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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q (Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
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 33-7764-C
INTERACTIVE GAMING & COMMUNICATIONS CORP.
Exact name of registrant as specified in charter)
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(State or other jurisdiction of incorporation or organization) |
23-2838676
(I.R.S. Employer Identification No.) |
4070 Butler Pike - Plymouth Meeting, PA 19462
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 941-0305
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 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 [ ]
As of Sept 30, 1999, there were 23,044,903 shares of the Registrant's common stock outstanding. The aggregate market value of the Registrant's voting stock held by nonaffiliates of the Registrant was approximately $2,700,000 computed at the closing price for the Registrant's common stock on the NASD Bulletin Board on September 30, 1999.
FINANCIAL STATEMENTS
In the opinion of the management of Interactive Gaming & Communications Corp. and subsidiaries (the Company), the accompanying unaudited interim consolidated financial statements contain all adjustments necessary of a fair presentation of the Company's financial condition as of September 30, 1999 and December 31, 1998, and the results of its operations and cash flows for the three month periods ended Sept. 30, 1999 and 1998.
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company's management believes that the disclosures and information presented are adequate and not misleading. Reference is made to the detailed financial statement disclosures which should be read in conjunction with this report and are contained in the notes to consolidated financial statements included in the Company's Annual Report Form 10-KSB for the year ended December 31, 1998. Certain items in prior period consolidated financial statements have been reclassified, where appropriate, to conform with the Sept. 30, 1999 presentation.
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CONSOLIDATED BALANCE SHEET
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| (UNAUDITED) | ||
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash |
$670,870
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$ 5,708
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| Accounts receivable, net of allowance for doubtful accounts of $113,000 in 1999 and 1998 |
3,101,820
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6,934
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| Deferred tax asset |
100,000
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| Inventory |
139,839
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| Marketable Securities |
341,733
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| Other current assets |
8,200
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| Total current assets |
4,362,462
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12,642
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| LONG TERM ASSETS: | ||
| Land & Building |
378,269
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| Software & Computer Equipment |
787,937
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| Furniture & Fixtures |
107,199
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| Machinery & Equipment |
46,732
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| Transportation Equipment |
237,967
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| Leasehold Improvements |
92,207
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1,650,311
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| Less: Accumulated Depreciation |
(518,793)
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| Net Long Term Assets: |
1,131,518
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68,351
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| Intangible Assets: Software Development | 1,652,149 | 1,393,547 |
| Gaming and Software sub-licenses, net | 301,616 | |
| Total Intangible Assets |
1,652,149
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1,695,163
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| Other Assets: | ||
| Notes Receivable |
3,191,500
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| Investments |
686,523
