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 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 ____ or ____
Commission file number 0-13865
ICC TECHNOLOGIES, INC.
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(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)
330 South Warminster Road
Hatboro, Pennsylvania 19040
---------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 682-6600
--------------
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
--------------------------------------
21,464,248 shares outstanding as of August 1, 1997.
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<PAGE>
<TABLE>
<CAPTION>
INDEX TO FORM 10-Q REPORT
PART I. FINANCIAL INFORMATION PAGE NO.
- ------- --------------------- --------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at June 30, 1997 and 3
December 31, 1996
Consolidated Statements of Operations - Three months and
six months ended June 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows - Six 5
months ended June 30, 1997 and 1996
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 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
<PAGE>
Item 1. Financial Statements (Unaudited)
ICC TECHNOLOGIES, INC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,997,575 $ 9,641,114
Prepaid expenses and other 19,681 108,161
------------ ------------
Total current assets 6,017,256 9,749,275
RESTRICTED CASH 2,500,000 2,500,000
PROPERTY, EQUIPMENT AND SOFTWARE, net 6,637 1,590
------------ ------------
Total assets $ 8,523,893 $ 12,250,865
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 158,380 $ 70,437
Payable to Engelhard/ICC 29,471 17,035
------------ ------------
Total current liabilities 187,851 87,472
------------ ------------
LOSSES OF ENGELHARD/ICC IN EXCESS OF INVESTMENTS 1,655,573 2,091,997
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, authorized 50,000,000 shares, issued
21,350,654 shares at June 30, 1997 and 21,282,354
shares at December 31, 1996 213,507 212,824
Additional paid-in capital 50,851,260 50,730,330
Accumulated deficit (44,212,868) (40,700,328)
Less: Treasury common stock, at cost, 66,227 shares (171,430) (171,430)
------------ ------------
Total stockholders' equity 6,680,469 10,071,396
------------ ------------
Total liabilities and stockholders' equity $ 8,523,893 $ 12,250,865
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
ICC TECHNOLOGIES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six month endeded
-------------------------------------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 163,928 $ 225,859 $ 299,072 $ 308,890
EXPENSES:
Equity interest in net loss of Engelhard/ICC 1,419,576 1,498,334 2,813,576 3,095,988
General and administrative 568,111 440,982 998,036 812,243
------------ ------------ ------------ -------------
Total expenses 1,987,687 1,939,316 3,811,612 3,908,231
------------ ------------ ------------ -------------
NET LOSS (1,823,759) (1,713,457) (3,512,540) (3,599,341)
CUMULATIVE PREFERRED STOCK
DIVIDEND REQUIREMENTS 0 0 0 (49,655)
------------ ------------ ------------ -------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (1,823,759) $(1,713,457) $ (3,512,540) $ (3,648,996)
============ ============ ============ =============
NET LOSS PER COMMON SHARE $ (0.09) $ (0.08) $ (0.17) $ (0.19)
============ ============ ============ =============
WEIGHTED AVERAGE COMMON SHARES 21,280,927 21,109,355 21,265,235 19,445,297
============ ============ ============ =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
ICC TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1997 1996
-----------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (3,512,540) $ (3,599,341)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,963 795
Equity interest in net loss of Engelhard/ICC 2,813,576 3,095,988
(Increase) decrease in:
Receivables 0 150,067
Prepaid expenses and other 88,480 107,223
Increase (decrease) in:
Accounts payable and accued expenses 100,379 (230,220)
------------ ------------
Net cash used in operating activities (508,142) (475,488)
------------ ------------
Cash Flows from Investing Activities:
Capital contributions to Engelhard/ICC (3,250,000) (5,000,000)
Purchases of property, equipment and software (7,010) 0
------------ ------------
Net cash used in investing activities (3,257,010) (5,000,000)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock and warrants, net 121,613 17,268,315
Cash redemption of Preferred Stock 0 (981,270)
Cash dividend on Preferred Stock 0 (394,610)
Repayments of borrowings from stockholder 0 (150,000)
