SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1996 0-14279
INTERCONTINENTAL TECHNOLOGIES GROUP, INC., NV
(Exact name of registrant as specified in its charter)
Nevada 88-0199585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 South Carson Street Carson City, Nevada 89701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 882-6629
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the registrant (l) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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
This report consists of 36 pages.
Indicate by check mark if the disclosure of delinquent
filers pursuant to Item 405 of Regulation SB (228.404 of this
chapter) is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy
information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year were
$716,938
The aggregate market value of the Registrant's voting stock
held by non- affiliates of the Registrant as of June 30, 1997 was
zero.
Class Outstanding at June 30, 1997
Common stock, par value $.001
5,191,593 shares
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
ITEM 1 BUSINESS
General Development of Business
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.
Sale of Real Estate
On January 12, 1993 the Registrant entered into a contract
for sale of real estate with Gita Temple Ashram, Inc., (Gita) a
New York not-for-profit corporation. The contract covered one of
two contiguous buildings in Woodside, NY that the Registrant's
subsidiary, Continental, used as its manufacturing and sales
facility. The contract specified a purchase price of $900,000
with $90,000 paid upon signing of the contract and the balance
due at the closing date The closing occurred on July 20, 1993 at
which time the Registrant received net proceeds from the sale
amounting to $782,379. The Registrant had a book basis in the
property of $240,625 at December 31, 1992.
Proceeds from this transaction were used to effect the
acquisition of Aero Industries, Inc., a corporation which had as
its primary business the operation of a leasehold on the Ft.
Lauderdale Airport.
In a separate transaction on March 8, 1994 the Registrant
sold its second building located in Woodside, NY to Gita for
$900,000. At closing the Registrant received $100,403, after
deducting expenses of the sale, and an eight-year promissory note
in the amount of $700,000. The Registrant had a book basis in
the property of $140,365 at December 31, 1993. The resulting
gain was recognized as income for the fiscal year ending December
31, 1994.
The Registrant does not expect that these transactions will
have adverse Federal income tax consequences as it has sufficient
operating loss carryforwards to offset the gain amounts.
The directors of the Registrant have not convened a
shareholders meeting for the approval of these transactions,
however they have secured the consent of the shareholders
representing a majority of the Registrant's Common Stock (See
Item 11.) Such shareholders control more than the simple
majority of shares required to approve such transactions in
accordance with the Registrant's by-laws.
SUBSIDIARIES
Aero Industries, Inc. (Aero)
Aero is a Florida Corporation, originally formed in 1978 to
exploit the introduction of the Brazilian Bandeirante aircraft
into the United States. In conjunction with this project, Aero
acquired a 6+ acre leasehold on the Fort Lauderdale Executive
Airport, which it currently leases to subtenants. This company
was acquired, primarily for the leasehold rights, in exchange for
$700,000 in cash and 800,000 shares of Registrant s restricted
common stock, in July, 1993. The leasehold which formed the
major asset of Aero was sold, in February, 1997, to an unrelated
third-party buyer, in exchange for $1,100,000 in total
consideration: $100,000 down payment and two notes for $500,000
each, both due within 180 days. Total costs incident to the
sale, to include area clean-up, EPA compliance, legal and
accounting fees and similar transaction costs, were $73,550.
ITG Energy, Inc.
ITG Energy, Inc. (Energy) is a California corporation,
formed in 1993, for the purpose of making investments in oil &
gas leases. The company made $300,000 of advances in 1993 for
the acquisition of the Eureka Canyon Oil Lease from Petro
Resources, Inc. The Company assumed functional control of the
property during 1994. The lease contains 30 wells, of which 6
are operational and generate approximately $100,000 per year in
revenues. The remaining 24 wells are dormant, pending further
analysis and rework. The company s goal is to return several more
of the wells to active status and to increase the output of the
operating wells. ITG has posted a $50,000 deposit with the
Department of Oil & Gas (California), and a $10,000 deposit with
the County of Ventura for plugging and abandonment bonds, which
will be recovered upon sale of the wells or actual satisfactory
closure of each of the active wells. During the latter portion
of 1996, the number of operating wells dropped to 4 as deferred
maintenance cut into the viability of operating two of the wells.
During the first and second quarters of 1997, all deferred
maintenance on these 2 wells and on 1 new well was accomplished,
and the output of the field increased by approximately 50%.
Total cost for this effort was less than $25,000.
International Semiconductor Stock Investment
Effective December 31, 1994, ITG entered into an agreement
to acquire 1,600,000 shares of the common stock of International
Semiconductor Corp. (formerly known as Israel Semiconductor
Corp.), ISC, in exchange for 1,000,000 shares of ITG common
stock. The actual shares of ISC stock were received from Lema
Investments, Ltd., the majority shareholder of ISC, and the
entity that received the 1,000,000 shares of ITG common. ISC 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
second quarter, ITG sold 200,000 shares of its holdings in ISC,
receiving approximately $499,000 in gross sales proceeds, which
were booked as a profit, since all ISC shares are carried on
the Company's books at zero, no valuation being available at
their time of original acquisition. During the fourth quarter,
an additional 45,000 shares were transferred to creditors of ITG
in exchange for release of indebtedness formerly secured by the
Gita Ashram note payable to ITG. At the time of the filing of
this report, ISC has been trading in the range of $0.05
to $0.50 per share.
Robert Terry, president of Registrant, is also the acting
president of ISC, a separate company, but receives no
compensation for his services.
East European Imports Transaction
During the fourth quarter of 1994, Registrant entered into
an agreement to invest in East European Imports, Inc. ("EEI"), a
corporation engaged in the importation of vehicles from the
country of Romania into the United States. Registrant, pursuant
to the agreement, advanced capital, and services and related use
of office facilities. Disputes developed between Registrant and
EEI which have led to the filing of a lawsuit for rescission in
the Superior Court of Dade County, Florida. This case is in the
discovery stage with the intent being a return of the investment
and loss of revenues flowing therefrom.
Skysite Communications Corporation
During the first quarter, 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 equipment sales and
usage of the satellite. The operations of Skysite were described
extensively in the first quarter, 1996, 10-QSB. Skysite's
revenues and expenses have generally risen from $8,700 during the
first quarter to approximately $150,000 for the fourth quarter.
The number of installed phones increased from 102 at the end of
the second quarter to 255 at the conclusion of the fourth
quarter. Skysite commenced billing for the accumulated airtime
during the fourth quarter, with over $65,000 in collectible time
accrued. Skysite negotiated and completed a sale of over 40
portable satellite telephones to the Boeing Corporation during
the third quarter, and anticipates subsequent equipment orders
from that company during the ensuing months. During the first
quarter of 1997, Skysite secured an order for a private network
channel and approximately 40 handsets from the government of the
Bahamas, which order will close during the second quarter, 1997.
Skysite had not reached profitability at the end of the
fourth quarter, and additional capital was arranged for company
operations. As a large equity holder in Skysite (47%), ITG
approved the sale of 7.5% of Skysite's common stock on October
17, 1996, for a $50,000 investment, 2.5% of the common for
$20,000 on January 7, 1997, and a final 7.5% for $50,000 on March
15, 1997. At the end of the first quarter, 1997, the
shareholders of Skysite determined that to achieve maximum
potential, additional significant sums were necessary for growth
and sought a large equity investor. This resulted in the sale of
100% of Skysite to VisCorp, a publicly-traded Nevada corporation,
on June 23, 1997. Negotiations were concluded on April 28, 1997,
with transfer of control effected April 30, 1997. ITG is
receiving 341,800 shares of VisCorp restricted common stock for
its interest in Skysite, and a release from the $250,000
guarantee, with collateral posted, which ITG had issued to
American Mobile Satellite Corporation, the airtime provider. ITG
also received 300,000 options to acquire VisCorp stock, with an
exercise price of $0.40, valid for a period of 3 years from the
date of official closing.
ITG maintains one seat on the three-man board of directors
of Skysite until such time as all issues concerning the airtime
guarantee and former employees have been resolved, which is
anticipated to occur during the third quarter, 1997, at which
point the ITG-selected director (Christopher Dieterich) will
resign.
Global Technologies, Inc.
During April and May of 1996, ITG acquired a 25% interest in
Global Technologies, Inc. ("GTI"), a company which had 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.
During the third quarter, ITG increased its participation in
GTI to a total capital holding of 48% of the common stock of GTI,
paying an additional $60,000 in cash, and committing $30,000 in
ITG common stock, evaluated against trading values to occur
during the fourth quarter. ITG issued 40,000 shares of common
stock to Mr. Brocklesby on July 30, 1996.
GTI has signed commission agreements 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.
During the third quarter, GTI entered into an agricultural
and related-industry joint management and development agreement
with Mid-America Trading Services, Inc., based in Kansas City,
Kansas. This entity is headed by Harlan Priddle, former
Secretary of Agriculture and Commerce for Kansas. Mr. Priddle
and the principals of GTI have made several trips to Romania, and
Mr. Priddle has now been appointed as the head of the
Romanian-American Agricultural Development committee, tasked with
the responsibility of bringing American agricultural technologies
and companies to Romania. The agreement with MITS gives them 49%
of the activities, related to agriculture, that result in
Romania.
