<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _______________________
Commission File Number 0-20180
INTERNATIONAL REALTY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 62-1277260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 Northwest 183Rd Street, Suite 518, Miami, Florida 33169
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
305-944-8811
------------
(Registrant's telephone number, including area code)
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 No X
---- -----
The number of shares outstanding of each of Issuer's classes of common equity as
of September 1, 1998.
Common Stock, par value $.001 9,954,31
----------------------------- ----------------
Title of Class Number of Shares
Transitional Small Business Disclosure Format yes no X
---- -----
<PAGE> 2
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL REALTY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
ASSETS:
REAL ESTATE AT COST:
PROPERTY HELD FOR FUTURE DEVELOPMENT $ 5,527,100
-----------
RECEIVABLES:
DUE FROM SHAREHOLDER 1,839,500
ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR
DOUBTFUL COLLECTIONS OF $11,100 134,900
-----------
1,974,400
-----------
CASH AND CASH EQUIVALENTS 118,200
FURNITURE, EQUIPMENT AND IMPROVEMENTS, NET 128,600
EXCESS OF COST OVER ESTIMATED FAIR VALUE OF 101,200
NET ASSETS ACQUIRED
OTHER ASSETS 57,400
-----------
405,400
TOTAL $ 7,906,900
===========
LIABILITIES:
MORTGAGES AND NOTES PAYABLE (NOTE 3) $ 1,063,100
ACCOUNTS PAYABLE 229,900
ACCRUED AND OTHER LIABILITIES 988,500
CONVERTIBLE NOTES (NOTE 4) 5,093,800
-----------
7,375,300
-----------
MINORITY INTEREST $ 1,275,200
-----------
SHAREHOLDERS' EQUITY:
COMMON STOCK, $.001 PAR; AUTHORIZED 10,000,000
SHARES; 9,954,313 SHARES ISSUED 10,000
CAPITAL IN EXCESS OF PAR 1,139,000
ACCUMULATED OTHER COMPREHENSIVE LOSS (237,800)
ACCUMULATED DEFICIT (1,639,300)
-----------
(728,100)
LESS SHARES OF COMMON STOCK HELD IN TREASURY, 15,500
AT COST
-----------
(743,600)
-----------
TOTAL $ 7,906,900
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
1
<PAGE> 3
PART I: FINANCIAL INFORMATION, CONTINUED.
ITEM 1. FINANCIAL STATEMENTS, CONTINUED.
INTERNATIONAL REALTY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1997 1998
--------------------------
<S> <C> <C>
REVENUES:
REVENUES FROM SERVICES PROVIDED $ 177,100 $ 191,600
----------- -----------
OPERATING EXPENSES:
AMORTIZATION AND DEPRECIATION 14,000 14,700
DIRECT 102,600 89,000
PAYROLL AND RELATED BENEFITS 48,100 51,800
SELLING, GENERAL AND ADMINISTRATIVE 33,400 62,200
----------- -----------
198,100 217,700
----------- -----------
LOSS BEFORE OTHER INCOME (EXPENSE), MINORITY INTEREST AND (21,000) (26,100)
PROVISION FOR INCOME TAXES (BENEFIT)
OTHER INCOME (EXPENSE):
INTEREST INCOME -- 200
INTEREST EXPENSE (100,300) (105,400)
REAL ESTATE OPERATING EXPENSES (49,200)
GAIN (LOSSES) ON EXCHANGE RATE FLUCTUATIONS (8,200) (29,800)
OTHER INCOME (EXPENSE) 1,300 3,000
----------- -----------
LOSS BEFORE MINORITY INTEREST AND PROVISION FOR INCOME TAXES (128,200) (207,300)
MINORITY INTEREST IN INCOME (LOSS) OF SUBSIDIARIES (11,800) (30,000)
----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (116,400) (177,300)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (116,400) $ (177,300)
----------- -----------
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX:
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS 11,600 (3,500)
INCOME TAX EXPENSE (BENEFIT) RELATED TO OTHER -- --
COMPREHENSIVE INCOME
----------- -----------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX 11,600 (3,500)
----------- -----------
COMPREHENSIVE LOSS $ (104,800) $ (180,800)
=========== ===========
LOSS PER SHARE OF COMMON STOCK $ (.01) $ (.02)
----------- -----------
WEIGHTED AVERAGE NUMBER OF SHARES 9,954,187 9,954,313
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
2
<PAGE> 4
PART I: FINANCIAL INFORMATION, CONTINUED.