------------ ------------
Net cash provided by financing activities 121,613 15,742,435
------------ ------------
Net increase in cash and cash equivalents (3,643,539) 10,266,947
Cash and Cash Equivalents, Beginning of Period 9,641,114 1,573,475
------------ ------------
Cash and Cash Equivalents, End of Period $ 5,997,575 $ 11,840,422
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
ICC TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1997
(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, 1996 included in the Company's
Annual Report on Form 10-K for the year then ended. Results of operations
for the three and six months ended June 30, 1997 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 active humidity control systems to supplement or replace
conventional air conditioning systems. The Partnership's active humidity
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 active humidity 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. 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
investigates from time to time other opportunities; however, the Company
currently does not have any commitments 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 and six months
ended June 30, 1997. The Company has incurred cumulative losses since
inception of approximately $44.2 million through June 30, 1997. In order
to continue operations, the Company has had to raise additional capital to
offset cash consumed in operations and support of the Partnership. Until
the Partnership generates positive cash flows from operations, it will be
primarily dependent on the partners to provide any required working
capital. The Company's continuation as a going concern is
6
<PAGE>
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
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 source of the cash utilized in the Company's operating and investing
activities during the three and six months ended June 30, 1997 was cash on
hand and proceeds from the exercise of stock options and warrants.
Management believes the Partnership will require additional capital
contributions. To the extent Partnership capital contributions exceed cash
on hand, 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:
<TABLE>
<CAPTION>
Quarter Quarter Six months Six months
ended ended ended ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Results of operations:
Revenues $ 3,630,840 $ 2,720,649 $ 6,308,939 $ 4,796,748
Cost of goods sold 3,961,507 3,326,514 7,274,219 6,230,247
--------- --------- --------- ---------
Gross profit(loss) (330,667) (605,865) (965,280) (1,433,499)
Operating expenses:
Marketing 992,082 842,477 2,008,737 1,716,198
Engineering 518,430 304,991 809,787 583,846
Research and development 160,682 242,940 306,997 539,925
General and administrative 722,266 890,435 1,300,547 1,704,399
------- ------- --------- ---------
Loss from operations 2,724,127 2,886,708 5,391,348 5,977,867
Interest expense 115,025 109,960 235,803 214,109
------- ------- ------- -------
Net loss $2,839,152 $2,996,668 $5,627,151 $6,191,976
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
As of As of
Balance sheet information: June 30, December 31,
1997 1996
-------------- ------------
<S> <C> <C>
Cash $ 443,923 $ 1,192,997
Receivables 3,444,828 2,640,804
Inventory 4,261,993 4,570,952
Other current assets 310,777 278,762
Property, plant and equipment 9,718,177 7,990,125
Cash held in escrow 14,248 307,476
Other noncurrent assets 1,994,160 1,978,115
--------- ---------
Total assets $ 20,188,106 $ 18,959,231
============ ============
Current liabilities $ 2,525,626 $ 2,248,209
Short-term loan 2,750,000 2,750,000
Long-term debt 8,720,939 8,642,330
Partners' capital 6,191,541 5,318,692
--------- ---------
Total liabilities and capital $ 20,188,106 $18,959,231
============ ===========
</TABLE>
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 $1,419,576 and $1,498,334 for the three months
ended June 30, 1997 and 1996, respectively and $2,813,576 and $3,095,988
for the six months ended June 30, 1997 and 1996, respectively. The
Partnership has incurred cumulative losses of approximately $34.4 million
since inception through June 30, 1997. 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 $1,655,573 and $2,091,997 as of
June 30, 1997 and December 31, 1996, respectively.
Payables to the Partnership were $29,471 and $17,035 at June 30, 1997 and
December 31, 1996, respectively. The general partners are guarantors of
the Partnership's long term debt which totals approximately $ 8.7 million
as of June 30, 1997.
