U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-14279
INTERCONTINENTAL TECHNOLOGIES GROUP, INC., NV
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 88-0199585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 South Carson Street, Carson City, Nevada 89701
(Address of principal executive offices) (Zip Code)
(702) 882-6629
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 5,191,593 as of June
30, 1997.
This report consists of 16 pages.<PAGE>
Part I. Item 1. FINANCIAL STATEMENTS
(attached at end of Part 1)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
Current Operations
ITG Energy, Inc. Energy continued its oil production
business during the second quarter, selling approximately $16,500
of crude oil. No material changes occurred in its operations,
however, deferred well maintenance from earlier quarters was
finally completed and resulted in slightly higher throughput
during the second quarter.
International Semiconductor Investment
ITG currently owns 1,355,000 shares of the common stock of
International Semiconductor Corp., which is in the business of
producing gallium arsenide diodes for use in the high-tech
electronics industry, and is based in Migdal Haemek, Israel. ISC
is a Nevada corporation, publicly held, and currently trading on
the over-the-counter market. At the time of the filing of this
report, ISC has been trading in the range of $0.10 to $0.05 per
share.
Skysite Investment
During the first quarter, 1997, ITG entered into a series of
negotiations with both Skysite and outside investors to alleviate
the continuing growth capital requirements of Skysite. This
resulted in the investment, by third parties, directly into
Skysite during the first quarter, and then, during the Second
Quarter, an outright sale of ITG's interest in Skysite's shares
to VisCorp, a publicly traded corporation based in Chicago,
Illinois. VisCorp will continue the business as developed. ITG
will receive 341,800 shares of VisCorp common stock and an option
to acquire an additional 300,000 for an exercise price of $0.40
per share for a period of four years following closing. ITG was
relieved of its obligation to provide collateral guarantees of
airtime usage to Skysite's contracted supplier, American Mobile
Satellite Corporation. This transaction was not completed until
the 23rd of June, 1997 and resulted in a temporary loss, as the
$263,750 investment allocated to Skysite was converted into
shares and options cumulatively valued at $0.50 per share as of
the date of closing, or a loss of $80,850 on the transaction.
VisCorp stock, with the acquisition of Skysite, rose to $1.00 per
share at the end of the third quarter, 1997, and will be
reflected at the higher market value in the quarterly report
ending September 30, 1997.
US Automotive
The principles of GTI shifted their focus from Romanian
investment to sales and marketing of improved oil filtration
systems for combustion engines, primarily heavy trucks and
busses. Negotiations began for exclusive representation in the
US and certain European and Southeast Asian territories. One,
US Automotive, a newly-formed Nevada corporation, owned
jointly by ITG and the former principles of GTI, entered into an
exclusive representation contract with Radale Imports, Inc.,
and in the U.S. and European markets. US Automotive has
complete rights to the technology in Indonesia, the European
Economic Community and Korea, and limited rights with
respect to automotive, marine and aviation power plants in
the United States. US Automotive received its first purchase
order (500 filters), from the distributor based in Indonesia,
earning a profit of $7,500, in September, 1997.
Aero Industries, Inc.
During the first quarter, Aero Industries sold its interest
in the Fort Lauderdale Executive Airport leasehold to an
unrelated third party. The transaction resulted in a sales price
of $1,100,000, which was reduced by brokerage commissions and
necessary leasehold repairs and environmental clean-up, to
$1,026,450. This asset had been held on the company's books at
zero. A lender of funds to Aero has claims originating from a
series of convertible notes provided by Aero and related contract
issues surrounding the lease as collateral, and has threatened
litigation to recover amounts it claims are owed. The company
believes that the maximum amount of its exposure is the sum of
the amounts loaned, plus legal and accounting expenses, less all
payments and rental receipts received by the lender, which would
be approximately $310,000. However, the lender has charged
interest at rates which are usurious in Florida, and if corrected
to acceptable rates would lower the amount allegedly owed to less
than $200,000. If penalties under Florida law are imposed for
the collection of usurious interest, which will be requested by
Aero if litigation results, and there would then be no debt
remaining, and the former lender would actually owe Aero
reimbursement of portions of the funds previously received.