ITEM 1. FINANCIAL STATEMENTS, CONTINUED.
INTERNATIONAL REALTY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Three Months Ended
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
SOURCES OF CASH:
CLIENTS AND OTHER $ 174,300 $ 344,900
INTEREST 200
--------- ---------
174,500 344,900
--------- ---------
USES OF CASH:
CASH PAID TO:
DIRECT COSTS 89,200 209,500
OPERATING 33,200 34,500
PAYROLL AND RELATED BENEFITS 30,300 46,800
INTEREST 5,000 1,700
--------- ---------
157,700 292,500
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES 16,800 52,400
--------- ---------
CASH FLOW USED IN INVESTING ACTIVITIES:
USE OF CASH:
ACQUISITION OF EQUIPMENT (4,400) (700)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
SOURCE OF CASH:
DUE FROM SHAREHOLDER 5,000
USE OF CASH:
PAYMENT OF
SHAREHOLDER LOAN 1,300
NOTES PAYABLE (43,700)
--------- ---------
CASH PROVIDED BY (USED IN) FINANCIAL ACTIVITIES 3,700 (43,700)
--------- ---------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (5,100) 15,600
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 11,000 23,600
CASH AND CASH EQUIVALENTS, BEGINNING 107,200 7,600
--------- ---------
CASH AND EQUIVALENTS, ENDING $ 118,200 $ 31,200
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE> 5
PART I: FINANCIAL INFORMATION, CONTINUED.
ITEM 1. FINANCIAL STATEMENTS, CONTINUED.
INTERNATIONAL REALTY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
Three Months Ended
1998 1997
RECONCILIATION OF NET LOSS TO CASH
PROVIDED BY OPERATING ACTIVITIES:
NET LOSS $(177,300) $(116,400)
ADJUSTMENTS TO RECONCILE NET LOSS TO
CASH PROVIDED BY OPERATING ACTIVITIES:
AMORTIZATION AND DEPRECIATION $ 14,700 14,000
AMORTIZATION OF NOTE PAYABLE DISCOUNT -- 7,600
MINORITY INTEREST (30,000) (11,800)
CURRENCY FLUCTUATION 29,800 8,200
CHANGES IN ASSETS & LIABILITIES:
ACCOUNTS RECEIVABLE (20,100) 166,500
OTHER ASSETS 48,500 (106,200)
DUE FROM SHAREHOLDER 49,200 --
ACCOUNTS PAYABLE (200) (49,100)
ACCRUED LIABILITIES 39,300 79,800
CONVERTIBLE NOTES 62,900 59,800
--------- ---------
TOTAL ADJUSTMENTS 194,100 168,800
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES $ 16,800 $ 52,400
========= =========
SCHEDULE OF NON-CASH OPERATING ACTIVITIES:
REDUCTION OF RECEIVABLE DUE FROM SHAREHOLDER $ 184,200 $ 16,300
CURRENCY FLUCTUATION AND EXPENSES PAID BY
SHAREHOLDER (179,200) (16,300)
--------- ---------
CASH RECEIVED $ 5,000 $ --
--------- ---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE> 6
PART I: FINANCIAL INFORMATION, CONTINUED.
ITEM 1. FINANCIAL STATEMENTS, CONTINUED.
INTERNATIONAL REALTY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(1) PRINCIPLES OF STATEMENT PRESENTATION
The unaudited consolidated financial statements include all adjustments which
are necessary, in the opinion of management, to fairly reflect the Company's
financial position and results of operations. All such adjustments are of a
normal recurring nature. The statements have been prepared using the accounting
policies described in the Company's 1997 Audited Financial Statements contained
in the Company's Form 10-KSB for the year ended December 31, 1997.
(2) TRANSACTION WITH DSC AND HEMISPHERE
Pursuant to an Amended and Restated Agreement dated August 19, 1996, the Company
consummated a transaction ("Transaction") on such date with DSC, S.A. de C.V.
