from Financing Activities:
Increase (decrease) of Notes Payable $ 2,559 $ 39,208
Increase (decrease) of Interest Payable 10,184 28,530
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Net cash provided by financing activities $ 12,743 $ 67,738
Cash and Cash Equivalents at Beginning of Period $ 20,167 $ 16,777
Cash and Cash Equivalent at the End of Period $ 17,889 $ 17,889
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 September 30, 1999, the Company reported a
loss of $79,723. As a result of this loss, the Company has an
accumulated deficit of $3,001,438 on September 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>
September 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 September 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, $434,200 as
of June 30, 1999, and $488,800 as of September 30, 1999.
Note 7 Interest Payable
The accrued interest payable as of December 31, 1998 and September 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
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Note 8 Notes Payable
<TABLE>
<CAPTION>
September 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 377,269 338,061
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interest due @ 8% per year
Total $903,969 $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 - nine months 1999 (258,510)
As of September 30, 1999 $ 3,001,438
</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 nine 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 September 30,1999 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, 1999 is $1,419,164. 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 $1,028,651, and $661,265 in 1997.
The current deficit of $3,001,438 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 September 30, 1998 was $2,631,925. The Company
continues to seek a capital infusion and is actively pursuing a merger with
Meyer Group Limited, a private telecommunications company. Terms for the merger
have been approved by the Board of Directors of both companies and audits are
currently in process to verify the assets involved.
RESULTS OF OPERATIONS
Operating Revenue - Operating revenues for the first nine months of
1999 were $81,257. This was a 30% 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
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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: January 14, 2000
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By: /s/ Barry J. Weidenhammer
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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> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 17,889
<SECURITIES> 0
<RECEIVABLES> 14,782
<ALLOWANCES> 2,300
<INVENTORY> 0
<CURRENT-ASSETS> 30,371
<PP&E> 23,212
<DEPRECIATION> 23,212
<TOTAL-ASSETS> 137,576
<CURRENT-LIABILITIES> 1,449,535
<BONDS> 0
0
0
<COMMON> 1,787,817
<OTHER-SE> (3,099,776)
<TOTAL-LIABILITY-AND-EQUITY> 137,576
<SALES> 10,907
<TOTAL-REVENUES> 10,907
<CGS> 0
<TOTAL-COSTS> 80,446
<OTHER-EXPENSES> 10,184
<LOSS-PROVISION> 2,300
<INTEREST-EXPENSE> 10,184
<INCOME-PRETAX> (79,723)
<INCOME-TAX> 0
<INCOME-CONTINUING> (79,723)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,723)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