GTI, in combination with MITS, entered into an agreement to
develop a large-scale grain depot and trans-shipment facility in
the port city of Constanza, Romania, and is currently locating
construction and financing partners for this $50,000,000 project.
During the third quarter, in anticipation of ITG's
developing relations with Sierra Leone's timber industry, GTI
entered into a timber distribution agreement with Guyana.
During the fourth quarter, ITG agreed to subsidize certain
of GTI's administrative overhead, in the amount of $10,000.00, in
exchange for an additional 2% of the company. This was finalized
in the first quarter of 1997. GTI operates out of office space
at 2950 31st Street, in Santa Monica, California. GTI has
several agents functioning on a commission-only basis in Romania,
but no full-time employees are located in Romania. As of
December 31, 1996, GTI owed ITG approximately $3,500 for
provision of office space and support services not included
within the equity exchange.
As of the end of the fourth quarter, GTI had no income and
no short-term prospects for income. GTI has become involved in
the marketing of oil filtration devices and advising investors in
the Republic of the Philippines, but no revenue from those
efforts is anticipated during the first two quarters of 1997.
Business Development
On November 22, 1996, after several months of negotiation,
the government of Sierra Leone granted ITG a 60% partnership
interest in the Sierra Leone Forest Industries Corporation, the
other 40% of the company to remain owned by the national
government. ITG, in concert with the government, will upgrade
and repair the existing sawmill and production facilities
in-country, enhance the logging and crop management yields of
existing timber reserves, improve the nascent furniture industry,
and create export marketing opportunities for the output of these
various aspects of the timber industry.
ITG anticipated the need for approximately $1,000,000 in
investment in the corporate operations of the Sierra Leone Forest
Industries Corporation, to occur in a 6 to 9 month period,
depending upon progress made in the repair and refurbishment of
the existing facilities and the ability of the company to
harvest, mill and sell its products.
These plans were delayed and then tabled indefinitely when a
rebel coup ousted the elected government in June of this year.
Until the actual resolution of the struggle for control of the
government, ITG is unable to move forward.
Other Items
Working Capital The practices of the Registrant with
respect to working capital items related primarily to sufficient
working capital with which to operate its former subsidiary
Continental Co. with respect to the inventory and accounts
receivable of said business, which was sold in 1993. Until such
time as the Registrant s current subsidiaries reach their planned
operating levels, working capital management is not a significant
factor.
Operating Loans During 1995, Registrant borrowed $302,500
from several parties to finance its ongoing operations and its
investment in the EEI car importation program. Registrant
pledged its interest in the income from the secured promissory
note issued by the Gita Ashram Temple, and has been directing the
income from that note to the repayment of the debt to the various
lenders. This is an amortizing series of notes, however they all
become due and payable during a six-month period commencing in
January of 1997. These notes all carry conversion rights
enabling the lenders to acquire ITG common stock at a purchase
price of $1.50 per share in exchange for cancellation of an
equivalent value of the principal and interest due on the notes.
As of June 30, 1997, a total of $152,314 was due on the notes
secured by a first position in the Gita Ashram promissory note,
and $42,500 in principal and $10,130 in interest was due to
holders of notes secured by a second position in the Gita Ashram
note, with $22,500 of the principal balance of the second
position notes having been converted to International
Semiconductor stock transferred from ITG to the creditors.
Backlog The operations of Aero and Energy do not consist
of product sales for which backlog is a significant factor.
Skysite has inventory and the potential for backlog, but ITG has
sold its position in that company and is no longer concerned with
its operations.
Government Contracts The Registrant does not anticipate
that any material portion of its business will be subject to
renegotiation of profits or termination of contracts at the
election of the United States government. The Registrant does
not have any current contracts with any customers or vendors that
are derivative of or dependent upon government operations.
Competition Competition is not a significant factor among
independent oil producers such as the Registrant s ITG Energy
subsidiary. Profitability is keyed directly to world oil prices
and competition from major oil producing countries is
significant, but also serves to establish world oil pricing for
purposes of smaller, independent sellers such as ITG Energy.
Research and Development Since its inception, the
Registrant has not engaged in either company-sponsored or
customer-sponsored research and development activities for its
connector business. Research and development activities of Aero
had been significant prior to the Registrant s acquisition of
this business. Activities since the acquisition have not
involved significant expenditures for research and development by
the Registrant.
Government Regulation The businesses engaged in by the
Registrant are subject to extensive regulation by federal, state
and local governmental agencies dealing with the protection of
the environment. Certain of these regulations, which include
provisions regulating air quality, water quality, disposal of
waste products and employee safety, are technical in nature and
involve substantial penalties in the event of breach and require
extensive controls to assure adherence with their requirements.
While the Registrant intends to operate in full compliance with
these regulations, such compliance as well as potential
inadvertent violations may result in significant additional cost
in the operation of the Registrant.
Employees. The Registrant currently has three full time
employees, with additional employees within the subsidiaries.
However, it is not expected that a significant number of
additional employees will be required to meet the requirements of
the Registrant's business. The Registrant's wholly owned
subsidiary, Continental Co. had approximately 150 employees prior
to June 30, 1993.
ITEM 2 PROPERTIES
During 1996, the Registrant used approximately 2000 square
feet of office space in Long Beach, California for administrative
offices at a rental rate of $1,500 per month, which terminated
during the second quarter of 1997. The Registrant has its
primary offices at 310 South Carson Street, in Carson City,
Nevada, for which it pays $750 per month. The term of the lease
is month by month.
Additionally, the Registrant subleased approximately 2,500
square feet of office space in Santa Monica, California at a rate
of $4,126 per month with a term ending July 31, 1997. The
Registrant subleases a portion of this facility to others and
receives approximately $2,000 per month as sublease income. The
primary sub-tenant is GTI, incurring debt at the rate of
approximately $3,000 per month, with telephone and support
services included within the rental allowance. This sub-lease
expires on July 31, 1997 and the Registrant has not determined
the necessity of renewing or locating similar alternative space.
ITEM 3 LEGAL PROCEEDINGS
The Registrant knows of no litigation pending, threatened or
contemplated, or unsatisfied judgments against the Registrant,
nor any proceedings to which the Registrant is a party, other
than the suit against East European Imports described above.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matters were submitted to a vote of the Registrant's
security holders during the previous three fiscal years.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock had previously traded in the
over-the-counter market up until early 1992. There has been no
trading in the Registrant's common stock for fiscal years ended
December 31, 1992 through 1996 and for the period to the date of
this report. Additionally, the Registrant is unaware of any
broker dealer currently making a market in the common stock.
The number of record holders of the Registrant's common
stock on June 30, 1997 was approximately 2,305 common
shareholders. However, there are a greater number of beneficial
owners.
To date, the Registrant has not paid cash dividends on its
Common Stock. Holders of Common Stock are entitled to receive
such dividends as may be declared and paid from time to time by
the Board of Directors out of funds legally available therefor.
The Registrant intends to retain all earnings for the operation
and expansion of its business and does not anticipate paying cash
dividends in the foreseeable future. Any future determination as
to the payment of cash dividends will depend upon future
earnings, results of operations, capital requirements, the
Registrant's financial condition and such other factors as the
Registrant's Board of Directors may consider.
ITEM 6: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Registrant's sole operation since its inception in 1983 to
June 30, 1993 was that of its 100% owned subsidiary, Continental
Connector Corporation. This subsidiary had been engaged in the
custom connector business since 1954 and was founded by its
president, Leon Gilbert, who elected to retire in 1993. During
its peak years, the subsidiary experienced annual sales in the
fifteen to twenty million dollar range with gross margins
approaching 60% in some years to a low of 6% in recent years.
Sales were primarily to defense, aerospace and communications
industries and the Registrant's customers were among the largest
US companies. The Registrant's sales and gross margins had
decreased steadily from 1985 as a result of government cuts in
defense and aerospace programs and the breakup of AT&T that
allowed the use of foreign-produced communications equipment.
Because of its operating losses during the years from 1987 to
1993 and the lack of available financing, the Board of Directors
implemented a plan to dispose of the salable assets of the
subsidiary, consisting primarily of real estate, equipment and
inventory, and to use the proceeds therefrom to liquidate
outstanding liabilities. Remaining resources were used to seek
new business opportunities.
Since 1994, the Company has been primarily engaged in an effort
to locate suitable investment opportunities that were in need of
cash and management to improve upon their market penetration and
profitability. Several candidates have been identified and
investments have been made, as noted above in the description of
the various subsidiaries and investments currently held by the
Company (see "General Development of Business").
MATERIAL CHANGES IN RESULTS OF OPERATIONS
There were no subsidiary operations of consequence at the
connector company in 1994, other than sale of the remaining
inventory on a contingency basis, with no cash received from that
transaction in either 1994 or 1995.
Interest expense increased in 1995 to $35,295 when the registrant
borrowed $302,500 against the income of the real estate sales
Note received from the sale of the New York real estate, and
increased slightly more in 1996 (to $38,460) when the Company
borrowed minor additional amounts during its investment in
Skysite Communications. (See Note 4 to the audited financial
statement.)
