Conformed Copy
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1996, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ or ____
Commission file number 0-13865
ICC TECHNOLOGIES, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2368845
---------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
441 North 5th Street, Suite 102
Philadelphia, Pennsylvania 19123
- -------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 625-0700
Former name, former address and former fiscal year if
changed since last report: not applicable
Indicate by check mark whether the registrant (1) 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 periods 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___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock, par value $.01 per share
21,195,554 shares outstanding as of May 6, 1996.
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<PAGE>
INDEX TO FORM 10-Q REPORT
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
- ------ --------------------- -------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 1996 and 3
December 31, 1995
Consolidated Statements of Operations - Three months 4
ended March 31, 1996 and 1995
Consolidated Condensed Statements of Cash Flows - Three 5
months ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 9
PART II OTHER INFORMATION
Item 1. Legal proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE>
BALANCE SHEET
Item 1. Financial Statements (Unaudited)
ICC TECHNOLOGIES, INC
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------------ -----------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 13,966,778 $ 1,573,475
Receivables -
Employees 28,667 28,667
Engelhard/ICC 48,367 160,973
Prepaid expenses and other 78,016 530,131
------------------ -----------------
Total current assets 14,121,828 2,293,246
RESTRICTED CASH 2,500,000 2,500,000
PROPERTY AND EQUIPMENT, net 2,737 3,180
------------------ -----------------
Total assets $ 16,624,565 $ 4,796,426
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 208,585 $ 28,358
Current portion of long-term debt 0 150,000
Accrued liabilities 127,544 287,091
------------------ -----------------
Total current liabilities 336,129 465,449
------------------ -----------------
LOSSES OF ENGELHARD/ICC IN EXCESS OF INVESTMENTS 2,394,819 2,797,165
------------------ -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value -
Series F, authorized, issued and outstanding 0 shares at March 31, 1996
and 135 shares at December 31, 1995 (liquidation value $256,270 at
December 31, 1995) 0 1
Series G Convertible, authorized, issued and outstanding 0 shares at
March 31, 1996 and 135 shares at December 31, 1995 (liquidation value
$664,400 at December 31, 1995) 0 4
Series H Convertible, authorized, issued and outstanding 0 shares at
at March 31, 1996 and 1,500 shares at December 31, 1995 0 15
Series I, authorized, issued and outstanding 0 shares
at March 31, 1996 and 500 shares atDecember 31, 1995 0 5
Series J, authorized, issued and outstanding 0 shares
at March 31, 1996 and 225 shares at December 31, 1995 0 2
Common stock, $.01 par value, authorized 50,000,000 shares,
issued 21,000,738 shares at March 31, 1996 and 14,692,193
shares at December 31, 1995 210,008 146,923
Additional paid-in capital 49,286,642 35,104,011
Accumulated deficit (35,431,603) (33,545,719)
Less: Treasury common stock, at cost, 66,227 shares (171,430) (171,430)
------------------ -----------------
Total stockholders' equity 13,893,617 1,533,812
------------------ -----------------
Total liabilities and stockholders' equity $ 16,624,565 $ 4,796,426
================== =================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
ICC TECHNOLOGIES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
----------------------------------
March 31, March 31,
1996 1995
---------------- ----------------
<S> <C> <C>
REVENUES $ 0 $ 6,500
COST OF GOODS SOLD 0 5,961
---------------- ----------------
Gross Profit 0 539
---------------- ----------------
OPERATING EXPENSES:
General and administrative 371,261 264,248
---------------- ----------------
Total operating costs 371,261 264,248
---------------- ----------------
Loss from operations (371,261) (263,709)
INTEREST:
Interest income 83,031 109,354
Interest expense on stockholders' loans 0 (4,063)
---------------- ----------------
83,031 105,291
---------------- ----------------
EQUITY INTEREST IN NET LOSS OF ENGELHARD/ICC (1,597,654) (999,983)
---------------- ----------------
NET LOSS (1,885,884) (1,158,401)
CUMULATIVE PREFERRED STOCK
DIVIDEND REQUIREMENTS (49,655) (51,875)
---------------- ----------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (1,935,539) $ (1,210,276)
================ ================
NET LOSS PER COMMON SHARE $ (0.11) $ (0.10)
================ ================
WEIGHTED AVERAGE COMMON SHARES 17,781,239 12,281,555