The Company and Engelhard made capital contributions of $2.25 million each
to the Partnership during the three months ended June 30, 1997 raising the
total capital contributions contributed to the Partnership during the six
months ended June 30, 1997 to $3.25 million each. Subsequent to June 30,
1997, each partner made an additional capital contribution of $500,000 to
the Partnership.
In April 1997, the Company and the Partnership relocated their principal
executive offices and related manufacturing facilities in Philadelphia to
a 138,000 square foot facility located in Hatboro, Pennsylvania.
(4) STOCK TRANSACTIONS:
Equity Investments
The Company received proceeds of approximately $9,000 and $126,000 from
the exercise of stock options and warrants to purchase approximately 9,000
and 67,000 shares of Common Stock in the three month periods ended June
30, 1997 and 1996, respectively. The Company received proceeds of
approximately $122,000 and $190,000 from the exercise of stock options and
warrants to purchase approximately 68,300 and 103,500 shares of Common
Stock in the six month period ended June 30, 1997 and 1996, respectively.
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 approximately $16.3 million
were offset by costs of approximately $600,000 incurred in the offering.
In April 1996, the underwriters of the secondary offering exercised their
overallotment option and purchased 186,813 shares of Common Stock for
proceeds of approximately $1.2 million after underwriting discounts and
commissions.
The Company loaned $230,467 to the chairman in July 1997 in connection
with the exercise of an option to acquire 82,753 shares of Common Stock.
The loan was in the form of a full recourse note which matures in five
years. Such note bears a market rate of interest equal to the prime rate
of 8.5% with such rate to be adjusted to the current prime rate at each
annual anniversary date.
7
<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 active humidity control systems to supplement or replace
conventional air conditioning systems. The Partnership's active humidity
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 active humidity
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 active
humidity control business conducted by the Company prior to the formation
of the Partnership is now being conducted by the Partnership, and the
Company is principally a holding company.
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 investigates from time to time other opportunities; however, the
Company currently does not have any commitments 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. The Company's general and administrative expenses increased
$127,129 to $568,111 for the three month period ended June 30, 1997,
compared to $440,982 for the same period in 1996, and increased $185,793
to $998,036 for the six month period ended June 30, 1997, compared to
$812,243 for the same period in 1996. Such increase was primarily the
result of increased consulting and professional fees. The Company's
interest income decreased $61,931 to $163,928 for the three month period
ended June 30, 1997, compared to $225,859 for the same period in 1996, and
decreased $9,818 to $299,072 for the six month period ended June 30, 1997,
compared to $308,890 for the same period in 1996. The decrease in interest
income is the result of a decrease in average cash and cash equivalents
balances in 1997 as compared to 1996.
The Company's net loss for the three months ended June 30, 1997 increased
$110,302 to $1,823,759, compared with the net loss of $1,713,457 for the
same period in 1996. The increase in the net loss is primarily
attributable to the increase in general and administrative expenses and
the reduction in interest income which more than offset reductions in the
Company's 50% share of the Partnership's loss. The Company's net loss for
the six months ended June 30, 1996 decreased $86,801 to $3,512,540,
compared with the net loss of $3,599,341 for the same period in 1996. This
decrease in the net loss is primarily attributable to reductions in the
Company's 50% share of the Partnership's loss, which more than offset
increases in general and administrative expenses and lower interest
income. Net loss per share of
9
<PAGE>
Common Stock increased to $.09 for the three month period ended June 30,
1997, compared with $.08 per share for the same period of 1996. Such
increase was attributable to the increase in net loss for the three month
period ended June 30, 1997. Net loss per share of Common Stock decreased
to $.17 for the six month period ended June 30, 1997, compared with $.19
per share for the same period of 1996. Such decrease was primarily the
result of decrease in net loss, the issuance of additional shares of
Common Stock and elimination of preferred stock dividend requirements.
The Partnership's revenue increased to $3,630,840 and $6,308,939 for the
three and six months ended June 30, 1997, respectively, compared to
$2,720,649 and $4,796,748 for the same periods in 1996 respectively. The
increase in revenue was attributable to increased equipment sales and the
sale of substrate from the Miami plant pursuant to a supply contract.