The results of operations of the Registrant consist of general
and administrative expenses of the parent company.
The registrant, as a result of the sale of the connector
subsidiary, recorded net profits of $1,497,087 in 1994. It also
recognized a loss of $1,200,000 in 1994 attributable to the
acquisition of shares of stock in International Semiconductor
Corp., because under the equity method of recognition of capital
investment, the company invested in had no profit and no book
value (See Note 3).
In 1996, the Company sold a portion (200,000 of the 1,600,000
shares) of its International Semiconductor Corp. investment, for
approximately $499,000, net of expenses, and transferred an
additional 45,000 shares of this stock to two note holders in
liquidation of their claims against the Company of $22,500. The
Company retains 1,355,000 shares, although the market value of
the holdings has diminished considerably since the summer of
1996.
The Company also invested approximately $263,750 in Skysite
Communications Corp., which it subsequently sold, with
negotiations beginning during the first quarter of 1997 and
concluding in June of 1997. The Company received 341,000 shares
of VisCorp common stock, and an additional 300,000 options to
acquire VisCorp common at $0.40 per share, in exchange for its
66% interest in Skysite. This transaction should conclude by the
close of the third quarter of 1997. VisCorp stock has traded
between $0.40 per share (upon purchase of Skysite) to $1.50 at
the end of August, 1997, after its acquisitionof Skysite.
The company has invested $240,000 in Global Technologies Inc.,
which it has elected to write off during 1996, as the Romanian
ventures have not proven profitable. GTI is currently developing
a marketing program for a long-lived oil filter for use on trucks
and heavy equipment, and has negotiated exclusive rights in
certain vertical markets, both in the United States and in
Europe. No revenues have resulted from this plan as yet, but
they will be recognized as income when received. The Company
received its first purchase order for 500 filter units in the
third quarter and will net $7,500 from this transaction, which is
estimated to be a recurring monthly order.
PetroChem, a car accessories distribution corporation, was
liquidated in 1996, as the manager-partner was found to be
criminally involved with fraudulent invoicing and illicit
inventory sales. This case is now in front of the criminal
courts of Florida, with liability having been admitted and
determination of the restitution amounts to be tried prior to the
end of the year. The Company has produced evidence to recoup
approximately $200,000 from this individual. Until resolution of
this matter, the Company has written down its investment in
PetroChem from $220,000 to zero.
During the fourth quarter of 1996, negotiations commenced for the
sale of the Company's subsidiary, Aero Industries, which
controlled the leasehold at the Fort Lauderdale Executive
Airport. These negotiations concluded in the first quarter of
1997 and will be reflected on the second quarter financial
statements. The total sales price, including cash and notes, was
$1,100,000, less expenses of approximately $73,550, for a net
receipt of $1,026,450.
LIQUIDITY AND CAPITAL RESOURCES
Primary Real Estate Loan During the first and second
quarters of 1995, Registrant borrowed $250,000 from private
investors, in a series of individual convertible notes,
collectively secured by Registrant's promissory note payable from
the Gita Ashram Temple (principal balance then owing of
approximately $675,000). All payments by the Temple were
assigned to the private investors for a period of 18 months, or
until the loan was repaid in its entirety. During the fourth
quarter, 1995, an additional sum of $52,500 was borrowed, from
these same individuals, collectively secured by a second position
(behind the $250,000 loan) in the Temple note.
Secondary Loans In January and February, 1996, the Company
borrowed an additional $12,500 against the Gita Temple Ashram
real estate mortgage, raising cumulative borrowings against the
note to an original debt of $250,000 in the initial or "first"
position, and $62,500 in the second position. The balance due on
this indebtedness was approxiamtely $221,000, in total, at
December 31, 1997.
Inventory Cash Out 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, based upon
ultimately received proceeds from the inventory liquidation,
which resulted in cash income of $280,000 (plus $10,000 for
purchase of 100,000 shares of the Registrant's restricted common
stock) during February, 1996, when EFTS disposed of the remainder
of the inventory. The 100,000 shares of the Company's common
stock issued to EFTS, Inc. as a result services rendered during
the settlement of the inventory liquidation by EFTS in its
subsidiary, Continental Connector Corporation (formerly owned by
the Company), were valued at $0.10 per share. This raised the
total number of shares issued by the Company to 5,151,593 shares
of common.
During the second quarter of 1997 the Registrant completed
the sale of its wholly-owned subsidiary, Aero Industries, and had
cash on hand of approximately $700,000.
The Registrant, as of June 30, 1997, had no capital
commitments that were unmet. The Registrant currently has no
future commitments for capital expenditures nor has it made
commitments for future business development.
Employee Stock Transactions Based upon his 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. Also, based upon
services rendered during the preceding years, one employee,
Christopher H. Dieterich, serving as corporate secretary and a
director, received options, effective July 10, 1996, on 250,000
shares, exercisable at $1.00 per share for a period of 5 years,
with these rights immediately vesting. The officers that have
served the company for the previous 3 years remain unpaid, and
will defer any compensation until such time as the company is in
satisfactory financial condition.
Other Stock Option Transactions On August 18, 1996, Aryeh (Arik)
Makleff, serving as a consultant to the Registrant, received
option rights on 250,000 shares, at $1.00 per share, for services
dating back to 1994, and for which no compensation has ever been
awarded.
ITEM 7: FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Opinion of Certified Public Accountant (1996) 20
Financial Statements: 1996:
Consolidated Balance Sheets as of December 31, 1995 and 1996
22
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 23
Consolidated Statement of Stockholders' Equity for the Years
Ended December 31, 1996, 1995 and 1994 24
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995 25
Notes to Consolidated Financial Statements (1996) 27 - 35
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Intercontinental Technologies Group, Inc.
We have audited the balance sheet of Intercontinental
Technologies Group, Inc. as of December 31, 1996 and the related
statements of operations, changes in stockholders' equity, and
cash flows for each of the two years then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above,
present fairly, in all material respects, the financial position
of Intercontinental Technologies Group, Inc. as of December 31,
1996, and the results of its operations and cash flows for each
of the two years then ended, in conformity with generally
accepted accounting principles.
/S/ Winter, Scheifley & Associates
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
May 31, 1997
<PAGE>
CONSOLIDATED BALANCE SHEET
December 31, 1996
ASSETS:
Current Assets:
Cash 1,147
Accounts receivable, other 20,000
Accounts receivable - related parties 3,500
Notes receivable - current 30,477
Total current assets 55,124
Property and equipment, at cost, net of
Accumulated depreciation of $124,529 181,812
Notes receivable - non-current 597,878
Investments 263,750
Deposits 51,000
Total Assets 1,149,564
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Note payable 12,500
Current portion of long term debt 221,068
Accounts payable 40,415
Accrued interest 13,849
Amount due officer 10,000
Total current liabilities 297,832
Advances from affiliates 252,557
Long-term debt 54,750
Stockholders equity:
Common stock, $.001 par value,
750,000,000 shares authorized,
5,191,593 shares issued and outstanding 5,192
Additional paid-in capital 4,041,680
Accumulated deficit (3,502,447)
Net worth 544,425
Total liabilities and equity 1,149,564
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1996 and 1995
Year Ended Year Ended
December 31 December 31
1996 1995
Sales 155,552 165,063
Cost of operations 78,512 90,703
Gross profit 77,040 74,360
Other costs and expenses:
General and administrative 1,185,395 267,795
Income (loss) from operations (1,108,355) (193,435)
Other income and (expense):
Gain on sale of securities 562,312 -
Interest income 37,534 56,990
Interest expense (38,460) (35,295)
561,386 21,695
Income (loss) before income taxes (546,969) (171,740)
Provision for income taxes - -
Net income (loss) (546,969) (171,740)
Earnings (loss) per share:
Net income (loss) (0.11) (0.03)
========= =========
Weighted average shares outstanding 5,163,260 5,051,593
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOW
Years Ended December 31, 1996 and 1995
Year Ended Year Ended
December 31 December 31
1996 1995
Net income (loss) (546,969) (171,740)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities
Gain on sale of investments (562,312) -
Stock issued for services 10,000 -
Charge off of goodwill 240,000 -
Depreciation 52,816 48,789
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (20,000) -
(Increase) decrease in other assets (3,500)
Increase (decrease) in accounts
Payable and accrued expenses 35,212 (119,013)
Total Adjustments (244,284) (73,724)
Net cash (used) in operating activities (791,253) (245,464)
Cash flows from investing activities:
Acquisition of property and equipment (27,775)
Investment in unconsolidated company (120,000)
Advances to investee company (263,750)
Proceeds from sale of investments 539,812
Repayment of notes receivable 318,002 25,728
Net cash (used in) investing activities 446,289 25,728
Cash flows from financing activities:
Repayment of stockholder advances (10,400) (131,821)
Advances from affiliates 385,602
Proceeds from notes payable 67,250 369,620
Repayment of notes payable (105,970) (20,082)
Net cash provided by financing
Activities 336,482 217,717
Increase (decrease) in cash (8,482) (2,019)
Cash and cash equivalents,
beginning of period 9,629 11,648
Cash and cash equivalents, end of
period 1,147 9,629
Supplemental cash flow information
Cash paid for interest - -
Cash paid for income taxes - -
<PAGE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
for the Years Ended December 31, 1996 and 1995
<TABLE>
<S> <C> <C> <C>
<C> <C>
Common Amount
Amount Accumulated Total
Shares
Deficit
Balance December 31, 1994 5,051,593 5,052
3,911,820 (2,783,738)
1,133,134
Net loss for the year - - -
( 171,740) ( 171,740)
--------- -----
- --------- --------- ---------
Balance December 31, 1995 5,051,593 5,052
3,911,820 (2,955,478)
961,394
Shares issued for services 100,000 100
9,900 10,000
Shares issued for investment 40,000 40
119,960 120,000
Net loss for the year - - -
( 546,969) (546,969)
--------- -----
- --------- --------- -------
Balance December 31, 1996 5,119,593 5,192
4,041,680 (3,502,447)
544,425
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Intercontinental Technologies Group, Inc.