Based upon the estimated maximum exposure, the Company has
booked income of $696,500 on the entirety of the transaction, and
posted the maximum potential amount reserved ($310,000) for
settlement of the claim as part of "accrued expenses" on the
Consolidated Balance sheet. Resolution of the lender s claims at
less than this amount would result in additional income from the
transaction to Aero Industries.
Business Development
During the first quarter, the Company was asked, by a local
architectural firm, which had been engaged by the City of Reno
for municipal planning purposes, to aid in the planning for the
redevelopment of the Truckee river corridor, within the city
limits of Reno, Nevada. The Company formed a subsidiary, Reno
River Plaza Development Corporation, and initiated a study aimed
at creation of a total development plan. During the second
quarter, the development plan was completed and presented to the
City of Reno. The city, after reviewing the presentation,
requested the development of further information concerning the
plan. The final plan was prepared and filed with the City on
September 2, 1997. ITG's teaming partners in this project:
Birtcher Construction Services, Inc., S.J. Ameroso Construction
Co., Inc., and Arciero Brothers Contractors, Inc., with
additional financial support provided by CitiCorp, Union Labor
Life and Miller & Schroeder, which have committed their time and
energies to the Reno River Plaza Redevelopment Corp. at cost, or
in some cases at their own expense.
On Time Data: The company entered into a convertible loan
agreement with On Time Data, Inc., a recently formed start-up
that promotes computer software and tracking to control and
virtually eliminate home-healthcare, provider fraud. The system
operates using identification software, keyed to each individual
provider of services, and a cross-referencing of the location
from which that individual telephones the master record-keeping
system. Each service provider contacts the main system upon
arrival at their assigned client/patient, and generally again
upon departure. The computer then compares all accumulated data
to the pre-programmed schedule and confirms that the service
provider is at the correct location and with the contracted
patient. Cost of the service is effectively 25 cents per phone
call to the provider, and On Time Data can provide instantaneous
record-keeping and billing services to the providers. All data
is available to the clients over the Internet, and each client
maintains its own Internet capacity for tracking and monitoring.
On Time has been in existence for approximately six months and is
adding clients at the rate of 2 to 3 per month. Break even is
estimated to occur in February or March of 1998 at the current
rate of growth, and sooner if more capital is invested. ITG
loaned On Time $50,000 with a credit line potential of an
additional $50,000, in exchange for 25% of the common stock of On
Time Data, and a return of the capital out of alternate funding
or profits.
Chinese Joint Venture: On May 16, 1997, the company loaned
$100,000 to John Reed International, Inc., a Nevada corporation,
having contract interests in the Provinces of Shandong and Hunan,
China, with the intent of further development of coal mining
properties that currently exist in the City of Zaozhuang. JRI
has the exclusive contract to locate, identify, and contract with
firms providing capital equipment to the Zaozhuang Coal Mining
Bureau, a Chinese Governmental entity, owned by the City of
Zaozhuang. Capital equipment estimates are in the range of
$110,000,000, with 10% of the funding to be provided in cash by
the City of Zaozhuang. The remainder is to be guaranteed by the
Provincial and Federal Governments. In Hunan Province, JRI has
been tasked with providing increased access to cellular telephony
technology, and has been granted a license to purchase equipment
to establish a cellular phone system, primarily for the railway
company communications system operating through central China.
ITG can convert its loan into 25% of the equity of JRI, or obtain
an additional 25% of JRI common (up to 50% total equity
participation) for an additional $150,000 of capital investment.
This decision is not required until execution of a contract
between the Chinese corporation and the equipment supplier.
Capital Resources and Liquidity of ITG
Operating Loans During the second quarter, ITG repaid an
additional $13,420 on its loans secured by the Gita Temple Ashram
Mortgage, with the balance at June 30, 1997 reduced to $152,314
on the "first" and remaining at $40,000 on the "second". ITG had
sufficient cash resources resulting from the sale by its
subsidiary, Aero and repayment of sums advanced to Aero, to
satisfy all immediate creditors and commitments coming current
during the first quarter. Portions of the loan came due during
the first quarter and were extended by the respective note
holders for an additional year.
Employee Stock Transactions None. 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. Tom Hanson, the new Chief
Operating Officer, began his employment during the first quarter,
and receives $3,000 per month for his services.
Manufacturing The company has no manufacturing operations, and
has had none since the sale of the Continental Connector
subsidiary's operations during the summer of 1993.