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| Deferred Acquistion costs |
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| Security Deposits | 17,350 | 1,118 |
| Goodwill, Net | 511,577 | - |
| Other assets | (9,471) | - |
| Total Other Assets | 4,397,479 | 1,118 |
| TOTAL ASSETS: | 11,543,608 | 1,777,274 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts Payable and Accrued expenses | 2,793,764 | 991,122 |
| Current Maturities - Long term debt | 558,683 | 15,000 |
| Capital Lease Obligation |
67,393
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- |
| Notes Payable | 248,229 | 318,021 |
| Advances from Shareholders | 100. |
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| Net Current Liabilities of Discontinued operations |
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| Dividends Payable | 1950 |
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| Total Current Liabilities | 3,670,119 | 1,324,143 |
| LONG TERM LIABILITIES: | ||
| Long term note payable less current portion | 673,437 | 76,000 |
| Capital lease obligation - less current portion | - | |
| Total Long Term Liabilities | 673,437 | 76,000 |
| TOTAL LIABILITIES: | 4,343,556 | 1,400,143 |
| MINORITY INTEREST | 1,462,217 | - |
| STOCKHOLDERS' EQUITY: | ||
| Common stock, $0.001 par value, 75,000,000 shares authorized 23,044,903 and 13,701,290 issues outstanding in 1999 and 1998 | 23,045 | 13,701 |
| Additional Paid in Capital | 7,001,937 | 2,676,296 |
| Retained Earnings (Deficit) | (1,287,147) | (2,312,866) |
| Total Stockholders Equity | 5,737,835 | 377,131 |
| TOTAL LIABILITIES & STOCKHOLDERS EQUITY | 11,543,608 | 1,777,274 |
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CONSOLIDATED STATEMENT OF OPERATIONS
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| (UNAUDITED) | (UNAUDITED) | |||
| REVENUES | 2,475,169 | 68,620 | 9,117,891 | 150,079 |
| COST OF SALES | 1,161,401 | - | 4,359,496 | - |
| GROSS PROFIT | 1,313,768 | 68,620 | 4,758,395 | 150,079 |
| OPERATING COSTS | ||||
| Salaries | 181,924 | 67,311 | 1,143,211 | 166,704 |
| Professional Fees | 93,855 | 2,228 | 360,902 | 56,450 |
| Depreciation and amortization | 2,394 | 62,497 | 136,810 | 124,992 |
| Auto; Travel; Entertainment | 41,179 | 3,835 | 145,406 | 14,450 |
| Bad Debt: | - | - | - | - |
| Other | 256,479 | 40,908 | 1,356,525 | 121,294 |
| Total expenses | 575,831 | 176,779.00 | 3,142,854 | 483,890 |
| Income (Loss) From Operations | 737,937 | (108,159) | 3,142,854 | (333,811) |
| Other Income (Expense) | ||||
| Other Income (expense) | 14,388 | - | (161,766) | - |
| Interest Expense | (61,033) | - | (129,144) | - |
| Minority Interest | (14,414) | |||
| Income from discontinued operations | 134,732 | |||
| Extraordinary item | 1,656,344 | |||
| Total Other Income (Expense) | (46,645) | - | (305,321) | 1,791,076 |
| Income (Loss) Before Taxes | 691,292 | (108,159) | 1,310,220 | 1,457,265 |
| Income Tax Provision - Benefit (Expense) | - | - | - | (100,000) |
| Net Income (Loss) | 691,292 | (108,159) | 1,310,220 | 1,357,265 |
| Basic (loss) earnings per common share: | ||||
| Continued operations | $ 0.03 | $ (0.01) | $ 0.06 | $ (0.03) |
| Discontinued operations | - | - | - | 0.01 |
| Extraordinary item | - | - | - | 0.12 |
| Net (loss) income per share | $ 0.03 | $ (0.01) | $ 0.06 | $ 0.10 |
| Weighted average common shares outstanding | 23,044,903 | 13,945,201 | 23,044,903 | 13,945,201 |
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CONSOLIDATED STATEMENT OF CASH FLOWS
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| SEPT | SEPT | |
| 1999 | 1998 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Cash received from customers | 8,198,619 | - |
| Cash Paid to suppliers & employees | (7,249,600) | - |
| Income taxes paid | (139,084) | - |
| Net cash used for operating activities | 809,935 | (190,621) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of Equipment | - | (7,241) |
| Purchase of fixed assets | (7,863) | - |
| Purchase of marketable securities | (22,324) | - |
| Net cash used in investing activities | (30,187) | (7,241) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Receipts of (payments on) notes | (1,282,797) | - |
| Receipts on short term notes | 354,502 | - |
| Net advances from stockholders | (87,458) | - |
| Net cash provided by financing activities | (1,015,753) | - |
| (DECREASE) INCREASE IN CASH | (236,005) | (197,862) |