================ ================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
ICC TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1996 1995
--------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (1,855,884) $ (1,158,401)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 443 239
Equity interest in net loss of Engelhard/ICC 1,597,654 999,982
(Increase) decrease in:
Receivables 112,606 (361,087)
Inventories 0 5,960
Prepaid expenses and other 60,054 (24,869)
Increase (decrease) in:
Accounts payable 180,227 (54,402)
Accrued expenses (174,847) 84,217
---------------- --------------
Net cash used in operating activities (79,747) (508,361)
---------------- --------------
Cash Flows from Investing Activities:
Capital contributions to Engelhard/ICC (2,000,000) 0
Purchases of property and equipment, net 0 (5,010)
---------------- --------------
Net cash used in investing activities (2,000,000) (5,010)
---------------- --------------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock and warrants, net 14,653,050 1,524,307
Repayments of borrowings from stockholder (150,000) 0
---------------- --------------
Net cash provided by financing activities 14,503,050 1,524,307
---------------- --------------
Net increase in cash and cash equivalents 12,423,303 1,010,936
Cash and Cash Equivalents, Beginning of Period 1,573,475 1,114,335
---------------- --------------
Cash and Cash Equivalents, End of Period $ 13,996,778 $ 2,125,271
================ ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
ICC TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1996
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 Rule 10-01 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 accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
financial statements and footnotes thereto for the year ended December
31, 1995 included in the Company's Annual Report on Form 10-K for the
year then ended. Results of operations for the three months ended March
31, 1996 are not necessarily indicative of results of operations
expected for the full year.
(2) BUSINESS AND GOING CONCERN CONSIDERATIONS
Business
ICC Technologies, Inc. ("ICC" or the "Company") is a Delaware
Corporation. ICC through its joint venture Engelhard/ICC ("the
Partnership") with Engelhard Corporation ("Engelhard"), designs,
manufactures and markets innovative climate control systems to
supplement or replace conventional air conditioning systems. The
Partnership's climate control systems are based on proprietary
desiccant technology initially developed by the Company, licensed
honeycomb rotor technology and Engelhard's patented titanium silicate
desiccant, ETS(TM). The Partnership's climate control systems are
designed to address indoor air quality, energy and environmental
concerns and regulations currently affecting the air conditioning
market.
The Partnership was formed on February 7, 1994 pursuant to the terms
and conditions under the Joint Venture Asset Transfer Agreement
("Transfer Agreement") whereby the Partnership succeeded to the
desiccant air conditioning business conducted by ICC prior to the
formation of the Partnership and the activities of ICC and Engelhard
under the Joint Development Agreement dated May 26, 1992. Since the
formation of the Partnership, the Company has become principally a
holding company whose activities have related primarily to its
participation in the management of the Partnership in which it owns a
50% interest. The Company is not permitted to engage directly or
indirectly in any activities which would conflict with the
Partnership's business as long as the Partnership is in effect, but the
Company is not precluded from engaging in other activities. The Company
currently does not have any plans to engage in other activities and,
therefore, is not expected to generate any significant revenues,
although it will continue to incur general and administrative expenses.
Going Concern
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Revenues
and the Company's share of results of operations of the Partnership
have been insufficient to cover costs of operations for the three
months ended March 31, 1996. The Company has incurred cumulative losses
since inception of $35,431,603 through March 31, 1996. In order to
continue operations, the Company has had to raise additional capital to
offset cash utilized in operating and investing activities. The
Company's continuation as a going concern is dependent on its ability
to: (i) generate sufficient cash flows to meet its obligations on a
timely basis, (ii) obtain additional financing as may be required, and
(iii) ultimately attain profitable operations and
6
<PAGE>
positive cash flows from its operations and its investment in the
Partnership. The accompanying financial statements do not include any
adjustments that may result from the Company's inability to continue
as a going concern.