("DSC") and Hemisphere Development Limited ("Hemisphere"). In the Transaction,
the Company acquired the majority interest in five (5) parcels of land amounting
to approximately 3,745 acres in Mexico (see Footnote 4 herein), other assets and
assumed liabilities of DSC and Hemisphere in exchange for 1,000,000 shares of
common stock with a fair value of $.0445 per share and convertible notes
("Notes") with a face value of $4,700,900. The estimated fair value of the
assets acquired and liabilities assumed is as follows:
Assets acquired:
Land $5,014,200
Receivable due from DSC 2,110,500
Cash 317,800
Other Assets 33,000
----------
$7,475,500
Liabilities assumed, including minority interest:
Mortgages $1,094,100
Accounts payable and accrued liabilities 323,300
Minority interest in net assets 1,312,700
-----------
$2,730,100
Total assets acquired less liabilities assumed $4,745,400
==========
The assets and liabilities have been recorded at a net asset value of $4,745,400
which is the estimated fair value of the Notes and common stock issued at the
date of the Transaction. Receivable due from DSC, cash and other assets were
recorded at their stated amounts. LIabilities were recorded at their present
value. Minority interest represents the portion of undivided net assets not
acquired.
The acquisition price of the land and other assets less the liabilities assumed
in the Transaction was determined based upon the estimated fair value of the
common stock (using the restricted share value of $0.0445 per share) at the date
of the Transaction. Since the common stock of the Company is not actively
traded, the Company had a valuation performed by an independent firm. The
valuation firm specializes in business and financial valuation. The firm
determined a fair market value on a minority interest basis. The valuation
concluded that the fair market values per share of the common equity of
International Realty Group on a minority interest basis as of August 19, 1996,
immediately before the Transaction were as follows:
5
<PAGE> 7
PART I: FINANCIAL INFORMATION, CONTINUED
ITEM 1. FINANCIAL STATEMENTS, CONTINUED
Unrestricted shares $0.0607
Restricted shares $0.0445
After the Transaction, the fair market values were
Unrestricted shares $0.0617
Restricted shares $0.0480
The Post Transaction fair market values include the assets and liabilities
assumed, which for valuation purposes are based on the amounts recorded in the
accompanying consolidated financial statements. The valuation report does not
take into consideration any effect on value resulting from future development or
future operating contributions of the assets acquired in the Transaction.
(3) MORTGAGE AND NOTES PAYABLE
Mortgages and Notes Payable at March 31, 1998 is summarized as follows:
Mortgage Note, bank $430,500
Note Payable, bank 587,100
----------
Total Payable to banks $1,017,600
Note Payable, unsecured 45,500
----------
$1,063,100
(4) CONVERTIBLE NOTE
Convertible notes ("Notes") with a face value of $4,700,900 convertible into
105,638,300 of Common Stock, accrue interest at 5% per year and mature on
February 1, 1999. Accrued interest as of March 31, 1998 is $392,900. The
following pro forma information is provided to reflect the effect of the
conversion on shareholders' equity as if it had occurred on March 31, 1998.
<TABLE>
<CAPTION>
March 31, ProForma ProForma
SHAREHOLDERS' EQUITY: 1998 Adjustments March 31,
1998
<S> <C> <C> <C>
COMMON STOCK, $.001 PAR; AUTHORIZED 10,000,000
SHARES; 9,954,313 SHARES ISSUED $ 10,000 $ 105,600 $ 115,600
CAPITAL IN EXCESS OF PAR 1,139,000 4,595,300 5,734,300
ACCUMULATED OTHER COMPREHENSIVE LOSS (237,800) -- (237,800)
ACCUMULATED DEFICIT (1,639,300) (1,639,300
----------- ---------- ----------
( 728,100) 4,700,900 3,972,800
LESS SHARES OF COMMON STOCK HELD IN TREASURY,
AT COST 15,500 -- 15,500
---------- ---------- ----------
$ (743,600) $ 4,700,900 $3,988,300
=========== =========== ==========
</TABLE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
The following discussion and analysis covers any material changes in financial
condition since December 31, 1997 and any material changes in the results of
operations for the three months ended March 31, 1998, as compared to the same
period in 1997. This discussion and analysis should be read in conjunction with
"Management's Discussion and Analysis and Results of Operations" included in the
Company's Form 10-KSB for the year ended December 31, 1997.
6
<PAGE> 8
PART I: FINANCIAL INFORMATION, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
ORGANIZATION AND BUSINESS
INTERNATIONAL REALTY GROUP, INC., ("the Company") was incorporated in Delaware
on April 13, 1970. Its principle offices are located at 111 NW 183 Street, Suite
518, Miami, Florida 33169. Its telephone number is (305) 944-8811, Fax (305)
651-3394.