Selling and Marketing The Company currently has no marketing
plans, pending analysis of the Reno project and the result of
sales of its Skysite and Aero subsidiaries.
<PAGE>
Part 1. Item 1. (continued) FINANCIAL STATEMENTS:
The unaudited financial statements for the Second Quarter
follow:
Consolidated Balance Sheet Page 5
Statements of Cash Flows Page 6
Statements of Opertions Page 7
Notes to Financial Statements Page 8
<PAGE>
Intercontinental Technologies Group, Inc.
Consolidated Balance Sheet
June 30, 1997
ASSETS
Current assets:
Cash $ 456,630
Trading securities 192,900
Accounts receivable, other 26,450
Accounts receivable, related parties 22,500
Notes receivable - current portion 30,477
----------
Total current assets 728,957
Property and equipment, at cost, less
accumulated depreciation of $138,279 177,493
Notes receivable - non-current 628,962
Deposits 51,000
----------
1,640,412
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 12,500
Current portion of long term debt 194,814
Accounts payable 35,425
Accrued expenses 325,763
Amount due officer 31,631
---------
Total current liabilities 600,133
Advances from affiliates 242,467
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 (3,303,810)
---------
743,062
---------
1,640,412
=========
See accompanying notes to financial statements.<PAGE>
<PAGE> Intercontinental Technologies Group, Inc.
Statements of Operations
For the Three months and Six Months Ended June 30, 1996
and 1995
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Six Months Six Months Three Mo. Three Mo.
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------ ------------ --------- ---------
Sales $ 13,182 $ 43,945 25,677 83,085
Cost of sales 15,188 7,799 23.206 16,413
------------ ------------ --------- ---------
Gross profit (loss) (2,006) 36,146 2,471 66,672
Other costs and expenses:
General and administrative 194,245 196,073 390,644 295,853
------------ ------------ --------- ---------
Income (loss) from operations (196,251) (159,927) (388,173) (229,181)
------------ ------------ --------- ---------
Other income and (expense):
Gain (loss) on sale of leasehold (37,464) - 658,986 -
Gain from sale of investments (80,850) 499,668 (80,850) 499,668
Equity in losses of
unconsolidated subsidiaries 0 (123,562) 0 (124,312)
Interest income 13,596 10,360 27,494 21,201
Interest expense ( 9,059) ( 14,019) ( 18,820) (26,658)
------------ ------------ --------- --------
(113,777) 372,447 586,810 369,899
------------ ------------ --------- --------
Income (loss) before income taxes (310,028) 212,520 198,637 140,718
Provision for income taxes 0 0 0 0
------------ ------------ --------- --------
Net income (loss) (310,028) 212,520 198,637 140,718
============ ============
========= ========
Earnings (loss) per share:
Net income (loss) $ (0.06) $ 0.04 0.04 0.03
============ ============
========= ========
Weighted average shares outstanding 5,191,593 5,051,593 5,051,593 3,931,593
============ ============
========= ========
</TABLE>
Intercontinental Technologies Group, Inc.
Statements of Operations
Three months Ended June 30, 1997
June 30, June 30
1997 1996
------------ ------------
Sales $ 12,495 $ 39,140
Cost of Operations 8,018 8,614
------------ ------------
Gross profit (loss) 4,477 30,526
Other costs and expenses:
General and administrative 196,399 99,780
------------ ------------
Income (loss) from operations (191,922) (69,254)
------------ ------------
Other income and (expense):
Gain on sale of leasehold interest 696,450 -
Equity in subsidiary losses - ( 750)
Interest income 13,898 10,841
Interest expense ( 9,761) (12,639)
------------ ------------
700,587 ( 2,548)
Income (loss) before income taxes 508,664 (71,802)
Provision for income taxes 0 0
------------ ------------
Net income (loss) 508,665 (71,802)
============ =============
Earnings (loss) per share:
Net income (loss) $ 0.10 $ (0.01)
============ ============
Weighted average shares outstanding 5,191,593 5,051,593
============ ============
See accompanying notes to unaudited
consolidated financial statements
<PAGE>
Intercontinental Technologies Group, Inc.
Notes to Consolidated Financial Statements
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's form 10-KSB filed for the year
ended December 31, 1996.
Income (loss) per share was computed using the weighted average
number of common shares outstanding.
