U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-14279
INTERCONTINENTAL TECHNOLOGIES GROUP, INC., NV
_________________________________________________________________
(Exact name of small business issuer as specified in its
charter)
Nevada 88-0199585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1408 Pawnee Drive, Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
(310) 425-2376
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 5,191,593 as of
September 30, 1996.
This report consists of 10 pages.
Part 1
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
Background The Registrant was originally organized in 1966
for the purpose of seeking to acquire subsidiary businesses. The
discretion of the Registrant in acquiring such other businesses
was very broad.
On May 13, 1985 the Registrant acquired 100% of the
outstanding stock of Continental Connector Corp. (Continental) in
exchange for 2,200,000 shares of the Registrant's common stock.
Continental Co. is a Colorado corporation that was engaged in the
development, manufacture and marketing of a broad line of
multi-contact, precision, rack and panel card edge connectors.
Operations consisted primarily of the manufacture,
processing, and assembly of plated metal contacts, receptacles of
various types designed and molded by Continental from thermal
setting compounds and other products, into precision connectors.
From May 13, 1985 through June 30th of the year ended
December 31, 1993, the Company operated only in this line of
business. However, all manufacturing and marketing operations
related to the connector business ceased, as to Registrant, as of
June 30, 1993.
On May 13, 1993 Registrant completed the sale of certain
machinery and equipment and inventory to PMC, Inc. a private
Delaware corporation having a diverse array of operations in
electronics and other businesses. In December, 1994, Registrant
sold the entirety of its remaining interest in the subsidiary,
Continental, to EFTS, Inc., of Florida. This sale contained a
contingent interest on the part of Registrant, which resulted in
income of $290,000 during February, 1996, when EFTS disposed of
the remainder of the inventory.
On August 15, 1993, Registrant changed its name from
Continental Connector Industries to Intercontinental Technologies
Group, Inc., shortened in normal usage to ITG. On August 23,
1993, Registrant also effected a 1 for 100 reverse stock split,
such that for each 100 shares of Continental Connector Industries
stock previously outstanding, a single share of new ITG stock
would be issued.
Current Operations
ITG Energy, Inc. Energy continued its oil production
business during the second quarter, selling approximately $24,400
of oil. No material changes occurred in its operations.
International Semiconductor Investment
ITG originally owned 1,600,000 shares of the common stock of
International Semiconductor Corp., which is in the business of
producing gallium arsenide diodes for use in the high-tech
electronics industry, and is based in Migdal Haemek, Israel. ISC
is a Nevada corporation, publicly held, and currently trading on
the over-the-counter market. During the month of May, ITG sold
200,000 shares of its holdings in ISC, receiving approximately
$499,000 in gross sales proceeds, which have been booked as a
profit, since these shares are carried on the Company's books at
zero, no valuation being available at their time of original
acquisition.
Skysite
During February and March, 1996, ITG entered into an
investment agreement with Skysite Communications Corporation
("Skysite"), a retail supplier of MSAT-1 satellite telephony
hardware and air time. From September of 1995 through March of
1996, AMSC (the owner/operator of the satellite) and Skysite
performed experimental test sales and airtime usage. Beginning
in April, 1996, Skysite began commercial sales and usage of the
satellite.
The operations of Skysite were described extensively in the
first quarter 10-QSB. Skysite's revenues and expenses have
generally risen from $8,700 during the first quarter to $178,000
during the second quarter. The number of installed phones
increased from 22 in the first quarter to 102 at the end of the
second quarter. Skysite has been unable to bill for airtime
usage during the first and second quarters because coordinating
software has not been available for transfers between AMSC and
Skysite. This problem will be resolved during the third quarter.
Skysite has reduced its losses, on a monthly basis, but was
still unprofitable at the end of the second quarter. The company
estimates monthly losses through Decmeber, 1996, before achieving
breakeven, assuming fulfillment of all backlogged orders and an
average airtime utilization of 200 minutes per installed
telephone.
The Skysite Digital Satellite Telephone System is an
integrated web of mobile satellite services for voice, fax and
data, that spans land mobile, fixed site, aeronautical and
maritime applications. Telephone calls made on the mobile
terminals initiate contact with the outside world through a
GM/Hughes communications satellite which is in a geo- synchronous
orbit 22,000 miles in space, above the equator. The satellite is
downlined into the Public Switched Telephone Network through a
Westinghouse Electric Communications Ground Segment (CGS) earth
station located in Reston, Virginia, and owned by AMSC. The
Skysite Digital Satellite Telephone System covers virtually all
of North and Central America, Hawaii and the Caribbean Basin.
Within the satellite coverage area a subscriber can make or
receive direct dial calls to or from anywhere in the world.
In addition to the dealer/reseller network described
previously (first quarter 10- QSB), Skysite has now added The
Discovery Channel and National Geographics as clients
recommending the Skysite servie through their web sites and
information services.