| CASH, BEGINNING - January 1 | $ 503,049 | $ 208,020 |
| CASH, ENDING - June 30 | $ 573,827 | $ 10,158 |
| Net Income (loss) | 1,455,626 | (455,324) |
| Amortization & Depreciation | 550,649 | 69,603 |
| Minority Interest | 1,462,217 | - |
| Increase in A/R | 1,516,688 | 216,543 |
| Deferred income tax benefit | - | 100,000 |
| Change in net assets & liabilities of discontinued operations | 314,181 | |
| (Increase) Decrease in inventory | 33,977 | - |
| (Increase) Decrease in other current assets & other assets | (2,788,927) | - |
| Decrease in A/P | (1,420,295) | (121,443) |
| Net cash used for operating account | 809,935 | (190,621) |
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CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
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| Common Stock
SHARES OUTSTANDING |
AMOUNT | ADDITIONAL
PAID-IN CAPITAL |
RETAINED
EARNINGS DEFICIT |
STOCK
HOLDERS EQUITY |
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| Balance December 31, 1998 | 13,701,290 | $13,701 | $2,676,296 | $ (2,312,866) | $377,131 |
| Issued common stock | 1,843,613 | $1,844 | $3,027,618 | $3,029,462 | |
| Net income for three months ended 3/31/99 | $186,423 | $186,423 | |||
| Balance March 31, 1999 | 15,544,903 | $15,545 | $5,703,914 | $ (2,126,443) | $ 3,593,016 |
| Issued common stock | 7,500,000 | $7,500 | $4,253,410 | $(1,764,869) | $2,496,041 |
| Net income for three months ended 6/30/99 | $622,355 | $622,355 | |||
| Balance June 30, 1999 | 23,044,903 | $23,045 | $9,957,324 | $ (3,268,957) | $ 6,711,412 |
| Net income for three months ended 9/30/99 | $691,292 | $691,292 | |||
| Balance September 30, 1999 | 23,044,903 | $23,045 | $7,001,937 | $ (1,287,147) | $5,737,835 |
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Computation of Earnings Per Common Stock for the three
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| Three Months
Ended Sept 30, 1999 |
Three Months
Ended Sept 30, 1998 |
NineMonths
Ended Sept 30, 1999 |
NineMonths
Ended Sept 30, 1998 |
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| Shares Outstanding | 23,044,903.00 | 13,945,201.00 | 23,044,903.00 | 13,945,201.00 |
| Weighted average shares outstanding | 23,044,903.00 | 13,945,201.00 | 23,044,903.00 | 13,945,201.00 |
| Net Income (Loss) | 691,292.00 | (108,159.00) | 1,310,220.00 | 1,357,265.00 |
| Total Net Income (Loss) Available for common stockholders | 691,292.00 | (108,159.00) | 1,310,220.00 | 1,357,265.00 |
| Basic and Diluted Earnings (Loss) per Share: | ||||
| Earnings (Loss) Per Share | 0.03 | (0.01) | 0.06 | 0.10 |
INTERACTIVE GAMING & COMMUNICATIONS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Interactive Gaming & Communications Corp. and Subsidiaries (the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company's management believes that disclosures and information presented are adequate and not misleading. Reference is made to the detailed financial statement disclosures which should be read in conjunction with this report and are contained in the notes to consolidated financial statements included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1998. The December 31, 1998 balance sheet was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles.
NOTE 2- INTERIM PERIODS
In the opinion of the management of the Company, the accompanying unaudited interim consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the Company's financial condition as of September 30, 1999. The results of operations for the three months ended September 30,1999 are not necessarily indicative of the results to be expected for the full year.
NOTE 3-PER SHARE DATA
Per share data was computed by dividing net income (loss) by the weighted average number of shares outstanding during the period.
NOTE 4-INVESTMENT IN GAMBLENET TECHNOLOGIES, LTD.
On May 25, 1999, the Company sold Gamblenet Technologies, Ltd. ("Gamblenet") for $2,640,000 consisting of $140,000 in cash and a five year note for $2,500,000.
NOTE 5- ACQUISITION OF CENTURY INDUSTRIES, INC.
On June 22, 1999, the Company entered into a majority acquisition and parent/subsidiary relationship agreement with Century Industries, Inc. ("Century"). The agreement calls for certain control block shareholders of Century to sell to the Company 53.26% of Century's issued and outstanding Class A shares in exchange for 7,500,000 shares of the Company's common stock.