The cash utilized in the Company's operating and investing activities
during the three months ended March 31, 1996 was financed primarily
through proceeds from the issuance of Common Stock and exercise of
stock options and warrants. Management believes the Partnership will
require additional capital contributions during 1996 and the Company
plans to use net proceeds from the offering of 2.5 million shares
completed in February 1996 to fund its portion of such required capital
contributions. To the extent Partnership capital contributions in
excess of the net proceeds from such offering are required, or if the
Company requires additional funds to continue its operations, the
Company would expect to satisfy such requirements by seeking equity
financing. The Company's ability to successfully obtain equity
financing in the future is dependent in part on market conditions and
the performance of the Partnership. There can be no assurance that the
Company will be able to obtain equity financing in the future.
(3) INVESTMENT IN ENGELHARD/ICC PARTNERSHIP
The following are the summarized unaudited financial results of the
Partnership:
Quarter ended Quarter ended
March 31, March 31,
1996 1995
------------- -------------
Results of operations:
Revenues $ 2,076,099 $ 1,788,002
Cost of goods sold 2,903,733 1,679,943
--------- ---------
Gross profit(loss) (827,634) 108,059
Operating expenses:
Marketing 873,721 827,168
Engineering 278,855 213,880
Research and development 296,985 366,412
General and administrative 813,964 479,796
------- -------
Loss from operations (3,091,159) (1,779,197)
Interest expense 104,149 220,768
------------ -------------
Net loss $(3,195,308) ($1,999,965)
============ =============
As of As of
Balance sheet information: March 31, December 31,
1996 1995
----------- ------------
Cash $ 143,476 $ 346,480
Receivables 2,621,357 2,057,420
Inventory 4,428,107 3,385,125
Other current assets 106,017 158,939
Property, plant and equipment 8,196,891 8,263,642
Cash held in escrow 744,889 865,744
Other noncurrent assets 1,767,367 1,802,155
------------ ------------
Total Assets $ 18,008,104 $ 16,879,505
============ ============
Current liabilities $ 1,856,200 $ 1,519,394
Revolving credit line 2,750,000 2,750,000
Long term debt 8,688,871 8,701,755
Partners capital 4,713,033 3,908,356
------------ ------------
Total Liabilities and capital $ 18,008,104 $16,879,505
============ ===========
7
<PAGE>
The Company's investment in the Partnership is owned by a subsidiary,
ICC Desiccant Technologies, Inc., whose principal asset is the
Partnership investment. The investment in the Partnership is accounted
for under the equity method of accounting. The Company's proportionate
share of losses in the Partnership are $1,597,654 and $999,983 for the
three months ended March 31, 1996 and 1995, respectively. The
Partnership has incurred cumulative losses of approximately $19,400,000
since inception through March 31, 1996. The Company's share of the
cumulative losses have resulted in the recognition of losses in excess
of the Company's investment in the amount of $2,394,819 and $2,797,165
as of March 31, 1996 and December 31, 1995, respectively.
Receivables from the Partnership were $48,367 and $160,973 at March 31,
1996 and December 31, 1995, respectively. Interest income earned from
the Partnership in connection with a bridge loan amounted to
approximately $92,000 in the first quarter of 1995. The general
partners are guarantors of the Partnership's long term debt which
totals approximately $ 8.7 million as of March 31, 1996.
The Company and Engelhard each made additional capital contributions of
$2,000,000 to the Partnership in the three months ended March 31, 1996.
Subsequently, each partner made additional $1 million capital
contributions to the Partnership in April 1996 and again in May 1996.