Federal and state income taxes amounting to approximately $67,500
applicable to net income for the six months ended June 30, 1997
have been reduced to zero due to the availability of net
operating loss carryforwards. The Company has unused loss
carryforwards of approximately $3,740,000 at June 30, 1997. The
federal tax benefit of the accumulated losses of approximately
$1,271,000 has been fully reserved as their ultimate realization
has not been assured.
During January 1997, the Company sold its interest in the Aero
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 Company received $1,000,000 of the proceeds during the
six months ended June 30, 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
$1,500,000 and has recorded $310,000, the expected maximum
settlement amount, as a liability and in determining the gain on
the sale. This amount is included in accrued expenses in the
accompanying balance sheet. The Company recorded a gain from the
sale of $658,986 during the six months ended June 30, 1997.
On April 30, 1997 the Company agreed to sell its interest in the
Skysite corporate subsidiary to VisCorp for 341,800 shares of its
restricted common stock and options to purchase 300,000
additional shares at $.40 per share. The stock received had a
market value as of the June 23, 1997 closing date of $.50 per
share. The Company recorded a loss from the transaction of
$80,850 during the quarter ended June 30, 1997. The Company
considers its investment in VisCorp shares to be temporary in
nature and, accordingly, has classified the investment as a
trading security in the accompanying balance sheet. VisCorp
shares had a market value of $1.00 at September 30, 1997. The
Company was relieved of its responsibilities to provide
additional funding to Skysite as a result of the sale.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports of Form 8-K
Exhibit 10.11 Contract with VisCorp for sale of
Skysite shareholdings, with exhibit pages.
Exhibit 10.12 Contract for Loan to John Reed International,
and investment in Chinese projects
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INTERCONTINENTAL TECHNOLOGIES GROUP, INC.
(Registrant)
Dated: November 7, 1997
By: /s/ Robert M. Terry
Robert M. Terry, President
By: /s/ Robert M. Terry
Robert M. Terry, Treasurer<PAGE>
Exhibit 10.11
MEMORANDUM OF UNDERSTANDING - ACQUISITION
This Memorandum of Understanding - Acquisition
("Memorandum"), is made on May 1, 1997, between VisCorp
("VisCorp"), a Nevada corporation, on the one hand, and
Intercontinental Technologies Group, Inc. ("ITG"), a Nevada
corporation, Tom D. Soumas, Jr. ("Soumas"), Cochran Ranch Golf
and Tennis Resort, Inc. ("Cochran"), a corporation, the Sinai
Administrative Trust ("Trust), Carol Anderson ("Anderson"), Hart
Garber ("Garber"), George Straayer ("Straayer"), Michael Savage
("Savage"), and Skysite Communications Corporation ("Skysite"),
on the other hand. ITG, Soumas, Cochran, Trust, Anderson,
Garber, and Straayer are sometimes collectively referred to
herein as "Sellers".
1. VisCorp and Sellers desire to have Sellers exchange all
of their shares in Skysite for shares of VisCorp in the
proportion (or maximum amount) set forth below so that VisCorp
will acquire all of the issued and outstanding shares of Skysite
(hereinafter sometimes referred to as "Skysite Acquisition").
2. Based on the current factors known, VisCorp will issue
no more than 750,000 shares of VisCorp Common Stock (the
"Shares") for all of the issued and outstanding shares of Skysite
(Sellers agree that Soumas will be entitled to receive up to
240,000 of the Shares and all of the remaining shareholders of
Skysite shall receive up to a maximum of 510,000 of the Shares).
3. Closing of the Skysite Acquisition may take place at
any time on or before November 1, 1997 and at any mutually
agreeable place, provided, however, that the Skysite Acquisition
will close within 15 days of the satisfaction of the conditions
set forth in paragraph 4.