Notes to Consolidated Financial Statements
NOTE 1: Summary of significant accounting policies.
Intercontinental Technologies Group, Inc. and subsidiaries (the
"Company") operate in the oil and gas industry and the real
estate management industry in the United States.
The Company was incorporated in Nevada on August 9, 1983. The
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Aero Industries, Inc.
(Aero) and ITG Energy, Inc. (Energy). The Company is a 60% owned
subsidiary of Aero International, Inc., a company controlled by a
family trust of which the Company's president is a member.
The Company does not refine or process its oil production but
sells such production under short-term contracts at field prices
quoted by purchasers in the area of the producing property. A
portion of the Company's production comes from "stripper wells",
(i.e., wells with low production and relatively high operating
costs). Because this production is low margin, stripper wells
are particularly vulnerable to declines in oil prices.
Principles of Consolidation
The consolidated statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated in consolidation.
Cash and Cash equivalents
The Company considers all highly-liquid investments purchased
with a maturity of three months or less to be cash equivalents.
Concentrations of credit risk
The company sells its oil and gas production to one purchaser in
California and manages one real estate operation in Fort
Lauderdale, Florida. Financial instruments which potentially
subject the Company to concentrations of credit risks are
primarily accounts and notes receivable. The Company requires no
collateral from the companies or purchasers with respect to
accounts receivable. Additionally, the Company has a note
receivable from an entity in New York that is secured by real
estate.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents and accounts receivable and payable. The carrying
amounts of such financial instruments approximate fair value
because of the short maturity of these Instruments.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided for using he straight line method over estimated useful
lives of five to seven years for Equipment and the remaining
lease term for leasehold improvements. Depreciation expense
amounted to $3,578 and $800 for the years ended December 31, 1996
and 1995, respectively.
Oil and Gas Properties
The Company follows the successful efforts method of accounting
for oil and gas operations whereby all exploration costs,
including geological and geophysical costs, annual delay rentals
on undeveloped leases and exploratory dry hold cost are charged
to expense as incurred. Intangible drilling and development
costs are capitalized on successful wells and development dry
holes. Undeveloped leasehold costs are capitalized and charged
to expense if abandoned or impaired, based on a
prospect-by-prospect evaluation.
Capitalized cost relating to producing properties ar depleted on
the units-of-production method based on estimated quantities of
proved reserves. Proved oil and gas properties are not
capitalized in an amount that exceeds the discounted future net
revenues of the associated property. Depreciation and depletion
of oil and gas properties amounted to $49,238 and $47,989 for the
years ended December 31, 1996 and 1995, respectively.
Revenue Recognition
Revenue is recorded when goods are shipped or services are
performed.
Advertising
Advertising expenses are charged to expense upon first showing.
Amounts charged to expense were $7,247 and $4,221 for the years
ended December 31, 1996 and 1995, respectively.
Net Loss per Share
Net loss per share of common stock is computed based on the
weighted average number of common shares outstanding during the
year. Common stock equivalents were anti-dilutive and were
excluded from the computation.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and the reported amounts of revenue and
expenses during he periods presented. Actual results could
differ from those estimates making it reasonably possible that a
change in these estimates could occur in the near term.
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standards
No. 123 (FAS 123), Accounting for Stock-Based Compensation
beginning with the Company's first quarter of 1996. Upon
adoption of FAS 123, the Company when required will continue to
measure compensation expense for any stock-based employee
compensation plans using the intrinsic value method prescribed by
APB no 25, Accounting for Stock Issued to Employees, and will
provide pro forma disclosures of the effect on net income and
earnings per share as if the fair value-based method prescribed
by FAS 123 had been applied in measuring compensation expense.
Recent Pronouncements
In 1996 Financial Accounting Standards no. 125 (FAS 125)
Accounting for Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities was issued. FAS 125 is effective
for transfers and servicing of financial assets and
Extinguishment of liabilities occurring after December 31, 1996.
The Company will adopt FAS 125 in 1997. Adoption of FAS 125 is
not expected to have a material effect on the Company's
consolidated financial position or operating results.
NOTE 2: Investments
During September 1994, the Company entered into an equity
exchange agreement with International Semiconductor Corp. (ISC)
and Lema Investments, Ltd. (Lema) whereby the Company would issue
1,000,000 shares of its restricted common stock to Lema in
exchange for 1,600,000 shares of the restricted common stock of
ISC. ISC is a manufacturer of gallium arsenide diodes and
substrates and is based in Israel. The ISC shares are traded
over-the-counter and at the agreement date were valued at a bid
price of $1.50. The restricted shares acquired by the Company
were valued at one-half of this amount. Since the Company's
shares of ISC amounted to approximately 28% of the then total
outstanding shares of ISC at the exchange date, the equity method
of accounting has been applied to this transaction. This method
limits the Company's investment to its proportionate share of the
net assets of ISC, which were in a deficit position at the
exchange date. Accordingly, the full amount of the value
assigned to the stock exchange ($1,200,000) has been treated as
goodwill and has been charged to operations in 1994.
ISC shares trade in the over-the-counter market and at December
31, 996 had a closing bid price of $0.50 per share.
Summarized financial information for ISC at December 31, 1995 is
as follows:
Current Assets $ 43,023
Non-current assets $ 1,396,499
Current liabilities $ 1,465,317
Non-current liabilities $ 1,231,414
Net (loss) $ (2,732,325)
ISC is considered to be in its development stage and sales of its
products have not commenced. Information for the year ended
December 31, 1996 is not available to the Company.
The Company has not recognized its proportionate share of the
losses of ISC for the years ended December 31, 1996 and 1995 in
its statement of operations as the amount of its investment in
ISC has been reduced to zero. The aggregate market value of the
Company's remaining 1,355,000 shares of ISC stock was
approximately $677,000 at December 31, 1996.
During the year ended December 31, 1996, the Company sold 200,000
of its shares of ISC for aggregate cash proceeds of $499,667.
During November 1996, the Company transferred 45,000 shares of
its ISC stock to individuals for cancellation of $22,500 of notes
payable to them by the Company. During April 1996, 600,000
shares of the ISC stock were pledged as collateral in connection
with the below-described joint venture agreement. The collateral
was released upon the sale of the Company's interest in the joint
venture.
On February 18, 1996, the Company entered into a stock purchase
and investment venture agreement with Skysite Communications
Corporation which provides for the Company to invest $250,000 for
a 50% share of the equity and profits of the entity. Skysite
Communications Corp (Skysite) is in the business of selling and
installing mobile satellite communications hardware manufactured
by others bundled with access to a GM/Hughes MSAT-1
communications satellite. Skysite began sales of systems and
telephone service during April, 1996. The Company's investment
in Skysite consists of cash advances of $263,750 at December 31,
1996 and has been accounted for at cost.
On April 30, 1997 the Company agreed to sell its interest in the
entity, which occurred on June 23, 1997, to VisCorp for 341,000
shares of VisCorp restricted common stock and 300,000 options to
purchase VisCorp common at $0.40 per share. The stock received
had a market value of $1.25 per share at June 23, 1997 and the
Company expects to record a gain from the transaction of
approximately $163,500 during the second quarter of 1997. The
Company was relieved of its responsibilities to provide
additional funding to Skysite as a result of the sale.
During 1996, the Company acquired 48% of the outstanding common
stock of global Technologies, Inc. (GTI) a closely held company
whose limited business activities to date have been focused on
the introduction of American companies and Technologies to the
country of Romania. The Company paid $120,000 in cash and issued
40,000 shares of its common stock valued at $120,000 in exchange
for the GTI stock. The Company has accounted for its investment
in GTI using the equity method of accounting. Since GTI had no
net assets the Company has charged its investment therein to
operations as an immediate write-off of goodwill.
NOTE 3. Note Receivable
The note receivable at December 31, 1996 and 1995 relates to the
sale of real estate in prior years and is collateralized by land
and buildings in Woodside, New York. The note is due in monthly
installments of principal and interest at 8.5% a.p.r. of $6,893
for a term of 15 years. The unpaid balance at the end of the 8th
year of the Note is due in a lump sum payment. The note is
pledged as
collateral for notes payable described in NOTE 4.