(4) STOCK TRANSACTIONS:
Equity Investments
In February 1996, the Company issued 2,500,000 shares of Common Stock
in a secondary offering at $7 per share less underwriting discounts and
commissions of $.49 per share. Proceeds of $16,275,000 were offset by
costs incurred with the offering of approximately $620,000. In
connection with the offering, all outstanding Preferred Stock was
converted into 3,609,696 shares of Common Stock and redeemed in cash
for $981,270. In addition, accrued dividends on the Preferred Stock
amounting to approximately $1,044,000 were declared and paid in cash,
except for $649,396 of such dividends associated with the Series G
Preferred Stock which were paid in the form of 162,349 shares of Common
Stock in accordance with the original terms of such series. As a result
of such conversion and redemption of Preferred Stock, there are
currently no shares of Preferred Stock outstanding. The Company plans
to use the remaining net proceeds from the offering to: (i) fund its
half of the estimated future financing requirements of the Partnership
and (ii) to fund the Company's working capital requirements. In April
1996, the underwriters of the secondary offering exercised their
overallotment option and purchased 186,813 shares for proceeds of
approximately $1.2 million after underwriting discounts and
commissions.
On March 31, 1995, pursuant to a private placement, the Company sold
300,000 shares of Common Stock for net proceeds of approximately
$3,000,000. The Company granted warrants to purchase 375,000 shares of
Common Stock at $9 per share to the placement agents in connection with
the private placement.
The Company received proceeds of approximately $47,000 and $425,000
from the exercise of stock options to purchase approximately 33,000 and
188,500 shares of Common Stock granted under its option plans in the
three month period ended March 31, 1996 and 1995, respectively. The
Company received proceeds of approximately $17,000 from the exercise of
warrants to purchase approximately 3,500 shares of Common Stock in the
three month period ended March 31, 1996.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company, through the Partnership, designs, manufactures and markets
innovative climate control systems to supplement or replace conventional air
conditioning systems. The Partnership's climate control systems are based on
proprietary desiccant technology initially developed by the Company, a licensed
honeycomb rotor technology and Engelhard's patented titanium silicate desiccant,
ETS(TM).
Pursuant to the formation of the Partnership on February 7, 1994, the Company
transferred its assets related to its desiccant climate control business,
subject to certain liabilities, to the Partnership in exchange for a 50%
interest in the Partnership through its wholly-owned subsidiary, ICC Desiccant
Technologies, Inc. Engelhard, in exchange for a 50% interest in the Partnership,
contributed capital to the Partnership, entered into a supply agreement to sell
ETS(TM) to the Partnership and entered into a license agreement granting the
Partnership an exclusive royalty-free license to use ETS(TM) in the
Partnership's business, including heating, ventilation and air conditioning. The
desiccant climate control business conducted by the Company prior to the
formation of the Partnership is now being conducted by the Partnership, and the
Company has become principally a holding company. Further, substantially all of
the employees of the Company have become employees of the Partnership and the
leases for the space occupied by, and certain other obligations of, the Company
have been assumed by the Partnership.
Since the formation of the Partnership, the Company's activities have related
primarily to its participation in the management of the Partnership in which it
owns a 50% interest. The Company is not permitted to engage directly or
indirectly in any activities which would conflict with the Partnership's
business as long as the Partnership is in effect, but the Company is not
precluded from engaging in other activities. The Company currently does not have
any plans to engage in other activities and, therefore, is not expected to
generate any significant revenues, although it will continue to incur general
and administrative expenses.
The Company accounts for its interest in the Partnership under the equity method
of accounting for investments. Although the Company has no obligation to provide
additional financing to the Partnership, because the Company has, and expects to
continue to fund its share of the Partnership's activities, the Company
recognizes its share of the losses of the Partnership.
Results of Operations
As described above, since the formation of the Partnership, the Company's sole
activities have related to its participation in the management of the
Partnership. During the three months ended March 31, 1996, the Company did not
engage in any other activities nor did it generate any revenues, compared to
$6,500 of revenues for the same period in 1995 from the sale of spare parts
related to cogeneration equipment. The Company did have continuous expenses
during the three month period ended March 31, 1996. The Company's general and
administrative expenses increased $107,013 to $371,261 for the three month
period ended March 31, 1996 compared to $264,248 for the same period in 1995,
primarily as a result of increased payroll and insurance costs.
The Company's net loss for the three months ended March 31, 1996 increased
$727,483 to $1,885,884 compared with the net loss of $1,158,401 for the same
period in 1995. This increase in the net loss is attributable to the Company's
50% share of the Partnership's loss of $3,195,308 for the three months ended
March 31, 1996 as compared to $1,999,965 recognized for the same period ended in
1995. Net loss per share of Common Stock increased to $.11 for the three month
period ended March 31, 1996, compared with $.10 per share for the same period of
1995.