4. Skysite requires $100,000 cash deposit to replace
certain collateral provided by certain shareholders of Skysite to
secure certain of Skysite's obligations to American Mobile
Satellite Corporation ("AMSC"). VisCorp agrees to raise private
placement financing (the "Private Placement"), as reflected in
the Memorandum of Understanding - Private Placement ("MOU"), and
further agrees that the first net proceeds up to $100,000 will
be used as a replacement deposit for the stock held as a security
deposit by AMSC; provided, that VisCorp makes no assurance that
any funds will be held as a security deposit by AMSC; provided
that VisCorp makes no assurance that any funds will be raised
through the Private Placement. VisCorp will use good faith
efforts in the exercise of its business discretion to maintain
the account with AMSC so as to avoid any call on the collateral
provided by the Skysite shareholders. If VisCorp breaches its
obligation in this paragraph 4, VisCorp will indemnify the
Skysite shareholders for any damage arising from the loss of the
collateral up to the value of AMSC s claim against the
collateral.
5. VisCorp will loan to Skysite $75,000.00, which amount
Sellers represent Skysite needs to meet immediate working capital
requirements for the period through May 15, 1997. Skysite will
issue a one-year note payable to VisCorp. Such loan shall be
at a maximum annual interest rate of 10% and shall be evidenced
by appropriate loan documentation including any security or
collateral VisCorp may deem necessary for its protection and
which Skysite agrees to provide to VisCorp.
6. Each Seller represents and warrants to the best of
their knowledge as follows:
(a) Sellers have the power to enter into and perform
this Memorandum; and this Memorandum's execution has been duly
authorized by all necessary corporate action.
(b) This memorandum constitutes a valid and binding
obligation on the part of Sellers and Soumas, enforceable in
accordance with its terms.
(c) No suit, action, arbitration, or legal,
administrative, or other proceeding or governmental investigation
is pending or threatened against or affecting Sellers, Soumas, or
Skysite, under this memorandum, except for the Witter Publishing
litigation, the PenWell Publishing litigation, and the Geoffrey
Stevens labor claim, except as otherwise disclosed herein.
(d) Sellers own all of the outstanding stock of
Skysite.
(e) The statement of assets and liabilities of
Skysite, dated May 2, 1997, as set forth on Exhibit A, hereto, is
true and correct as of the date of the financial statement.
(f) There are no liabilities of Skysite, whether
actual or contingent, directly or indirectly arising out of any
act or omission occurring at any time prior to the execution of
this MOU, other than as set forth on Exhibit B, except for a
recently incurred obligation to AMSC estimated to be
approximately $150,000 and the maximum amount of such liabilities
shall not exceed $846,578.76.
(g) Neither the execution of this memorandum nor the
consummation of the transactions contemplated by it would
constitute a default or violation of the articles of
incorporation of bylaws of any of Sellers, or of any license,
lease, franchise, mortgage, instrument or other agreement.
(h) no consent or approval of any other person or
governmental authority is necessary for this memorandum to be
effective.
7. Each Seller, individually, shall indemnify, defend, and
hold harmless VisCorp and its officers, directors, shareholders,
employees, agents, and representatives (collectively, "VisCorp
Indemnitees"), against all liability, demands, claims, costs,
losses, damages, recoveries, settlements, and expenses (including
interest, penalties, attorney fees, accounting fees, expert
witness fees, costs and expenses) incurred by any VisCorp
Indemnitee, known or unknown, contingent or otherwise, directly
or indirectly arising from or related to any untruth, inaccuracy,
misrepresentations, or breach of any representations and
warranties or agreements made by the breaching individual Seller
in this memorandum.
8. As to any breach of Seller's obligations under this
Memorandum occurring within 90 days of execution which gives rise
to an indemnity obligation set forth in paragraph 7, the number
of shares to e distributed to Sellers and Soumas pursuant to
paragraph 2 shall be reduced by the dollar value of such breach,
with the responsibility being allocated solely to the breaching
Seller's share holdings.
9. Upon execution of this Memorandum: (a) Savage shall
resign as Chief Executive Officer of Skysite effective
immediately, and (b) Soumas shall continue as President of
Skysite, but shall report to Lynn D. Rowntree ("Rowntree").
Soumas shall continue to have the authority customarily
associated with the office of the president, except that Soumas
must obtain Rowntree's consent to hire any personnel, to convey
any interest in any asset of Skysite (including the writing of
any checks), and to incur any obligation on the part of Skysite
in excess of $5,000.00.
10. VisCorp will not terminate any Skysite employees for a
period of sixty days following the execution of this memorandum,
except wit the unanimous consent of the Skysite Board of
Directors.