NOTE 4: Notes payable and long-term debt
Long term debt at December 31, 1996 consisted of two series of
notes due to individual investors due currently ($178,568) and at
August 15, 1997 ($42,500). The notes accrue interest at 18% per
year and are collateralized by the above described note
receivable. The Company made repayments of $45,970 on the first
series of notes during the year ended December 31, 1996 and in
November 1996, transferred 45,000 shares of its ISC investment
stock to retire $22,500 of the second series balance.
Additionally, the Company borrowed $54,750 from an entity during
may, 1996, under terms similar to the above described notes
except that the note is due in full at May 13, 1998. Notes
payable consists of a short term borrowing from an individual
with interest at 18% per annum.
NOTE 5: Income Taxes
At December 31, 1996, the Company had approximately $3,490,000 of
unused net operating loss deductions that will expire in years
beginning in 2006 as follows:
2006 $ 583,000
2007 $1,250,000
2008 $ 945,000
2010 $ 172,000
2011 $ 540,000
----------
$3,490,000
A valuation allowance of $1,186,600 was provided at December 31,
1996 for net operating loss carryforwards which more likely than
not will not be utilized prior to their expiration.
NOTE 6: Commitments and Contingencies
The Company is obligated for non-cancelable operating lease
payments with initial terms exceeding one year relating to office
space and certain equipment leases. The lease agreements require
future minimum lease payments as follows:
Year ending December 31, Amount
1997 $60,282
1998 31,400
1999 31,400
2000 13,083
-------
136,165
Rent expense in 1996 and 1995 was $144,291 and $106,694
respectively. The Company receives sublease income of $87,500
per year related to its Florida real estate management operation.
During July 1993, the Company acquired Aero Industries, Inc.
(Aero), a Florida corporation that subleases hangar and office
space at the Fort Lauderdale Executive Airport in Florida, in a
business combination accounted for as a purchase. Aero also owns
undeveloped rights to certain retrofit technology for jet and
helicopter aircraft. The assets of Aero consisted principally of
leasehold improvements with a historical basis of $830,000.
During July 1993, in connection with the refinancing of bank debt
related to the hangar and office facilities, the Company assigned
its interests n the Aero lease to an independent third party as
collateral for a loan made to the Company by the individual. The
assignment was subject to buy back provisions which were not
completed by the specified date of January 30, 1994. At that
date, the Company removed the asset and certain corresponding
liabilities from its balance sheet but continued to operate the
facility.
The assignment agreement had not been filed with or approved by
the original lessor of the property and during 1996 and 1995 the
Company continued to carry out its obligations to maintain the
property under the lease terms.
During January, 1997, the Company sold its interest in the lease
to an independent third party for a gross sales price of
$1,100,000. After expenses of the sale, the Company received net
proceeds of $1,026,450 during the period from February to May of
1997.
The lease sale is subject to a claim by the lender for repayment
of the loan amount. The Company expects that the actual amount
due will be determined by litigation or arbitration and has
estimated the possible range of the claim to be from $150,000 to
$350,000 and will record the higher amount as a liability and in
determining the gain on the sale. The Company expects to record
a gain from the sale of approximately $696,500 during the first
quarter of 1997.
NOTE 7: Related Party Transactions
Aero International, Inc. (International) a company controlled by
the Company's president is a significant shareholder of the
Company. During the years ended December 31, 1995 and 1996,
International made advances to the Company in cash or by payment
for services provided to the Company by others and received
repayment of the advances as follows:
1996 1995
Beginning balance $133,045 $ (19,176)
Advances received 203,006 62,780
Advances repaid 64,605 215,001
------- -------
Ending balance $(5,356) $133,045
Additionally, during 1996 and 1995, the Company received advances
from its unconsolidated subsidiary, ISC, amounting to $152,500
and $20,400, respectively.
NOTE 8: Stockholders' equity
During the year ended December 31, 1996, the Company issued
restricted shares of its $.001 par value common stock for various
purposes as follows:
100,000 shares valued at $0.10 for services provided to the
Company by EFTS, Inc.
40,000 shares valued at $120,000 issued to an individual in
connection with a joint venture agreement as described in Note 2.
No market for the Company's common stock existed at any time
during the periods presented.
NOTE 9: Business Segment Information
The Company's operations re classified into two principal
industry segments, oil operations and real estate operations.
The following is a summary of segment information for the years
ended December 31, 1996 and 1995:
1996 1995
--------- ------------
Net sales to unaffiliated
customers:
Oil and gas $ 78,032 $ 87,534
Real estate 77,520 77,520
--------- ----------
$ 155,552 $ 165,063
Income (loss) from operations:
Oil and gas $ (14,184) $ ( 7,295)
Real Estate 22,401 1,573
--------- ----------
Other income 599,846 56,990
Other expense (38,460) (35,295)
General Corp expense (1,182,995) (187,716)
--------- ---------
Income (loss) before taxes (544,569) (171,740)
Capital Improvements
Oil and gas - -
Real estate - -
Corporate 27,775 -
--------- ---------
27,775 -
Depreciation
Oil and gas 49,238 47,989
Real Estate - -
Corporate 3,578 800
--------- ---------
$ 52,816 $ 48,789
Information about major customers
During 1996 and 1995, all of the Company's revenue from oil and
gas sales were derived from sales to EOTT Energy, Inc. and all of
its rental income was derived from a lease with US Aero Paint,
Inc.
In view of the demand for domestic oil at market prices, the
Company does not believe that the loss of any customers would
adversely affect its operations.
NOTE 10: Supplementary oil and gas information (unaudited)
The Company's oil and gas operations are conducted in the United
States. Information relating to these operations is summarized
as follows;
Costs Incurred in oil and gas actyear of the is due in a lump sum
payment.
The note is pledged as collateral for notes payable described in
NOTE 4.
NOTE 4: Notes payable and long-term debt
Long term debt at December 31, 1996 consisted of two series of
notes due to individual investors due currently ($178,568) and at
August 15, 1997 ($42,500). The notes accrue interest at 18% per
year and are collateralized by the above described note
receivable. The Company made repayments of $45,970 on the first
series of notes during the year ended December 31, 1996 and in
ated based on current costs and were not adjusted to anticipate
increases due to inflation or other factors. No deductions were
made for general overhead, depreciation and interest.
The determination of oil and gas reserves is based on estimates
and is highly complex and interpretive. The estimates are
subject to continuing change as additional information becomes
available and an accurate determination of the reserves may not
be possible for several years after discovery.
Estimated Quantities of Proved Oil and Gas Reserves
Following is a reconciliation of the Company's interest in net
quantities of proved oil and gas reserves. Proved reserves are
the estimated quantities of crude oil and natural gas which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Estimated
reserves of oil (barrels) and natural gas (thousand of cubic
feet) s of December 31, 1996 and 1995, and the changes thereto
for the years then ended are as follows:
Oil (Bbls) Gas (Mcf)
Total Proved Reserves:
Estimated quantity, December 31, 1994 138,479 -
Revisions in previous estimates - -
Production (6,079) -
------- ------
Estimated quantity, Dec 31, 1995 132,400 -
Revisions in previous estimates (55) -
Production (5,780) -
------- ------
Estimated quantity, December 31, 1996 126,565 -
======= ======
Proved developed reserves:
December 31, 1995 132,400 -
======= ======
December 31, 1996 126,565 -
======= ======
Standardized measure of discounted future net cash flows and
changes therein relating to proved oil and gas reserves:
Estimated discounted future net cash flows and changes therein
were determined in accordance with Statement of Financial
Accounting Standards No. 69. Certain information concerning the
assumptions used in computing the valuation of proved reserves
and their inherent limitations are discussed below. The Company
believes such information is essential for a proper understanding
and assessment of the data presented.
Future cash inflows are computed by applying year-end prices of
oil and gas relating to the Company's proved reserves to the
year-end quantities of those reserves.
The assumptions used to compute the proved reserve valuation do
not necessarily reflect the Company's expectations of actual
revenues to be derived from those reserves nor their present
worth. Assigning monetary values to the reserve quantity
estimation process does not reduce the subjective and
ever-changing nature of such reserve estimates.
Additional subjectivity occurs when determining present values
because the rate of producing the reserves must be estimated. In
addition to errors inherent in predicting the future, variations
from the expected production rate also could result directly or
indirectly from factors outside the Company's control, such as
unintentional delays in development, environmental concerns and
changes in prices or regulatory controls.
The reserve valuation assumes that all reserves will be disposed
of by production. However, if reserves are sold in place,
additional economic considerations also could affect the amount
of cash eventually realized.
The future development and production costs are computed by
estimating the expenditures to be incurred in developing and
producing the proved oil and gas reserves at the end of the year
based on year-end costs and assuming continuation of existing
economic conditions.
Future income tax expense is not provided based on the
availability of net operating loss carry forwards.
A discount rate of 12 percent per year was used to reflect the
timing of the future net cash flows.