EXHIBIT II
| Nine Months Ended
Sept. 30, 1999 |
Nine Months Ended
Sept. 30, 1998 |
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| Shares Outstanding | 23,044,903 | 13,945,201 |
| Weighted average shares outstanding | 23,044,903 | 13,945,201 |
| Net Income (Loss) | $ 1,455,626 | $ 1,357,265 |
| Preferred Dividends | -------------- | -------------- |
| Total Net Income (Loss) Available for Common Stockholders' | $ 1,455,626 | $ 1,357,265 |
| Basic and Diluted Earnings (Loss) Per Share: | ||
| Earnings (Loss) Per Share | $0.06 | $0.10 |
The Consolidated Statement of Operations for 1999 and 1998 reflect the results from continuing operations. The continuing operations for the Company as restated for those years and as discussed prospectively herein reflect licensing fees, royalties and other revenues earned from traditional advertising sources and Internet related development and design fees, and the consolidation of Century Steel Products. Accordingly, such revenues for third quarter 1999 were $ 2,475,169 as compared to $ 326,325 for third quarter 1998. The increase in revenues for 1999 as compared to 1998 resulted from royalties generated by Intersphere Communications from software licenses, and consolidated revenues of newly acquired subsidiaries. However, Intersphere advertising revenues have increased in 1999. Expenses from continuing operations increased from $483,890 in third quarter 1998 to $ 575,831 in 1999, mainly as a result of the Company's acquisition of control of Century Industries, Inc. and subsidiaries. There was also a more efficient utilization of employee resources in the ongoing development of the Company's ToteMaster interactive internet horse racing and gaming software platform.
For the nine month period ended September 30, 1999 and 1998 the consolidated statement of operations reflects an increase in revenues from continuing operations from $164,556 in 1998 to $ 9,117,891 in 1999. Expenses increased from $680,183 in 1998 to $2,997,448 in 1999. Consolidated operating income for the 1999 nine months year to date was $ 1,760,947 as compared to ($333,811) in 1998. The revenue and expense increases are attributable to the Company's acquisition of control of Century Industries, Inc. as well as IGC's proportional increases. IGC's stand alone operating income was $ 934,305..
Liquidity and Capital Resources
The Company's consolidated current assets were $ 4,362,462 in 1999, an increase of $ 4,349,820 over the $12,642 in 1998. Current liabilities in 1999 were $ 3,670,119, and $1,324,143 in 1998, an increase of $ 2,345,976. The Company's working capital increased from a deficit of ($23,422) in 1998 to a surplus of $1,258,775, or 22% more current assets than current liabilities in 1999, a ratio greater than 1 to 1. The largest component increase in working capital was the Company's acquisition of control of Century Industries, inc. and subsidiaries. In addition, working capital increased as a result of the Company's receipt of a payment of $500,000 from Gamblenet Technologies, Ltd., on its note of $2,500,000.
The Company has written off its $4,990,000 note from the sale of the Company's former subsidiaries. However the company is in litigation and will recognize as revenue any award or settlement. The Company has available at June 30, 1999 approximately $421,000 of unused operating loss carry forwards that may be applied against future taxable income and that expire in various years from 2011 to 2013.
Under a promissory note payable to Madison Bank, the Company has a $200,000 line of credit available to fund working capital needs. As of March 31, 1999, the Company has utilized the line.
Further cost reductions and anticipated revenue growth from licensing and advertising revenues as described in the Prospective Outlook discussion that follows should contribute to further increases in working capital.
The Company acquired the control block of Century Industries, Inc. on June 23, 1999, for 7,500,000 shares of the Company's common stock. The terms of the acquisition also provide for the public Century shareholders to receive an offer equal to or better than that received by Century's control shareholders.
The Company further sold its original joint effort company with Century Industries, Inc., Gamblenet Technologies, Ltd. to Diversified Management Group Partners LP for $2,640,000. Gamblenet paid the Company $12,000 in the first quarter 1999, and subsequently paid an additional $128,000 in the second quarter 1999, and $500,000 in the third quarter of 1999. Century also sold its Scibal Associates subsidiary for $1,800,000 in cash and notes, reflected in Century's 10-Q report.
Year 2000
The "Year 2000 Problem" arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly recognize a year that begins with "20" instead of the familiar "19". If not corrected, many computer applications could fail or create erroneous results. The problems created by using abbreviated dates appear in hardware such as microchips, operating systems and other software programs. The Company's Year 2000 ("Y2K") compliance project is intended to determine the readiness of the Company's business for the Year 2000. The Company defines Y2K compliance to mean that the computer code will process all defined future dates properly and give accurate results. In September 1998, the Company formed a Y2K compliance committee which includes chief software writing personnel reporting directly to the President. Management of the Company believes that it has an effective program in place to resolve any Y2K issues and that all of its equipment and software are in compliance to address Y2K readiness. However, although management believes that the Company's systems and applications are Y2K compliant, there can be no assurance that the systems of other companies with which it does business will be Y2K compliant on a timely basis.