11. Sellers shall cause both the resignation and
appointment of members of the Board of Directors of Skysite such
that immediately following the execution of this memorandum, the
Skysite board shall consist of three members: Lawrence Siegel,
Soumas, and an appointee of ITG. The ITG appointee shall
continue to serve until such time as the obligations of ITG to
AMSC have been satisfied, at which time such board member shall
resign and shall be replaced by an appointee of VisCorp.
12. Except for the obligations set forth herein, including
paragraph 13, upon execution of this memorandum, Sellers and
Savage, and each of them, and their respective successors, heirs,
executors, and assigns (collectively Releasing Parties ) shall
and do hereby jointly and severally, absolutely and irrevocably
discharge and release VisCorp and Skysite and their respective
officers, directors, partners, predecessors, and successors of
and from any and all liabilities, liens, debts, accounts,
accountings, payments due, demands, obligations, promises, acts,
agreements, costs, and expenses (including attorneys fees)
damages, actions and causes of action, of whatever kind or
nature, whether known or unknown, suspected or unsuspected, which
any of them now or hereafter own or hold or has at any time
heretofore owned or held against the other by reason of any
matter, cause or thing whatsoever, which occurred, was done,
omitted or was suffered to be done through the date of execution
of this Memorandum.
13. (a) The parties understand and agree that the release
set forth in paragraph 12 does not apply to the promissory note
executed by Soumas in favor of Cochran in the amount of
$10,000.00.
(b) The parties understand and agree that the release
set forth in paragraph 12 does not apply to the account payable
between Savage and Skysite, but only to the extent that the
amount of the payable does not exceed $10,000.00 and provided
that all expenses represented by the amount of the payable
(subject to verification) constitute legitimate business expenses
of Skysite.
14. This Memorandum is intended to provide both guidance in
the preparation of a more complete written agreement and evidence
of a legally binding agreement between the parties, enforceable
in accordance with the terms set forth herein. The parties agree
to use their best efforts to negotiate a more complete agreement,
which will supersede this agreement. However, failure to achieve
a more complete agreement will not limit the enforceability of
the agreement reflected in this Memorandum.
The definitive agreement will contain the representations,
warranties, covenants, conditions, and other terms and provisions
that are commercially reasonable and typical for transactions of
this type between similarly situated parties. If the parties do
not enter into a complete, definitive agreement, they agree that
any provisions necessary to construe and enforce this agreement
will reflect such commercially reasonable provisions.
VisCorp
By: /s/ Lawrence Siegel
Lawrence Siegel, President
Intercontinental Technologies Group,
Inc.
By: /s/ Christopher H. Dieterich
Christopher H. Dieterich, Secretary
/s/ Michael Savage
Michael Savage, Vice-President
Skysite Communications Corporation
By: /s/ Thomas Soumas
Thomas D. Soumas, President
Cochran Ranch Golf and Tennis Resort,
Inc.
By: /s/ Michael Savage
Michael Savage, President
Sinai Administrative Trust
By: /s/ Ruben Kitay
Ruben Kitay, Trustee
<PAGE>
<PAGE>
Exhibit 10.12
INVESTMENT AGREEMENT
The parties to this agreement are John Reed International,
Inc., and its president John Reed (collectively, "JRI") and
Intercontinental Technologies Group, Inc. ("ITG"). The parties
intend to pursue the opportunity to build, own, operate and
transfer power stations in China, and to modify, upgrade and/or
participate in the development of the ZaoZhung Coal Mining Bureau
company contract.
1.0 The Company
1.1 A new company, to be identified as John Reed
International, Inc., a Nevada corporation, will be formed, having
all of the existing attributes of JRI, California, or, if
possible, JRI, California will be reincorporated in Nevada. The
existing debt structure of JRI is agreed to be approximately
$180,000, all due John Reed individually. This debt will be
recognized by the parties, will draw the minimum interest in each
successive year, and will be repaid on a 50/50 sharing basis, out
of profits, at the same time any debts are repaid to ITG.
1.2 ITG's investment will take the form of an initial
capital purchase in JRI, based upon a total investment of legal
fees and contributed cash of $250,000, of $10,000 in stock
purchase, with the remainder to be in the form of loans. When
fully paid and/or loaned, this will entitle ITG to 45% of the
common stock of JRI.