December 31,
1996 1995
Future cash flows $ 2,151,605 $ 2,383,200
Future production costs (1,396,075) (1,438,975)
Future development costs (52,000) (52,000)
--------- ---------
Future net cash flows 703,530 892,225
12% annual discount for estimated
timing of cash flows (149,851) (189,961)
--------- ---------
Standardized measure of discounted
future net cash flows 553,679 702,264
The following are principal sources of changes in the
standardized measure of discounted future net cash flows;
Year ended December 31,
1996 1995
Beginning balance 702,264 756,040
Sales of oil and gas produced
net of production costs (54,939) (68,322)
Effect of price change (102,610) -
Accretion of discount 8,967 14,546
-------- --------
Ending balance 553,679 702,264
======== ========
An oil price at December 31, 1996 of $17 per barrel of oil was
used in the estimation of hte Company's reserves and future net
cash flows.
ITEM 8 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements during the period between
the Registrant and its accountants on accounting principles and
financial disclosure.
PART III
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The names and ages of the Company's officers and directors
are as listed below. Each officer and director assumed his
position in connection with the change in control of the
Registrant as previously discussed. The terms of the officers and
directors will expire at the next annual meeting of the Company's
shareholders.
There is no arrangement or understanding between any
Director of the Registrant and any other person or persons
pursuant to which such Director was or is to be selected as a
director of a nominee for director.
The Registrant's executive officers hold office until the
next annual meeting of the directors of the Registrant. There is
no arrangement or understanding between any executive officer and
any other person pursuant to which such executive officer was
selected as an officer of the Registrant.
The Registrant does not employ persons, other than the named
executive officers, who make or are expected to make significant
contributions to the business of the Registrant.
There are no family relationships between any director or
executive officer of the Registrant except as noted.
Name Age Position
Robert M. Terry 66 President, Chairman
of the
Board of Directors
Christopher Dieterich 49 Secretary,
Vice-President,
Director and Chief
Counsel
Michael Savage 73 Vice-President and
Director
Tom Hansen 63 Chief Operating
Officer and Director
ROBERT M. TERRY has been Chairman of the Board of Directors and
President since August 1993. Mr. Terry has been president and
chief executive officer of Aero International, Inc. since its
inception in 1978. Mr. Terry has over 35 years of finance,
engineering development and construction development experience.
He has been an owner/operator of several firms in the aerospace,
construction, health services and marketing arenas. Mr. Terry
established a multi-project construction business in New York
City which, in 1965, led to assignments as consulting engineer on
major projects throughout Europe, Mexico and the United States.
In 1970, he was appointed President of National Health Services
for the State Mutual Insurance Company. In 1978, Mr. Terry
entered the aviation industry with the formation of Aero
Industries as exclusive US distributor of Brazilian aircraft. He
operated that business from 1978 to the present. Mr. Terry is
also President and Chairman of the Board of International
Semiconductor Corp., a publicly-traded 12(g) company.
CHRISTOPHER H. DIETERICH has been Secretary, Vice-President and a
Director of the Company since September 1993. Mr. Dieterich is a
practicing attorney who holds advanced degrees in Civil
Engineering and Law/Economics. He has extensive experience in
the fields of construction, development, aviation, oil and gas
production, and environmental remediation. Mr. Dieterich is
recognized professionally for his management and technical
expertise in working with complex issues involving multi-country
negotiations. In 1993, occassioned by a lease dispute, his
professional law corporation filed for protection under chapter
11. For the last five years he has been self-employed in a three
person law firm which has represented commercial and residential
developers and companies in the aviation and environmental
reclamation industries. The firm provides securities related
services for public and private companies, general business
litigation services and specializes in securities litigation.
MICHAEL SAVAGE has been Vice-President, Marketing and Acquisition
and a Director since August, 1993. Mr. Savage has been a
self-employed financial consultant from 1958 to the present. Mr.
Savage has pioneered numerous companies and company concepts. He
is recognized as a "founder of the equipment leasing and
automatic car wash industries. Mr. Savage formed the first
equipment leasing company in the US in 1952, General Leasing
Corporation. He advised major corporations such as IBM, Singer,
Friden Calculator and Pitney-Bowes in the development of their
product leasing programs. After founding the Western Association
of Equipment Lessors, and being recognized for his financial
expertise, Mr. Savage was retained for several years by the Dunes
Hotel in Las Vegas. His expertise at developing, from concept to
maturity, acquiring, and merging companies has benefited numerous
publicly-traded firms.
TOM HANSEN assumed the position of Chief Operating Officer during
the first quarter of 1997, and was appointed to the board of
directors at that time. Mr. Hansen, Chief Administrative officer
and Secretary, received his education in Business Administration
and Political Science from Santa Monica City College and the
University of California at Los Angeles, graduating in 1956.
During the course of his 40 year business career, he has been a
Quality Control Inspector with North American Aviation; Director
of Development for Sherman Oaks Savings & Loan; Special Assistant
to the President of Pacific Air Transport; President of Cerritos
Travel; and President and CEO of Flash-R- Lite Corporation, a
traffic control company. He served four years as Chief of Staff
for Donald D. Lorenzen, where his responsibilities included
oversight of airport and harbor departments, land-use planning,
legislative and regulatory review and analysis, and liaison with
government officials and agencies. He has been the Executive
Director for the Republican Party in Los Angeles County and is
currently Chairman of a Republican senatorial district committee.
ITEM 10: EXECUTIVE COMPENSATION
The following tabulation sets forth the compensation of
the Chief Executive Officer of the Registrant. There were no
other highly compensated executive officers and no other forms of
compensation, current, long-term or deferred.
Name Year Position Salary
Robert M. Terry President from August 1993
5374 Village 1994 $ 0
Road, Long Beach 1995 $ 0
California 1996 $ 0
No other employees or officers or directors received in excess of
$10,000 during either of the years 1995 or 1996. Mr. Hansen will
receive a salary of $36,000 annually, commencing the first
quarter of 1997.
Currently, there are tentative employment agreements in place
with Mr. Terry, and with Christopher H. Dieterich, functioning as
the company's general counsel, secretary and a director. Arik
Makleff, is serving as the chief financial consultant to the
company.
As of December 31, 1996, 600,000 options were held by Dieterich,
Makleff and Savage, each having the rights to acquire shares at
an exercise price of $1.00 per share with an exercise period of 4
years in the case of Savage (100,000 shares) and 5 years for
Dieterich and Makelff on 250,000 shares each.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the beneficial ownership of
Common Stock of the Registrant as of December 31, 1996, by (i)
each of the Registrant's officers and directors, (ii) each person
who is known by the Registrant to own beneficially more than 5%
of the outstanding shares of Common Stock, and (iii) all of the
Registrant's officers and directors as a group:
Amount and
Nature of Percent
Name and address of Beneficial of
beneficial owner (l) Ownership Class
--------------------- ----------- -------
Aero International, Inc. 3,030,000 60.4%
Lema Investments, Ltd. 1,000,000 19.6%
American Agri-Business 220,000 4.4%
Officers and directors
as a group1 3,250,000 64.8%
1Beneficial ownership results in each case from the
possession of sole voting and investment power with respect to
the shares. Robert M. Terry, President, trustee of the
controlling shareholder of Aero International, and Michael Savage
(as president of American Agri-Business) are the only directors
having a Common Stock directive or ownership interest in the
Registrant. Of the shares attributed to Mr. Terry's control,
3,030,000 shares are owned by Aero International, Inc. a company
controlled by the Terry family trust, of which Mr. Terry is a
trustee. Mr. Savage also has options to acquire 100,000 shares
of the company's common stock at $1.00 per share, exercisable
over a 4-year period. Mr. Dieterich, a director, has options to
acquire 250,000 shares at $1.00 per share, exercisable over a 5
year period. No one has as yet exercised any options.
The Registrant knows of no arrangement, the operation of which
may, at a subsequent date, result in change in control of the
Registrant.
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as provided for below, no director or officer of the
Registrant, nominee for election as a director, security holder
who is known to the Registrant to own of record or beneficially
more than 5% of any class of Registrant's voting securities, or
any relative or spouse of any of the foregoing persons, or any
relative of such spouse, who has the same home as such person,
has had any material transaction or series of transactions since
the beginning of 1991, or has any presently proposed transaction,
to which the Registrant was or is to be a party, in which any of
such persons had or is to have any direct or indirect material
interest. Certain conflicts of interest have existed and will
continue to exist between the Registrant and its officers and
directors. Each has other interests including business interests
to which he devotes his primary attention.
PART IV
ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON
FORM 8-K
The following documents are filed as a part of this Report
immediately following the signature page.
1. Financial Statements
For a complete list of the Financial Statements filed with
this Annual Report on Form 10-KSB, see index to Financial
Statements on page 24.
2. Reports on Form 8-K
The Registrant has not filed any reports on Form 8-K during
the last quarter of the period covered by this report.