9
<PAGE>
The Partnership's revenue for the three months ended March 31, 1996 increased
$288,097 to $2,076,099 compared to $1,788,002 for the same period in 1995. The
increase in revenue is attributable to increased equipment sales offset by a
reduction in sales of substrate from the Miami plant to Ciba Geigy pursuant to a
supply contract. Equipment sales increased to $1.1 million compared to
approximately $300,000 for the three months ended March 31, 1995. Sales of
substrate from the Miami plant amounted to approximately $900,000 for the three
months ended March 31, 1996 compared to approximately $1.5 million for the three
months ended March 31, 1995. The Partnership recorded a gross loss of
approximately $830,000 for the three months ended March 31, 1996 compared to a
gross profit of approximately $110,000 for the same period in 1995 due primarily
to increases in manufacturing costs of equipment without a corresponding
increase in equipment sales.
The Partnership's operating expenses increased $376,269 to $2,263,525 for the
three months ended March 31, 1996 compared to $1,887,256 for the same period in
1995 due primarily to higher general and administrative operating costs. General
and administrative expenses have increased primarily as a result of an increased
administrative staff and related payroll costs. As a result of the gross loss
and increased operating expenses, the loss from operations increased $1,311,962
to $3,091,159 for the three months ended March 31, 1996 as compared to
$1,779,197 for the same period in 1995.
The Partnership's net loss increased $1,195,343 to $3,195,308 for the three
months ended March 31, 1996 compared to $1,999,965 for the same period in 1995
due to the increase in the loss from operations offset by a decrease in net
interest expense of $116,619 due to reduced borrowings.
The Partnership's backlog for equipment amounted to approximately $2.1 million
at May 6, 1996.
Liquidity and Capital Resources
The Company's cash and cash equivalents increased $12,393,303 to $13,966,778 as
of March 31, 1996 as compared to $1,573,475 as of December 31, 1995. The
increase in cash and cash equivalents is primarily due to the public sale of
2,500,000 shares of Common Stock. In February 1996, the Company issued 2,500,000
shares in a secondary offering at $7 per share less underwriting discounts and
commissions of $.49 per share. Proceeds of $16,275,000 were offset by costs of
approximately $620,000 incurred in connection with the offering. In connection
with the offering, all outstanding Preferred Stock was converted into 3,609,696
shares of Common Stock and redeemed in cash for $981,270. In addition, accrued
dividends on the Preferred Stock amounting to approximately $1,044,000 were
declared and paid in cash, except for $649,396 of such dividends associated with
the Series G Preferred Stock which were paid in the form of 162,349 shares of
Common Stock in accordance with the original terms of such series. As a result
of such conversion and redemption of Preferred Stock, there are currently no
shares of Preferred Stock outstanding. The Company plans to use the remaining
net proceeds from the offering to: (i) fund its half of the estimated future
financing requirements of the Partnership and (ii) to fund the Company's working
capital requirements. In April 1996, the underwriters of the secondary offering
exercised their overallotment option and purchased 186,813 for proceeds of
approximately $1.2 million after underwriting discounts and commissions.
Net cash used in operating activities by the Company was $79,747 for the
three months ended March 31, 1996 due to the net loss (before non-cash charges
and the Company's 50% share of the net loss of the Partnership) of $257,787 and
net working capital provided of $178,040. The Company and Engelhard each made
additional capital contributions of $2,000,000 to the Partnership in the three
months ended March 31, 1996. Net cash used in operating activities and for
investments in the Partnership by the Company were financed by proceeds from the
issuance of Common Stock and exercise of stock options and warrants.
Subsequently, each partner made additional $1 million capital contributions to
the Partnership in April 1996 and again in May 1996.