2.0 The Investment
2.1 ITG's total investment in JRI is to be $250,000, less
the $50,000 of legal fees to be provided by Christopher
Dieterich. Should these services not be made available, ITG will
cause them to be provided by an alternate firm and will bear
their responsibility. ITG will also provide $190,000 in loans,
having the same terms as the loan due John Reed.
2.2 In exchange for the investment and loans, ITG will
receive up to 50% of the capital or common stock of JRI, less 5%
to be ceded to Dieterich if he provides the described services,
upon full compliance with the investment of the remaining
$200,000.
2.3 The initial investment will be the sum of $100,000 due
upon execution, which will be utilized for payments to be
determined by John Reed up to $70,000 and the remainder for
travel and office expenses.
2.4 The cash investment of ITG subsequent to the initial
$100,000 will be governed by the following series of decisions
and commitments:
ONE: Within 5 days of the next need for capital, subject to
the determination by the board of JRI (as set forth
elsewhere in this agreement), ITG must commit to invest up
to $150,000, as needed, and thereby retain its 50% interest
in JRI; or
TWO: Within that same 5 day-period determine that it does
not wish to invest further in JRI, at which time it must
elect:
Option 1: keep the investment (equity/loan) it
currently has ($100,000) and retain a 25%
interest in JRI, or
Option 2: request that JRI repurchase the 25% interest
for the sum of $300,000, payable within 90
days from the date of the election. This is
a debt of JRI, not any of the shareholders.
If JRI is not able to pay this sum, then
JRI's assets (which would include the
project) will be subject to ITG's claims.
It is not the parties' intent to sell equity in the venture for
recognition of Reed's profit, but to sell the equity to insure
that the venture (JRI) has sufficient operating capital to
undertake the steps necessary to fulfill the various contracts
with the Chinese, secure appropriate teaming partners or
subcontractors and establish a viable company built around the
Chinese infrastructure contracts.
3.0 Company Operations
3.1 John Reed will remain as President and Chairman of the
Board of JRI, and any other positions will be filled as necessary
at the direction of Reed. Once ITG has achieved its complete
investment, the company will be run under normal corporate law
with directors appointed by the shareholders and the shareholders
then appointing officers. Prior to that time, Reed is in charge.
3.2 The parties anticipate that ITG will be responsible for
handling US and financial investor affairs and Reed will be
responsible for all Chinese and South East Asian affairs, and
will remain as the lead individual when appearances are called
for at investor/contractor meetings.
3.3 Local affairs will be based at Reed's address for all
Chinese communications until a formal entity is created, such as
"Jinshan Power", at which point it will have a new address
befitting its stature (whatever that is at the time). All other
communications can be based out of 2950 Ocean Park (law office)
until such time as that becomes impractical. If necessary, phone
lines will be pulled in and answered "JRI" if the need arises.
3.4 There will be no salaries to the initial parties or
their employees until such time as there is more permanent
sources of income. Each party will bear its own employees'
expenses for salaries, but JRI will cover travel, as approved.
3.5 Any decisions as to spending of the $200,000 paid in by
ITG will be approved by one person from the Reed group and one
person from the ITG group.
4.0 Public Offering and/or Trading
4.1 ITG agrees that, upon successful establishment of any
potential project for JRI, ITG will distribute its holdings in
JRI to ITG's shareholders, such that JRI will then have in excess
of 2,300 shareholders. Following, or contemporaneous with, this
shareholder dividend distribution, ITG will cause to be filed
(utilizing Dieterich's commitment of legal services) a Form 10 on
behalf of JRI, establishing JRI as a 12(g)-3 reporting company
for SEC purposes and therefore "public".
4.2 ITG will also conduct liaison and negotiation with
major brokerage houses, either prior to or shortly after the
public filings on behalf of JRI, in an attempt to solicit
investment interest in JRI as a public entity, with the goal
being one of market penetration in the securities business and a
possible investment by an outside "house" irrespective of ITG's
shareholders.
5.0 Miscellaneous
5.1 GTI. ITG understands that significant benefits may
enure to JRI from its dealings with GTI (Brocklesby) and agrees
to accept, subject to feasibility, the terms and conditions of
dealings with GTI concerning the ABB power plants originally
built for the Tennessee Valley Authority, or such replacements as
may be identified.
5.2 Subsequent Events. JRI 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.
5.3 Amendment. This Agreement may be amended or modified
at any time and in any manner only by an instrument in writing
executed by the parties hereto.