3. Exhibits
Number Description Page
3.1 Amendment to the Articles of Incorporation, dated
September 1, 1993, changing name of company to
Intercontinental Technologies Group, Inc. <Fn1>
3.2 Amendment to the Articles of Incorporation, dated
September 1, 1993 effecting a reverse split of 100 old
shares for 1 new share.<Fn1>
10.3 Asset Purchase agreement with Petro Resources, dated
October 1, 1994<Fn1>
10.4 Promissory Note in the amount of $650,000 from the Gita
Ashram Temple, dated March 8, 1994<Fn1>
10.5 Equity Purchase and Investment Agreement with East
European Imports, dated November 10, 1994<Fn1>
10.6 Exchange of Equity Agreement, dated September 1, 1994,
with ISC and LEMA Investments, Ltd.<Fn1>
10.6 Settlement Agreement with EFTS, Inc., dated February
23, 1996.<Fn1>
10.7 Memorandum of Understanding with Skysite, dated
February 18, 1996, effective March 15, 1996<Fn2>
10.8 Memorandum of Understanding with Sierra Leone Forest
Industries,dated November 22, 1996.<Fn3>
10.9 Global Technologies, Inc., contract, dated April 12,
1996, amended July 14, 1996 34
10.10 Memorandum of Understanding with VisCorp for sale
of interest in Skysite,dated May 2, 1997 42
21.1 Subsidiaries of Registrant 45
Footnotes: Fn(1): Filed as an Exhibit to the 1995 10-KSB
Fn(2): Filed as an Exhibit to the March 31,
1996 10-QSB
Fn(3): Filed as an Exhibit to the September
30, 1996 10-QSB
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Intercontinental Technologies Group, Inc.
By /s/ Robert Terry
Date: 26 Sep 97 Robert M. Terry
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
Date 26 Sep 97 By /s/ Robert Terry
Robert M. Terry,
President and Director
Date 26 Sep 97 By /s/ Christopher Dieterich
Christopher Dieterich
Secretary and Director
Date 26 Sep 97 By /s/ Michael Savage
Michael Savage
Vice President, Director
Date: 26 Sep 97 By /s/ Tom Hansen
Tom Hansen
Vice President, Director
<PAGE>
Exhibit 10.9 Global Technologies contracts
EQUITY SUBSCRIPTION AGREEMENT
The parties to this agreement are Intercontinental
Technologies Group, Inc. ("ITG"), a Nevada corporation, and
Global Technologies, Inc. ("GTI"), a Nevada corporation.
Whereas, ITG desires to invest in GTI's opportunities
generally associated with the country of Romania, and
specifically to include activities involving the sale of
transportation equipment, agricultural equipment, the development
of an agribusiness industry within and for Romania, commodities
trading bureaus, exchanges and like financial institutions.
Prior GTI and ITG activities, including housing project, oil and
gas, power generation, roads and bridges, and rail infrastructure
(GTI), and aviation, port, automobile and free-zone developments
(ITG), are presently not included within the corporate
opportunities of GTI for purposes of this agreement.
Whereas, GTI desires to raise capital for exploitation of
its Romanian opportunities;
Therefore, in consideration of the mutual promises contained
within this agreement, the parties agree as follows:
1.0 Stock Purchase by ITG
1.1 ITG agrees to acquire 15% of the equity of a company to
be formed, to be identified as Global Technologies, Limited
Liability Company (GTI, LLC), which will have within it all of
the rights of GTI as currently constituted and as developed in
the future (assume GTI is its subsidiary) in exchange for
$60,000, to be paid in 3 separate segments:
i) $20,000 upon execution of this agreement
ii) $20,000 30 days later
iii) $20,000 60 days later
This $60,000 will be considered to be $30,000 for equity
purchase and $30,000 as a short- term loan, with terms set forth
below.
Repayment of the $30,000 of this investment that is
constituted as a loan will occur during the course of operations
of GTI such that the first monies received for any purposes
constituting income after June 30, 1996 to the company will be
divided 50% to debt repayment and 50% to profits distribution,
with the 50% allocated to debt repayment utilized to repay the
$30,000 to ITG. Further distributions from the other 50% will be
attributed to profits, such that ITG would receive 15% of the 50%
that is being so allocated until GTI debt to ITG is fully
discharged. Thereafter, distribution of profits and payment of
any shareholder dividends, after deduction of company expenses
and corporate taxes, shall be according to normal commercial
practices and in amounts to be determined as appropriate by the
board of directors of GTI.
1.2 ITG will have an option, good for six months from the
date of execution of this Agreement, to acquire an additional 10%
of the equity of GTI, LLC in exchange for cancellation of its
note for $30,000, or return to the company of any sums received
in payment of this note, plus the issuance, to Peter Brocklesby
or his assigns, of an amount of ITG common stock sufficient to
provide for $90,000 of value, calculated upon the "bid" price of
ITG common on the date of the exercise of the option, not to
exceed $3.00 per share. ITG will provide for the registration of
this stock for free-tradeability within 45 days of its issuance.
1.3 In addition to the opportunities set forth in 1.2, in
the event GTI concludes business within six (6) months of the
date of execution of this Agreement sufficient to generate gross
profits in excess of $2,000,000, then ITG shall issue to Peter
Brocklesby or his assigns a further amount of ITG common stock
sufficient to provide for $90,000 of stock value.
2.0 Company Operations
2.1 GTI will establish an office at ITG's current
headquarters within 2950 31st Street, Suite 240, Santa Monica, in
office space to be provided to GTI pursuant to this agreement and
any subsequent sub-lease agreements entered into between the
companies. The initial space will be two offices and an
associated secretarial bay and GTI will be assessed rent at the
rate of $2,000 per month. Included within this rental will be
reception services, access to conference rooms, copiers,
facsimile machines, scanners, computers and similar office
equipment, with supplemental charges for third-party costs (i.e.,
phone and fax machine, copy charges, etc.), and the provision of
telephone equipment for access to outside lines. GTI will be
responsible for its own telephone lines and charges.
2.2 During the first 3 months following execution of this
agreement, ITG will advance the necessary rental charges, phone
access charges and similar costs, to be accrued and recaptured
subsequently from profits of GTI (out of the 50% of gross income
attributable to debt and expense reduction). After the initial
3-month period, GTI will pay these expenses directly to the
various providers of the services.
2.3 Personnel of ITG will be provided during the initial
period for purposes of aiding the operations of GTI. Initially,
this will be Toni Gales, who will accrue, but not draw, an
independent contractor fee of $1,000 per month from GTI (to be
recovered in a fashion similar to the costs advanced under 2.2
above). GTI may replace her at any time with personnel of its
choosing. ITG will also engage the services of additional
persons, in agreement with GTI, as necessary, and will advance
their costs or salaries during the 3-month period, also for
accrual and recapture out of later profits. Executive work force
and compensation will be discussed on a singular basis, but ITG
agrees to support GTI's legal and liaison requirements utilizing
its own management (i.e., Makleff, Terry, Dieterich and Savage)
until such time as personal agreements are concluded.
2.4 All parties agree to separately account for company
expenses incurred by them, and, with approval of GTI management,
be reimbursed for these expenses. All operations of GTI will be
undertaken as in normal corporate management such that ITG will
have either a 15% or 25% vote (depending upon option exercise) in
the affairs and operations of GTI. To the extent directors are
elected, ITG will have the right to appoint 1 of the initial
directors, and a proportionate vote for any additional or
subsequent directors. ITG acknowledges that Mahoney is and will
remain the President of GTI, and that Brocklesby is and will
remain the Chief Executive Officer of GTI, and that each will
have full authority of his office to manage GTI and to conduct
business on behalf of the company.
3.0 Future Corporate Opportunities
All parties recognize that numerous opportunities will arise
in the operations of the business, and that, for purposes of this
initial investment, the business of GTI is the development and
exploitation of opportunities arising from Romania with respect
to all phases of arrangements with Romania and outside investors,
operators and development companies. Any business venture that
is related to this area, whether discovered by GTI or ITG, should
be brought to the board of GTI for its acceptance or rejection
and is therefore an asset of GTI until rejected by the board.
The preamble to this agreement is incorporated for purposes of
defining the included and excluded business arenas for purposes
of application of this section 3.0.
4.0 Miscellaneous
4.1 Subsequent Events. GTI and ITG each agree to notify
the other party if, subsequent to the date of this Agreement,
either party incurs obligations which could compromise their
efforts and obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified
at any time and in any manner only by an instrument in writing
jointly executed by the parties hereto.
(C) Further Actions and Assurances. At any time and from
time to time, each party agrees to take actions and to execute
and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to
comply with any of its obligations, agreements, or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed. The failure of any party to this Agreement
to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such provision
or a waiver of the right of such party thereafter to enforce each
and every such provision. No waiver of any breach of or
non-compliance with this Agreement shall be held to be a waiver
of any other or subsequent breach or non-compliance.
(E) Assignment. Rights under this Agreement may not be
assignable by GTI and/or ITG without the prior written consent of
the other party.
(F) Notices. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the Untied States
mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for
transmittal, or when sent by facsimile transmission, charges
prepaid, provided the communication is addressed:
(1) In the case of INTERCONTINENTAL TECHNOLOGIES
GROUP, INC.
2950 31st Street, Suite 240
Santa Monica, California 90405
FAX (310) 452-0076
(2) In the case of GTI:
2950 31st Street, Suite 240,
Santa Monica, California 90405
FAX (310) 452-0076
or to such other person or address designated by ITG or
GTI to receive notice.