Equipment sales increased to approximately $2.1 and $3.4 million for the
three and six months ended June 30, 1997, respectively, compared to
approximately $1.4 and $2.6 million for the three and six months ended
June 30, 1996, respectively. Sales of substrate increased to approximately
$1.5 and $2.8 million for the three and six months ended June 30, 1997,
respectively, compared to approximately $1.2 and $2.2 million for the
three and six months ended June 30, 1996, respectively. The Partnership
recorded a reduction in the gross loss to approximately $331,000 and
$965,000 for the three and six months ended June 30, 1997, respectively,
compared to a gross loss of approximately $606,000 and $1,433,000 for the
same periods in 1996, respectively, due primarily to increased
efficiencies in labor and material costs.
The Partnership's operating expenses increased to $2,393,460 for the three
months ended June 30, 1997 compared to $2,280,843 for the same periods in
1996, respectively, due primarily to higher engineering and marketing
costs offset by lower general and administrative costs. The Partnership's
operating expenses increased to $4,426,068 for the six months ended June
30, 1997 compared to $4,544,368 for the same periods in 1996 due to lower
general and administrative and research and development costs offset by
higher marketing and engineering costs. Marketing and engineering costs
increased due to increases in related staff levels and activities. General
and administrative expenses have decreased primarily as the result of
decreased inventory obsolescence and severance costs. Research and
development expenses decreased as the result of decreased staff size. The
reduction in gross loss offset the increase in operating expenses
resulting in a decrease in the loss of operations to $2,724,127 for the
three months ended June 30, 1997 as compared to $2,886,708 for the same
period in 1996. The reduction in gross loss and in operating expenses
resulting in a decrease in the loss of operations to $5,391,348 for the
six months ended June 30, 1997 as compared to $5,977,867 for the same
period in 1996.
The Partnership's net loss decreased to $2,839,152 and $5,627,151 for the
three and six months ended June 30, 1997, respectively, compared to
$2,996,668 and $6,191,976 for the same period in 1996, respectively, due
to the increased revenues and reduction in operating costs.
The Partnership's backlog for equipment amounted to approximately $2.2
million at July 24, 1996.
Liquidity and Capital Resources
The Company's cash and cash equivalents decreased $3,643,539 to $5,997,575
as of June 30, 1997 as compared to $9,641,114 as of December 31, 1996. The
decrease in cash is primarily attributable to the $3.25 million capital
contribution made to the Partnership in the six month period ended June
30, 1997.
Net cash used in operating activities by the Company was $508,142 for the
six months ended June 30, 1997 due to the net loss, before non-cash
charges and the Company's 50% share of the net loss of the Partnership, of
$697,001 offset by net working capital provided of $188,859. The Company
and Engelhard made capital contributions of $3,250,000 each to the
Partnership in the six months ended June 30, 1997. Subsequent to June 30,
1997, each partner made a capital contribution of $500,000 to the
Partnership. Net cash used in operating activities and for investments in
the Partnership by the Company were financed by existing cash and proceeds
from the issuance of Common Stock and exercise of stock options and
warrants.
10
<PAGE>
The Partnership's cash and cash equivalents decreased to $443,923 at June
30, 1997 from $1,192,997 at December 31, 1996. The decrease was due to
cash used in operating activities of approximately $5 million, resulting
from the Partnership's net losses and working capital requirements, and
cash used in investing activities of approximately $2.5 million related to
purchases of machinery and equipment related primarily to the new
production facility in Hatboro, Pennsylvania. Financing activities
provided approximately $6.8 million which consisted primarily of $6.5
million in capital contributions from the Company and Engelhard. The
Partnership is expected to require and will be dependent on the Company
and Engelhard to provide additional financing to support its current
operations and any 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. To the extent Partnership capital contributions in excess
of available cash of the Company 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 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 approximately $16.3 million were offset by
costs of approximately $600,000 incurred in connection with the offering.