Skysite is targeting these 6 markets:
1 - Transportation group: Aeronautical, Rail and Trucking
2 - Broadcast media and motion picture industry
3 - Disaster recovery market
4 - Government and public safety market
5 - Petroleum, mining and utilities segment
6 - Rural telephony market
Skysite most recently assisted the States of Virginia and North
Carolina Governors' offices in providing field communications for
recovery after Hurricane Bertha battered the coastal
communities.
ITG increased its investment in Skysite during the second
quarter to 250,000 in cash, accepting a loan of $54,750 from
Cochran Ranch and Tennis Club to complerte the transaction. ITG,
through the Second Quarter, has invested $250,000 in cash and an
additional $250,000 in guarantees in Skysite and has up to a 57%
equity stake depending upon certain performance conditions.
Business Development
Global Technologies, Inc. During April and May of 1996,
ITG acquired a 25% interest in Global Technologies, Inc. ("GTI"),
a company which has as its primary focus the introduction of
American companies and technologies into the recently democratic
and capitalistic country of Romania. ITG originally paid $60,000
in cash and $90,000 in its capital stock for a 15% acquisition of
GTI common stock. ITG then exercised an option under the
original agreement to cancel the original indebtedness of GTI to
ITG by having its majority shareholder transfer an additional 10%
of his stock to ITG.
GTI has signed commission agreements with Massey Fergusen, a
subsidiary of AGCO, USA in Atlanta, for the sale of farm
equipment to Romanian customers, and with Penske Equipment
Leasing, for sale of trucks and specialized road equipment. GTI
has representation agreements, for worldwide sales rights, with
several Romanian wineries and with Romanian interests seeking to
build grain elevators in-country. At this time, GTI has no
income.
GTI operates out of office space provided by and leased from
ITG at 2950 31st Street, in Santa Monica, California, and
currently employs 2 full-time and 2 part-time employees in the
United States. GTI has several agents functioning on a
commission only basis in Romania, but no full-time employees are
located in Romania.
As of the end of the second quarter, GTI had no income and
no short-term prospects for income. A sale of agricultural
equipment by Massey-Fergusson, to occur in late 1996 or early
1997, is currently scheduled by the province of Galati in
Romania, and would entitle GTI to a commission of 3% of the gross
sales price of $15,000,000 ($450,000 if the sale occurs).
Capital Resources and Liquidity of ITG
Operating Loans During the first and second quarters, ITG
repaid $11,225 on its loans secured by the Gita Temple Ashram
Mortgage, with the balance at June 30 reduced to $202,579 on the
"first" and remaining at $62,500 on the "second". ITG had
sufficient cash resources resulting from the sale of ISC stock to
satisfy all creditors and commitments coming current during the
second quarter.
Employee Stock Transactions Based upon his dedication and
contribution to the operations of the Company, Michael Savage, a
director and vice-president, was issued the right to acquire
100,000 shares of the Company's common stock, at any time during
the ensuing 4 years, at an exercise price of $1.00 per share.
There are no other stock compensation or option plans in
existence at this time. The primary officers of the company
continued to defer their monthly salaries pending sustained
profitability of the Company.
Manufacturing The company has no manufacturing operations, and
has had none since the sale of the Continental Connector
subsidiary's operations during the summer of 1993.
Selling and Marketing Skysite continued its marketing plan and
increased its number of installed telephones. GTI, the Romanian
liaison company, has no formal marketing plan in existence. ITG
continued to operate the Ft. Lauderdale leasehold of Aero
Industries, with the existing long-term tenant in place.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports of Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: December 3, 1996 INTERCONTINENTAL TECHNOLOGIES
GROUP, INC.
(Registrant)
By: /s/ Robert M. Terry
Robert M. Terry, President
By: /s/ Robert M. Terry
Robert M. Terry, Treasurer
Intercontinental Technologies Group, Inc.
Unaudited Balance Sheet
June 30, 1996
ASSETS
Current assets:
Cash $ 345,887
Notes receivable - current portion 28,002
Accounts receivable, other 5,266
----------
Total current assets 379,155
Property and equipment, at cost, less
accumulated depreciation of $98,913 185,338
Notes receivable - non-current 606,091
Advances to stockholder 182,983
Advances to unconsolidated subsidiaries 190,968
Deposits 51,000
----------
1,595,535
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 202,579
Accounts payable and accrued expenses 20,694
Advances from stockholder 127,900
---------
Total current liabilities 351,173
Notes payable - non-current 132,250
Stockholders' equity:
Common stock $.001 par value,
750,000,000 shares authorized,
5,151,593 shares issued and
outstanding 5,152
Additional paid-in capital 3,921,720
Accumulated deficit ( 2,814,760)
---------
1,112,112
---------
1,595,535
=========
See accompanying notes to financial statements.