(G) Headings. The section and subsection headings in this
agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(H) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
(I) Governing Law. This Agreement was negotiated and is
being contracted for in the State of California, but shall be
governed by the laws of the State of Nevada, notwithstanding any
conflict-of-law provision to the contrary.
(J) Binding Effect. This Agreement shall be binding upon
the parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors, and
assigns.
(K) Entire Agreement. This Agreement contains the entire
agreement between the parties hereto and supersedes any and all
prior agreements, arrangements, or understandings between the
parties relating to the subject matter of this Agreement. No
oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express or
implied, other than as set forth herein, have been made by any
party.
(L) Severability. If any part of this Agreement is deemed
to be unenforceable the balance of the Agreement shall remain in
full force and effect.
(N) Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date above written.
INTERCONTINENTAL TECHNOLOGIES
GROUP, INC.
By: /s/ Robert M. Terry
Robert M. Terry,
President
GLOBAL TECHNOLOGIES, INC.
By: /s/ Peter Brocklesby
Peter Brocklesby,
Chief Executive Officer
/s/ Sean Mahoney
Sean Mahoney
President
<PAGE>
SUPPLEMENTAL INVESTMENT AGREEMENT
The parties to this agreement are Intercontinental
Technologies Group, Inc. ("ITG") and Global Technologies, Inc.
("GTI"). This agreement is an amendment to the original
investment agreement dated April 12, 1996, and modifies that
agreement only as to the terms specifically set forth in this
supplement.
1.0 Additional Investment of ITG
ITG agrees to invest an additional $90,000 in GTI in the
form of cash ($60,000) and ITG common stock ($30,000), with the
stock value being determined during the first full week of active
trading of ITG stock in the public market, and sufficient shares
being issued at the average of the bid/asked price so that
$30,000 is received by GTI. If the stock trades for a price
equal to or in excess of $3.00 per share, then GTI will receive
10,000 shares.
2.0 Additional Equity Acquired by ITG
In exchange for the consideration set forth in 1.0 above,
ITG will receive sufficient shares of GTI stock so that it owns
48% of the issued and outstanding shares.
3.0 Conditional Buyback of Portion of ITG Equity
GTI will have rights to re-acquire portions of the equity to
be held by ITG according to the following condition:
For a period of 120 days following the receipt of the
$60,000 under this supplemental agreement, GTI may pay to ITG the
sum of $90,000 and recover 5% of the GTI equity.
4.0 Miscellaneous Provisions
4.1 At least $10,000 of the invested funds will be
directed to payment of the existing bill at the Romanian law firm
of Herzfeld & Rubin to relieve pressures on pending deals in
Romania.
4.2 At least $2,500 of the funds will be directed
towards Arik Makleff to repay personal loans made by him to Peter
Brocklesby.
4.3 The final embodiment of the company, either LLC or
normal corporation, will be formed promptly in the State of
Nevada and shares issued before July 18, 1996.
Any other provisions of the original agreement will remain in
force and only those areas specifically modified by this
supplemental agreement are being changed.
Dated: July 14, 1996
INTERCONTINENTAL TECHNOLOGIES
GROUP, INC.
By: /s/ Christopher H. Dieterich
Christopher H. Dieterich
Secretary
GLOBAL TECHNOLOGIES, INC.
By: /s/ Sean Mahoney
Sean Mahoney, President
Exhibit 10.10 Skysite Stock Sale Memorandum
DEAL MEMORANDUM INCIDENT TO MERGER
Set forth below are the deal points governing the
acquisition of an interest in and eventual merger of Skysite
Communications Corporation, a Delaware corporation ("Skysite")
into VisCorp.
1. VisCorp will provide Skysite with $75,000 to meet
immediate working capital projected to cover operations through
May 15, 1997. Skysite will issue a one-year note payable to
VisCorp at 10.5% annual interest. This note will be convertible
solely at VisCorp's option into 7.5% of the shares of Skysite.
2. VisCorp will issue 500,000 new shares of VisCorp common,
subject to normal restrictions, which are to be sold by ITG
representatives to raise additional operating capital for Skysite
operations. First call on any capital raised through the sale of
these shares will be to fund any debts then due American Mobile
Satellite Corporation ("AMSC"), unless at that point in time ITG
is no longer the surety for the airtime contract (i.e., all L/C's
or collateral on deposit belong to ITG have been returned and the
obligation cancelled). These shares will also represent a
one-year note payable to VisCorp at 10.5% annual interest. This
note will be convertible solely at VisCorp's option into an
additional 30% interest in Skysite.
3. VisCorp will lend Skysite an additional $125,000 to meet
ongoing operational expenses within the sixty day period ending
June 20, 1997. Skysite will issue a one-year note payable to
VisCorp at 10.5% annual interest. This note will be convertible
solely at VisCorp's option into an additional 17.5% interest in
Skysite.
4. VisCorp will issue ITG and related parties (everyone
except Tom Soumas) 500,000 new shares of VisCorp common upon
closing, which will include tender of all equity interests that
these ITG and related shareholders are claiming in Skysite. This
number is based upon $370,000 in equity investments and $30,000
in direct loans by Savage to Skysite. Any loans of Savage in
excess of the $30,000, verified by audit, will be paid directly
out of operating capital or out of the private placement,
whichever occurs first. An additional 240,000 shares of VisCorp
common will be issued to Tom Soumas or his designee on or before
December 31, 1997 to complete the acquisition of Skysite, making
it a wholly-owned subsidiary of VisCorp. The stock issued to the
ITG-related shareholders will have an 18-month restriction
against resale unless ITG completes the private placement
described below, in which case the restriction will be dropped to
the normal 12-month Rule 144 private placement guidelines to be
in effect April 29, 1997.
Private Placement: VisCorp will issue the 500,000 shares
described in item #2 above for resale or pledge, under terms and
conditions to be agreed upon before actual consummation of a
private placement of these shares, with ITG being responsible for
conducting and effecting the placement. The penalty for lack of
success by ITG under this private placement is the additional
6-month holding period on the stock being issued to it and its
related parties. This restriction will not apply to stock issued
to Soumas.
The following terms and conditions are placed upon the completion
of certain aspects of this transaction:
(a) Prior to Item #3 above occurring, Skysite will have
consummated any one of the following deals in progress: CBS
Newspath, Royal Bahamian Police Force, NBC Newschannel, ABC Absat
Operations, FAA/CSC Project (classified), Chevron Shipping, or
any deal of a similar dollar stature for equipment and service
sales.
(b) If Term (a) above is not met and Item #3 needs to take
place due to expiration of the 60-day period, Skysite will make
an immediate 30% reduction in overhead.
(c) Tom Soumas, Jr., the present President, will resign as
president and become Vice- President, Marketing, and VisCorp will
appoint one of its employees or designees to become
President/CEO, to be paid by VisCorp for purposes of allocation
of overhead under (b) above. Michael Savage will resign as CEO.
Soumas' position and job status will be evaluated and future
status determined during the 60-day period mentioned in Item #3
above. During that same period, no hiring or firing of Skysite
personnel may take place without the unanimous consent of the
Skysite board of directors.
(d) Any private placement proceeds will be split 75% to
Skysite and 25% to VisCorp, with Skysite signing a 10.5% one-year
note for that portion of the proceeds it receives.
(e) The Skysite board of Directors will initially consist
of three members, Mr. Larry Siegel, one member appointed by ITG
and Tom Soumas. The ITG director will remain in place until such
time as ITG is removed from any exposure to AMSC under the
collateralization agreements, at which point, the ITG director
will resign and VisCorp will appoint his replacement. Delaware
law will govern all operations of the company following its
merger into VisCorp.
These terms are agreed this 24th day of April, 1997:
INTERCONTINENTAL TECHNOLOGIES GROUP, INC.
a Nevada corporation
By: /s/ Christopher H. Dieterich
Christopher H. Dieterich, Secretary
/s/ Michael Savage
Michael Savage, Vice-President
VISCORP, a Nevada corporation
By: /s/ Larry Siegel
Lawrence Siegel, President
SKYSITE COMMUNICATIONS CORPORATION
a Delaware Corporation
By: /s/ Tom Soumas
Tom D. Soumas, Jr., President
/s/ Michael Savage
Michael Savage, CEO
ITG-Related Shareholders:
/s/ Michael Savage
MICHAEL SAVAGE on behalf of
Cochran Ranch and Tennis Club
/s/ Ruben Kitay
RUBEN KITAY on behalf of
Sinai Administrative Trust
Individuals:
/s/ Tom Soumas
TOM D. SOUMAS, JR.
/s/ Michael Savage
MICHAEL SAVAGE
<PAGE>
Exhibit 21.1 SUBSIDIARIES OF REGISTRANT
ITG Energy, Inc. (100%)
Aero Industries, Inc. (100%)
Global Technologies, Inc. (48%)
Skysite Communications Corporation (42%)
<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1147
<SECURITIES> 0
<RECEIVABLES> 50477
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55124
<PP&E> 306441
<DEPRECIATION> 124529
<TOTAL-ASSETS> 1149564
<CURRENT-LIABILITIES> 297832
<BONDS> 221068
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0
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