In April 1996, the underwriters of the secondary offering exercised their
overallotment option and purchased 186,813 of Common Stock for proceeds of
approximately $1.2 million after underwriting discounts and commissions.
The Company received proceeds of approximately $9,000 and $126,000 from
the exercise of stock options and warrants to purchase approximately 9,000
and 67,000 shares of Common Stock in the three month period ended June 30,
1997 and 1996, respectively. The Company received proceeds of
approximately $122,000 and $190,000 from the exercise of stock options and
warrants to purchase approximately 68,300 and 103,500 shares of Common
Stock in the six month period ended June 30, 1997 and 1996, respectively.
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 1996
financial statements includes an explanatory paragraph regarding
substantial doubts about the Company's ability to continue as a going
concern. The Company's 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
six months ended June 30, 1997. The Company has suffered recurring losses
accumulating to approximately $44.2 million since inception through June
30, 1997. In order to continue operations, the Company has had to raise
additional capital to offset cash consumed in operations and in support of
the Partnership. 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 1996
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
$34.4 million since inception through June 30, 1997. 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,
11
<PAGE>
(ii) obtain additional financing or refinancing as may be required and
(iii) ultimately, attain profitable operations and positive cash flow from
operations.
Safe Harbor for Forward-Looking Statements
Except for historical matters contained herein, the matters discussed in
this Form 10-Q are forward-looking and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Readers are cautioned that these forward-looking statements reflect
numerous assumptions and involve risks and uncertainties which may affect
the Company's or the Partnership's business, financial position and
prospects and cause actual results to differ materially from these
forward-looking statements. The assumptions and risks include sufficient
funds to finance working capital and other financing requirements of the
Company and the Partnership, market acceptance of the Partnership's
products, dependence on proprietary technology, competition in the air
conditioning industry and others set forth in the Company's filings with
the Securities and Exchange Commission.
12
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No legal proceedings by, or against, the Company were
initiated in the quarter ended June 30, 1997.
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
The last Annual Meeting of Stockholders of ICC was held June
5, 1997. The record date for the meeting was April 10, 1997.
At such meeting, the holders of Common Stock, voting as a
single class, elected a Board of Directors for the Company
consisting of the following six persons: Robert Aders; Charles
Condy; Irwin Gross; Mark Hauser; Stephen Schachman; William
Wilson; Andrew Shapiro and Albert Resnick. These individuals
will serve on the Board of Directors until the next annual
meeting of stockholders or until their respective successors
have been duly elected and qualified.
The votes were cast as follows for the election of Directors:
<TABLE>
<CAPTION>
Name For Withheld
---- --- --------
<S> <C> <C>
Robert Aders 19,943,170 327,524
Charles Condy 19,952,180 318,514
Irwin L. Gross 19,878,178 392,516
Mark S. Hauser 19,682,089 588,605
Albert Resnick 19,885,680 385,014
Stephen Schachman 19,962,580 308,114
Andrew L. Shapiro 19,883,982 386,712
William A. Wilson 19,952,230 318,464
</TABLE>
The stockholders also ratified the selection of the firm of
Coopers & Lybrand LLP to be the Company's auditors for 1997.
There were 20,057,562 votes in favor of the selection, 105,762
votes against, and 107,370 in abstention.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: 27 Financial Data Schedule
(b) The following reports have been filed with the Securities and
Exchange Commission.
None
13
<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: August 1, 1997 BY: /s/ Irwin L. Gross
--------------------------------------- -------------------
Irwin L. Gross, Chairman
and President
DATE: August 1, 1997 BY: /s/ Manfred Hanuschek
--------------------------------------- --------------------
Manfred Hanuschek
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 5,997,575
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,017,256
<PP&E> 11,781
<DEPRECIATION> 5,144
<TOTAL-ASSETS> 8,523,893
<CURRENT-LIABILITIES> 187,851
<BONDS> 0
0
0
<COMMON> 213,507
<OTHER-SE> 6,466,962
<TOTAL-LIABILITY-AND-EQUITY> 8,523,893
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 998,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (698,694)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,813,576)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,512,540)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