Inflation
Inflation has not had a significant impact on the Company's comparative results of operations.
Prospective Outlook
Certain matters discussed in this section contain forward-looking statements, including without limitation, statements containing the Company's future revenue and earnings. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected.
The Company will focus its efforts on software development such as a platform for Internet horse racing and licensing its proprietary products and exclusive licensing privileges for future revenues. The Company has effectively exited the Internet gaming business involving the acceptance of customers' wagers with the sale of its gaming subsidiaries Sports and Casinos in March 1998 and will be engaged principally in its gaming and entertainment software development business.
Century Industries, Inc. in Consolidation with its Subsidiaries
SUBSIDIARIES' THIRD QUARTER RESULTS OF OPERATIONS
Century Industries, Inc. in Consolidation
with its Subsidiaries
Past Development
The following discussion and analysis of the Company's consolidated financial condition and results of operations should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Notes thereto. This document may contain forward-looking statements that involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements.
Current Operations
The Registrant, as the parent holding company for Century Steel Products, Inc., and US Insurance Brokers, Inc., has no operations of its own, other than its functions for shareholders' relations, legal and accounting, and the remaining reporting requirements of a public company. The operations of each subsidiary can be found hereinbelow.
Third Quarter Consolidated Operating Results
Third quarter 1999 consolidated revenues were $1,671,156, and the same period for 1998 consolidated revenues were $3,039,637, which is a decrease of $1,368,481, or 45%. This decrease is due to the Company's divestiture of Scibal Associates in June, 1999. Third quarter consolidated operating income increased to $311,535 from $34,827 at September 30, 1998, an increase of $276,708. This rise in consolidated operating income is attributable to the ongoing strong sales and earning performance at the Century Steel Products subsidiary, and the decrease in parent company operating expenses.
Third quarter 1999 consolidated net income increased to $269,042 from ($248,233) at September 30, 1998, an increase of $517,275, or 208%. The revenue decrease and concomitant operating income decrease are also attributable to the divestiture of Scibal Associates. As indicated further herein in the unaudited financial statements, total operating costs were down across the board, from $1,297,842 for the three months ended September 30, 1998, to $198,220 for the same period in 1999. While the divestiture of Scibal Associates was a part of this reduction, it should be noted that management has effectively reduced its parent overhead and other consulting fees to help the Company achieve profitability.
Further information regarding the divestiture of the Scibal Associates
subsidiary can be found in the August 5, 1999 Form 8-K filing completed
by the Registrant.
Year to Date Consolidated Operating Results
The Companys consolidated year to date 1998 revenues totaled $9,476,450 compared to the same period 1999 of $7,473,067 for a decrease of $2,003,383 or 21%. Consolidated operating costs through the third quarter 1999 were $2,436,810, a decrease of $1,572,495, or 39%, from operating costs of $4,009,305 for the same period in 1998. Consolidated net income was ($644,028) for the year to date in September, 1998, and this was $462,902 for the same period in 1999. These changes can be attributed to the divestiture of Scibal Associates, as well as the ongoing efforts of management to decrease parent overhead expenses, which has been completed effectively.
Year to Date Consolidated Assets and Capital Growth
The Company's year to date consolidated assets are $6,171,814, a decrease of $2,834,481 from consolidated assets of $9,006,295 as of September 30, 1998. This is due to the divestiture of Scibal Associates. Consolidated capital has decreased from $5,060,413 for the same period of 1998 to $3,149,830 in 1999. This is due to the divestiture of Scibal Associates.
The year to date earnings per common share is $0.03, and the third quarter earnings were $0.02 per common share. Additional shares were issued in the 3rd quarter, totaling 1,732,000 Class A common voting shares, and 3,148,000 Class B common voting shares, for a grand total of 4,880,000 shares, represent the conversion of unit holders equity in the USIB Holdings, LP to Class B common stock equity in the Company. USIB Holdings, LP was de-consolidated due to the divestiture of Scibal Associates.