<PAGE>
Intercontinental Technologies Group, Inc.
Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
------------ ------------
Net cash provided by (used in)
operating activities $ (260,712) $ (271,514)
Cash flows from investing activities
Collection of notes receivable 312,264 0
Advances to unconsolidated
subsidiaries (259,780)
Sale of investment securities 499,668
Purchase of Equipment ( 3,285)
------------ ------------
Net cash provided by (used in)
financing activities 548,867 0
Cash flows from financing activities:
Proceeds from notes payable 12,500 185,000
Repayment of notes payable (21,959)
Increase in stockholder loans 57,562 135,314
------------ ------------
Net cash provided by (used in)
financing activities 48,103 320,314
------------ ------------
Increase (decrease) in cash 336,258 48,800
Cash and cash equivalents,
beginning of period 9,629 11,648
------------ ------------
Cash and cash equivalents,
end of period $ 345,887 $ 60,448
============ ============
See accompanying notes to financial statements.
<PAGE> Intercontinental Technologies Group, Inc.
Statements of Operations
For the Three months and Six Months Ended June 30, 1996
and 1995
<TABLE>
<S> <C> <C> <C> <C>
Six Months Six Months Three Mo. Three
Mo.
Ended Ended Ended Ended
June 30, June 30, June 30, June
30,
1996 1995 1996 1995
------------ ------------ ---------
- ---------
Sales $ 83,085 $ 86,894 43,945
44,902
Cost of sales 16,413 26,174 7,799
9,093
------------ ------------ ---------
- ---------
Gross profit (loss) 66,672 60,720 36,146
35,809
Other costs and expenses:
General and administrative 295,853 320,758 196,073
150,475
------------ ------------ ---------
- ---------
Income (loss) from operations (229,181) (260,038) (159,927)
(114,666)
------------ ------------ ---------
- ---------
Other income and (expense):
Gain from sale of investments 499,668 0 499,668
0
Interest income 21,201 28,500 10,360
14,250
Interest expense (26,658) 0 ( 14,029)
0
Equity in losses of
unconsolidated subsidiaries (124,312) 0 (123,562)
0
------------ ------------ ---------
- --------
369,899 28,500 372,447
14,250
------------ ------------ ---------
- --------
Income (loss) before income taxes 140,718 (231,538) 212,520
(100,416)
Provision for income taxes 0 0 0
0
------------ ------------ ---------
- --------
Net income (loss) 140,718 (231,538) 212,520
(100,416)
============ ============
========= ========
Earnings (loss) per share:
Net income (loss) $ 0.03 $ (0.06) 0.04
(0.03)
============ ============
========= ========
Weighted average shares outstanding 5,051,593 3,931,593 5,051,593
3,931,593
============ ============
========= ========
</TABLE>
<PAGE> Intercontinental Technologies Group, Inc.
Notes to Consolidated Financial Statements
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's form 10-KSB filed for the year
ended December 31, 1995.
Income (loss) per share was computed using the weighted average
number of common shares outstanding.
During the six months ended June 30, 1996, the Company issued
100,000 shares of its restricted common stock to an unrelated
party in exchange for services rendered to the Company valued at
$10,000.
During the six month period, the Company issued an additional
$12,500 of secured notes for cash. The notes are secured by the
Company's long-term note receivable. Additionally, the Company
received cash advances from an unconsolidated subsidiary of
$107,500 and made cash advances to its parent of $49,938.
The Company sold 200,000 shares of International Semiconductor
Corp. (ISC) for net proceeds of $499,668. The Company's
investment in ISC fell to less than 20% of the outstanding common
stock of ISC, however, the investment continues to be accounted
for using the equity method of accounting since the Company's
officers, directors and shareholders exert a significant degree
of control over the management of ISC.
The Company made cash investments of an aggregate of $259,780 to
unconsolidated equity method subsidiaries during the six month
period. The Company recorded an aggregate of $124,312 as its
share of the operating losses of these subsidiaries for the
corresponding period.
The Company collected $286,000 due from the sale of the assets of
its former subsidiary, Continental Connector Corp. during the
period.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 345,887
<SECURITIES> 0
<RECEIVABLES> 33,268
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 379,155
<PP&E> 284,251
<DEPRECIATION> 98,913
<TOTAL-ASSETS> 1,595,535
<CURRENT-LIABILITIES> 351,173
<BONDS> 202,579
<COMMON> 5152
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,595,535
<SALES> 83,085
<TOTAL-REVENUES> 83,085
<CGS> 16,413
<TOTAL-COSTS> 16,413
<OTHER-EXPENSES> 295,853
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5457
<INCOME-PRETAX> 140,718
<INCOME-TAX> 0
<INCOME-CONTINUING> 140,718
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 140,718
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