5.4 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.
5.5 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.
5.6 Assignment. Neither this Agreement nor any right
created by it shall be assignable by either party without the
prior written consent of the other party.
5.7 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 ITG
Robert M. Terry
2950 31st Street, Suite 240
Santa Monica, California 90405
(2) In the case of JRI:
John Reed
222 S. Figueroa, Suite 1821
Los Angeles, California 90012
or to such other person or address designated by ITG or
JRI to receive notice.
5.8 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.
5.9 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.
5.10 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. Should any aspect of
this agreement be subject to litigation or arbitration, the
prevailing party in such dispute will be entitled to, in addition
to all other damages, an award of its reasonable attorneys and
accountant's fees.
5.11 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.
5.12 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.
5.13 Severability. If any part of this Agreement is deemed
to be unenforceable the balance of the Agreement shall remain in
full force and effect.
5.14 Facsimile Counterparts. A facsimile, telecopy, or
other reproduction of this Agreement may be executed by one or
more parties hereto and such executed copy may be delivered by
facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can
be seen, and such execution and delivery shall be considered
valid, binding and effective for all purposes. At the request of
any party hereto, all parties agree to execute an original of
this Agreement as well as any facsimile, telecopy or other
reproduction hereof.
5.15 Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
5.16 No Third Party Beneficiaries. Nothing contained in
this Agreement, expressed or implied, is intended to confer upon
any person or entity other than the parties to this Agreement and
their successors-in-interest and permitted assignees, any rights
or remedies under or by reason of this Agreement unless expressly
so stated.
5.17 Remedies. The parties to this Agreement acknowledge
and agree that breach of any of the covenants of the Agreement
may not be compensable by payment of money damages and,
therefore, that the covenants of the parties set forth in this
Agreement may be enforced in equity by a decree requiring
specific performance. Without limiting the foregoing, if any
dispute arises concerning the sale or other disposition of any of
the stock that is the subject of this Agreement, the parties
agree that an injunction may be issued restraining the sale or
other disposition of such stock or rescinding any such sale or
other disposition, pending resolution of the controversy. These
remedies shall be cumulative and non-exclusive and shall be in
addition to any other rights and remedies the parties may have
under this Agreement.
5.18 Representation. Both parties acknowledge that they
have been represented in general terms by Dieterich, who
represents both parties separately in other endeavors and waive
any conflict of interest that may result therefrom. Based upon
this representation, neither party will be construed to have been
the drafting party for this Agreement, and neither party will be
adjudged as "represented" for purposes of interpreting
ambiguities in the Agreement.
5.19 Force Majeure. The parties accept that events beyond
their control may modify or force cancellation of the terms and
conditions of this agreement and therefore accept that the
intervention of acts that are outside of either party's control,
such as flood, famine, government edict, acts of god, and similar
intrusions will not be considered a breach by either party.
[SIGNATURES ON NEXT PAGE]<PAGE>
Dated: November 8, 1997
JOHN REED INTERNATIONAL, INC.
By:_/s/ John Reed_______________
John Reed, President
INTERCONTINENTAL TECHNOLOGIES GROUP, INC.
By:_/s/ Robert Terry____________
Robert M. Terry, President
By:_/s/ Arik Makleff____________
Arik Makleff, Director
CHRISTOPHER DIETERICH**
By:_/s/ Christopher Dieterich___
Christopher Dieterich
**As to those portions of the agreement concerning performance of
legal services (paragraphs 2.0, 2.1 and 4.1).<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-END] JUN-30-1997
[CASH] 456,630
[SECURITIES] 192,900
[RECEIVABLES] 48,950
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 728,957
[PP&E] 315,772
[DEPRECIATION] 138,279
[TOTAL-ASSETS] 1,640,412
[CURRENT-LIABILITIES] 600,133
[BONDS] 12,500
[COMMON] 5,192
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 1,640,412
[SALES] 12,495
[TOTAL-REVENUES] 4,477
[CGS] 0
[TOTAL-COSTS] 196,399
[OTHER-EXPENSES] 196,399
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 9,761
[INCOME-PRETAX] 508,664
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 508,665
[EPS-PRIMARY] 0.10
[EPS-DILUTED] 0.10
</TABLE>