Additionally, the Company completed its examination of its internal computer systems to verify for Year 2000 compliance. Finalization indicates that the Issuer and its subsidiaries will not have any Year 2000 compliance difficulty. The "worst case" scenario for Year 2000 problems are that the Registrant would have to function manually and could do so without significant loss of business. The Registrant feels that the Year 2000 efforts have not substantially or materially deferred its ability to conduct any other projects or IT projects.
The following is a discussion and analysis of each subsidiary's results
of operations.
Century Steel Products, Inc.
Century Steel Products, Inc.'s (CSP's) sales of $1,671,156 for the third
quarter 1999 were greater than the third quarter of 1998 sales of $1,017,321.
CSP finds this increase to be in line with its ongoing efforts to increase
its business through development of new customer relationships.
Cost of goods sold was $1,161,401 in 1999, and was $849,730 for the
third quarter 1998. This increase is concomitant with the increase
in sales.
At September 30, 1999, CSP's third quarter operating income was $341,202, and at September 30, 1998 it was ($36,000). This operating income is indicative of CSPs efforts to increase revenues and earnings through new customer relationships while reducing its office personnel.
CSP's revenues year to date for the first 9 months of 1999 were $3,719,212, and were $3,582,708 for the same period of 1998. CSP's year to date 1999 operating income is $341,202, and 1998 operating income for the same period was $53,061.
U.S. Insurance Brokers, Inc. (USIB)
USIB was organized in April 1995 under the laws of the District of Columbia, has its domiciliary offices at 700 13th St., NW, Suite 950, Washington, DC 20007, and it has administrative offices at 11708 Bowman Green Drive, Reston, VA 20190.
To date, none of USIB's efforts to market group insurance plans to membership based groups have succeeded. Management is in preliminary discussions with various entities regarding the disposal of USIB's assets.
Results of Operations
USIB's third quarter 1998 operating loss was ($21,051), and in 1999 is was $0.00. This change is due to the decrease of expense at USIBs offices, as the Registrant intends to dispose of the assets of USIB shortly, and USIB did not have any operations.
USIB's year to date 1998 operating loss was ($99,237), and for the same period 1999 it was ($39,256). Again, USIB has effectively reduced personnel in anticipation of divestiture.
As mentioned previously, the Registrant has divested itself of its Scibal Associates, Inc. subsidiary, in exchange for $1,800,000.
USIB Holdings Limited Partnership
USIB Holdings LP was formed in 1997 for the purpose of acting as an acquisition entity for insurance related entities.
This entity was formed as a Limited Partnership, with USIB as its General
Partner, in order that the Company could utilize David Scibal's 727,273
Class B warrants, which he contributed as capital to the LP, as consideration
for the proposed formation of the new insurance subsidiary, as capital.
Mr. Scibal, in effect, was willing to participate in the go forward profits
as a 20% investor rather than exercise and sell the Class B shares underlying
his warrant based upon his demand registration rights which originally
attached to his warrants. This was anticipated to reduce the potential
dilution of the Company's shares after the securities underwriting which
was planned for financing the new Florida insurance subsidiary, which never
materialized.
Due to the divestiture, which included the return of Mr. Scibal's 20% interest in the LP, the LP's subsequent return of his Class B shares to the Company's treasury, and lack of income and operations, the LP is in the process of "winding up". USIB's investment in the LP will be offset by amounts due to the LP and will wash out in the "winding up."
CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES
The Company's and its subsidiaries primary sources of capital are their accounts receivable and their bank credit lines.
Consolidated accounts receivable were $3,850,375 at September 30, 1999, an increase over its accounts receivable of $1,881,939 at September 30, 1998.
The Company "upstreamed" $75,000 to its parent Company, Interactive Gaming & Communications corp. during the 3rd quarter.
The Company expects to receive payments totaling $750,000 towards its
note from Advantage Holdings, Inc. during the year 2000, from the sale
of Scibal Associates.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Notes 1 and 6 of notes to consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended March 31, 1999. The Exhibits filed as part of this report is listed below.
Exhibit 27. Financial Data Schedule
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INTERACTIVE GAMING & COMMUNICATION CORP.
Dated: August 26, 1999
By: /s/ MICHAEL F. SIMONE
Michael F. Simone, President
and Chief Executive Officer
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