The Company, together with its consolidated subsidiaries, is a provider of
commercial and residential real estate, machinery and equipment valuations and
appraisals in the United States and Hungary and land development primarily in
Mexico. The Company will be developing its Mexican properties into various
resort and commercial developments. Once developed they will engage in the
marketing and operation of its properties and other ancillary real estate
activities. No development of the properties located in Mexico will occur until
after the conversion of the notes issued in the transaction described in "Land
Development", which notes are collateralized by the properties located in
Mexico.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
REAL ESTATE CONSULTING SERVICES
Revenues increased for the three months ended March 31, 1998 totaling
$191,600 as compared to $177,100 for the same period in 1997. Revenues from
domestic operations performed by Appraisal Group International, Inc. ("AGII")
were $156,600, as compared to $158,200 for the same period in 1997. Revenues
from foreign operations performed by Appraisal Group International, Rt. ("AGI
Rt.") increased for the current period to $35,000 compared to $20,300 for the
same period in 1997.
Operating expenses for the three months ended March 31, 1998 were $217,700
compared to $198,100 for the comparable period in 1997. Of the total expenses,
domestic operations accounted for 85% and foreign operations accounted for 15%.
Selling, General and Administrative expenses for the period increased from
$33,400 in 1997 to $62,200 in 1998. The increase in Selling, General and
Administrative expenses is primarily attributable to increased audit, legal and
other corporate expenses. Payroll and Related Benefits for the period increased
from $48,100 in 1997 to $51,800 for the current 1998 period. Direct expenses,
including the production of appraisal reports and appraiser's fees, travel,
photography and other related expenses, decreased from $102,600 in 1997 to
$89,000 for the current 1998 period. Amortization and Depreciation expense was
consistent between the periods.
Other income (expense), during the current 1998 period, consisted of
interest expense, which was $105,400 compared to $103.000 for the comparable
period in 1997. The majority of interest expense is attributable to the
Convertible Note ($62,900) and debt for properties located in Mexico. Currency
translation expense was $29,800 for the current 1998 period compared to $8,200
for the comparable period in 1997. Such translation expense is attributable to
the currency fluctuations of Mexican pesos denominated accounts receivable and
mortgages, notes and other liabilities during each such period.
7
<PAGE> 9
PART I: FINANCIAL INFORMATION, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
LAND DEVELOPMENT
The Company has acquired interests in five properties located in Mexico,
pursuant to a transaction (the "Transaction") with DSC, S.A. de C.V. ("DSC") and
Hemisphere Developments Limited ("Hemisphere"), dated as of August 19, 1996. The
Company believes that each of the Mexican properties is suitable for future
development as either a resort, residential or commercial property. Since the
properties secure the Company's obligations under certain notes issued to DSC
and Hemisphere, the Company does not plan to undertake any development of such
properties until after such notes have been converted. While no assurances can
be given, the Company expects that the conversion of these notes (convertible
into an aggregate of 105,638,300 shares of the Company's Common Stock) will
occur in the fourth quarter of 1998. Any development of the properties
thereafter is contingent upon the Company obtaining necessary financing.
Potential sources of financing include mortgage financing from financial
institutions located in the United States or Mexico, or the issuance of equity
securities of the Company. The Company has no present understanding, agreement
or commitment for financing any such property and there can be no assurance that
financing will be available to the Company on commercially reasonable terms or
at all.
During the current period, in concurrence with DSC and Hemisphere, the
Company began preliminary activity in its land development operations. The
Company had costs, paid directly by DSC through the reduction of their account
payable to the Company, totaling $74,100 for personnel, engineering, site plans
and other related expenses. As a result, property held for future development
increased $24,900 in connection with the capitalization of certain of these
costs, and the balance of $49,200 was charged to real estate operating expenses
during the current period.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and Cash Equivalents for the three months ended March 31, 1998
totaled $118,200. Accounts receivables totaled $1,974,000. Of this amount,
$1,839,500 is due from shareholder. During the current period, shareholder
receivables were reduced by $184,200 including $79,200 through the payment of
certain land development costs and payments to the Company, with the balance
attributable to currency fluctuation. Accounts receivable of $134,900 is from
domestic operations ($100,000) and foreign operations ($34,900).
Net cash provided by operating activities, for the current period, was
$16,800 compared to $52,400 for the 1997 period. Cash flow used in investing
activities, primarily for the acquisition of equipment for consulting services,
totaled $4,400. Net cash provided by (used in) financing activities was $3,700
in the current period. There was a modest increase of cash and equivalents of
$11,000 for the current period compared to $23,600 for the comparable 1997
period.