The Partnership's cash and cash equivalents decreased to $143,476 at March
31, 1996 from $346,480 at December 31, 1995. The decrease was due to cash used
in operating activities of approximately $4 million, resulting from the
Partnership's net losses and working capital requirements, and cash used in
10
<PAGE>
investing activities of approximately $300,000. Operating and investing
activities were primarily financed by $4 million in capital contributions from
the Company and Engelhard. The Partnership is expected to require additional
financing to support anticipated growth and will be dependent on the Company and
Engelhard to provide additional financing to support its current operations and
future expansion. There can be no assurance that the Company or Engelhard will
be willing, or able, to provide such additional financing.
Management believes the Partnership will require additional capital
contributions during 1996 and the Company plans to use the net proceeds from the
offering of 2.5 million shares completed in February 1996 to fund its portion of
such required capital contributions. To the extent Partnership capital
contributions in excess of the net proceeds from such offering are required or
if the Company requires additional funds to continue its operations, the Company
would expect to satisfy such requirements by seeking equity financing. The
Company's ability to successfully obtain equity financing in the future is
dependent in part on market conditions and the performance of the Partnership.
There can be no assurance that the Company will be able to obtain equity
financing in the future.
In April 1995, the Partnership obtained financing from the issuance of $8.5
million in industrial development revenue bonds. The Company guaranteed 50% of
the Partnership's indebtedness associated with the industrial development bonds
and established an irrevocable letter of credit for $2.5 million to support its
portion of the guarantee, which is collateralized by a $2.5 million certificate
of deposit.
On March 31, 1995, pursuant to the private placement, the Company issued 300,000
shares of Common Stock for net proceeds of approximately $3,000,000. The Company
granted warrants to purchase 375,000 shares of Common Stock at $9 per share to
the placement agents in connection with the private placement.
The Company received proceeds of approximately $47,000 and $425,000 from the
exercise of stock options to purchase approximately 33,000 and 188,500 shares of
Common Stock granted under its option plans in the three month period ended
March 31, 1996 and 1995, respectively. The Company received proceeds of
approximately $17,000 from the exercise of warrants to purchase approximately
3,500 shares of Common Stock in the three month period ended March 31, 1996.
ICC has not declared any dividends on Common Stock and does not expect to
declare dividends in the foreseeable future. Payment of future dividends will
rest within the discretion of the Board of Directors and will depend, among
other things, on ICC's earnings, capital requirements and financial condition.
The independent accountants report on the audit of the Company's 1995 financial
statements includes an explanatory paragraph regarding substantial doubts about
the Company's ability to continue as a going concern. The Company's financial
statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. Revenues and the Company's share of results of operations of the
Partnership have been insufficient to cover costs of operations for the three
months ended March 31, 1996. The Company has suffered recurring losses
accumulating to approximately $35 million as of March 31, 1996. In order to
continue operations, the Company has had to raise additional capital to offset
cash utilized in operating and investing activities. The Company's continuation
as a going concern is dependent upon its ability to: (i) generate sufficient
cash flows to meet its obligations on a timely basis, (ii) obtain additional
financing as may be required and (iii) ultimately, attain profitable operations
and positive cash flow from its operations and its investment in the
Partnership. The accompanying financial statements do not include any
adjustments that may result from the Company's inability to continue as a going
concern.
The independent accountants report on the audit of the Partnership's 1995
financial statements also includes an explanatory paragraph regarding
substantial doubts about the Partnership's ability to continue as a going
concern. The Partnership has incurred cumulative losses of approximately $19
million since inception through March 31, 1996. The Partnership's continuation
as a going concern will remain dependent upon its ability to: (i) generate
sufficient cash flows to meet its obligations on a timely basis, (ii) obtain
additional financing or refinancing as may be required and (iii) ultimately,
attain profitable operations and positive cash flow from operations.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No legal proceedings by, or against, the Company were
initiated in the quarter ended March 31, 1996.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) The following reports have been filed with the Securities
and Exchange Commission.
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 6, 1996 BY: /s/ Irwin L. Gross
------------------------------- -------------------
Irwin L. Gross, Chairman
and President
DATE: May 6, 1996 BY: /s/Manfred Hanuschek
-------------------------------- --------------------
Manfred Hanuschek
Chief Financial Officer
13
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0
0
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