Mortgage and notes payable for the three months ended March 31, 1998 were
$1,063,100 attributable to: (i) $1,017,600 mortgages to Mexican banks for
property currently held for future development, and (ii) $45,500 note payable
for domestic operations. Accounts payable totaled $229,900. Accrued liabilities,
totaling $988,500 consisted of: (i) $556,600 accrued salaries, (ii) $335,600
accrued interest and other expenses for Mexican operations, (iii) shareholder
loans $46,900 and the balance attributable to other short-term debt.
CURRENCY RISK. The Company is subject to risk in changes of foreign exchange
rates for its subsidiaries that use a foreign currency as their functional
currency, or for assets or liabilities which are foreign currency denominated
and are translated to U.S. dollars at each reporting period. The Company has
made quarterly currency translation adjustments (totaling $237,800 over an
eight-year period) for its foreign operations, recognized as a component of
shareholder's equity. When a foreign entity operates in a highly inflationary
economy, the Company uses the U.S. dollar as the functional
8
<PAGE> 10
PART I: FINANCIAL INFORMATION, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
currency, rather than the local currency. Effective September 30, 1996 the
Company considered Mexico to operate in a highly inflationary economy. The
Company has not engaged in the purchase of forward contracts, or other hedging
techniques, to manage such foreign exchange risk to protect against earnings and
cash flow volatility resulting from changes in foreign exchange rates.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company herein or orally, whether in presentations, in
response to questions or otherwise. Any statements that express, or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "will result", "are expected to", "will continue", "is
anticipated", "estimated", "projection" and "outlook") are not historical facts
and may be forward-looking and, accordingly, such statements involve estimates,
assumptions, and uncertainties which could cause actual results to differ
materially from those expressed in the forward-looking statements. Such
uncertainties include, among other, the following: (i) the Company's ability to
obtain additional financing to implement its business strategy; (ii) real estate
investment risks, including the potential for increases in real property taxes;
(iii) real estate development risks, including obtaining building permits or
necessary zoning changes, construction delays strikes, adverse weather
conditions and other conditions beyond the control of the Company; (iv)
illiquidity of real estate investments; (v) the financial condition of the
Company's clients; (vi) imposition of new regulatory requirements affecting the
Company; (vii) a downturn in general or local economic conditions where the
Company owns real property; (viii) the delay or failure to properly manage
growth and successfully integrate acquired companies and operations; (ix) lack
of geographic diversification; (x) effect of uninsured loss and (ix) other
factors which are described in further detail in the Company's filings with the
Securities and Exchange Commission.
The Company cautions that actual results or outcomes could differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors. Further, management
cannot assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
YEAR 2000 COMPLIANCE:
The Year 2000 issue is the result of computer programs being written using two
(2) digits rather than the four (4) digits to define the year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than 2000. This problem could force
computers to either shut down or provide incorrect data or information. The
Company utilizes generic software programs developed, maintained and upgraded by
independent computer software providers. In response to the Year 2000 issue,
management is of the opinion that the providers of these software programs will
resolve the date sensitive issue so that all critical systems will be in
compliance prior to the Year 2000. The Company does not anticipate any material
adverse impact on its business.
9
<PAGE> 11
PART II: OTHER INFORMATION
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27.1 Financial Data Schedule (For SEC purposes only)
B. Reports on Form 8-K
None for the quarterly period ended March 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
INTERNATIONAL REALTY GROUP, INC.
DATE: OCTOBER 22, 1998 BY: /s/ RICHARD M. BRADBUR
-------------------------------------------
Richard M. Bradbury
President
(Principal Executive and Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
INTERNATIONAL REALTY GROUP, INC. INTERIM REPORT DATED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-QSB FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1998 DATED OCTOBER 22, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 118,200
<SECURITIES> 0
<RECEIVABLES> 1,974,400
<ALLOWANCES> 0
<INVENTORY> 5,527,100<F1>
<CURRENT-ASSETS> 0
<PP&E> 128,600
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,906,900
<CURRENT-LIABILITIES> 1,218,400
<BONDS> 6,156,900
0
0
<COMMON> 10,000
<OTHER-SE> (733,600)
<TOTAL-LIABILITY-AND-EQUITY> 7,906,900
<SALES> 0
<TOTAL-REVENUES> 191,600
<CGS> 0
<TOTAL-COSTS> 217,700
<OTHER-EXPENSES> 75,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,400
<INCOME-PRETAX> (207,300)
<INCOME-TAX> 0
<INCOME-CONTINUING> (180,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (180,800)
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
<FN>
<F1>INVENTORY CONSISTS OF REAL ESTATE, HELD FOR FUTURE DEVELOPMENT.
</FN>
</TABLE>