form10q033108.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[ X
]
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the quarterly period ended March 31, 2008
|
|
[ ]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
For the transition period from ________________ to
_________________
|
|
Commission file
number 0-50742
|
INTERNATIONAL CONSOLIDATED
COMPANIES, INC.
_____________________________________________________________________________
(Exact
name of small business issuer as specified in its
charter)
|
|
FLORIDA
________________________________________________
(State
or other jurisdiction of incorporation or organization)
|
02-0555904
____________________________
(IRS
Employer Identification No.)
|
|
2100
19th
Street, Sarasota FL 34234
_____________________________________________________________________________
(Address
of principal executive offices)
|
|
(941)
330-0336
_____________________________________________________________________________
(Issuer's
telephone number)
|
|
_____________________________________________________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
|
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [ X
] No [ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act). Yes [ ] No [ X
]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer [ ] Accelerated
filer [ ]
Accelerated
filer Non-accelerated filer [ ] Smaller
reporting company [X]
APPLICABLE
ONLY TO CORPORATE ISSUERS
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 17,432,660 Common Shares no par value as of
March 31, 2008
Transitional
Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART
I — FINANCIAL INFORMATION
Item 1. Financial
Statements.
SIGN
MEDIA SYSTEMS, INC.
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
SIGN
MEDIA SYSTEMS, INC.
INDEX
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Condensed
Consolidated Balance Sheet at March 31, 2008
(Unaudited)
4
Condensed
Consolidated Statements of Operations for the Three Months
Ended March 31, 2008 and 2007
(Unaudited)
5
Condensed
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2008 and 2007
(Unaudited)
6
Notes to
the Condensed Consolidated Financial Statements (Unaudited) 7-11
INTERNATIONAL CONSOLIDATED COMPANIES,
INC.
(FORMERLY KNOWN AS SIGN MEDIA SYSTEMS,
INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
269,424 |
|
|
$ |
9,048 |
|
Accounts
receivable, net
|
|
|
837,849 |
|
|
|
946 |
|
Inventory
|
|
|
624,946 |
|
|
|
- |
|
Advances
to vendors and other receivables
|
|
|
227,663 |
|
|
|
- |
|
|
|
|
1,959,882 |
|
|
|
9,994 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT -
net
|
|
|
5,500,750 |
|
|
|
40,059 |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Due
from related parties
|
|
|
695,033 |
|
|
|
616,527 |
|
Intangible
assets, net
|
|
|
715,493 |
|
|
|
- |
|
Deposits
on intangible assets
|
|
|
1,782,914 |
|
|
|
- |
|
|
|
|
3,193,440 |
|
|
|
616,527 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
10,654,072 |
|
|
$ |
666,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt
|
|
$ |
1,526 |
|
|
$ |
4,578 |
|
Accounts
payable and accrued expenses
|
|
|
2,560,123 |
|
|
|
60,722 |
|
Shareholders
loans
|
|
|
12,350 |
|
|
|
- |
|
Advances
from customers and other payables
|
|
|
15,170 |
|
|
|
- |
|
Taxes
Payable
|
|
|
152,969 |
|
|
|
- |
|
Liability
for stock to be issued
|
|
|
50,000 |
|
|
|
50,000 |
|
Loans
from Banks
|
|
|
1,580,434 |
|
|
|
- |
|
|
|
|
4,372,572 |
|
|
|
115,300 |
|
|
|
|
|
|
|
|
|
|
LONG
TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Loans
from related parties and other
|
|
|
2,329,559 |
|
|
|
- |
|
|
|
|
2,329,559 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
6,702,131 |
|
|
|
115,300 |
|
|
|
|
|
|
|
|
|
|
MINORITY
INTEREST
|
|
|
3,490,021 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Common
stock, no par value, 100,000,000 shares authorized
|
|
|
|
|
|
at
March 31, 2008 and December 31, 2007; 17,432,660 and 12,566,549 shares
issued
|
|
and
outstanding at March 31, 2008 and December 31, 2007
|
|
|
4,624,200 |
|
|
|
2,062,400 |
|
Additional
paid-in capital
|
|
|
921,700 |
|
|
|
671,700 |
|
Prepaid
expenses
|
|
|
(60,000 |
) |
|
|
(150,000 |
) |
Retained
earnings (deficit)
|
|
|
(5,023,980 |
) |
|
|
(2,032,820 |
) |
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
461,920 |
|
|
|
551,280 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
$ |
10,654,072 |
|
|
$ |
666,580 |
|
The
accompanying notes are an intergral part of these condensed consolidated
financial statements.
INTERNATIONAL CONSOLIDATED COMPANIES,
INC.
(FORMERLY KNOWN AS SIGN MEDIA SYSTEMS,
INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
UNAUDITED
FOR THE THREE MONTHS ENDED MARCH 31,
2008 AND 2007
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$ |
- |
|
|
$ |
16,259 |
|
|
|
|
|
|
|
|
|
|
COSTS
OF GOODS SOLD
|
|
|
- |
|
|
|
18,697 |
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT (LOSS)
|
|
|
- |
|
|
|
(2,438 |
) |
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Professional
fees and administrative payroll
|
|
|
2,720,327 |
|
|
|
1,228,293 |
|
General
and administrative expenses
|
|
|
268,667 |
|
|
|
45,534 |
|
Depreciation
|
|
|
10,166 |
|
|
|
10,166 |
|
|
|
|
2,999,160 |
|
|
|
1,283,993 |
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE OTHER INCOME (EXPENSE)
|
|
|
(2,999,160 |
) |
|
|
(1,286,431 |
) |
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Impairment
of inventory
|
|
|
- |
|
|
|
(7,462 |
) |
Interest
income
|
|
|
8,000 |
|
|
|
8,110 |
|
Interest
expense
|
|
|
- |
|
|
|
(72 |
) |
|
|
|
8,000 |
|
|
|
576 |
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE INCOME TAXES
|
|
|
(2,991,160 |
) |
|
|
(1,285,855 |
) |
Provision
for income taxes
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
NET
LOSS APPLICABLE TO COMMON SHARES
|
|
$ |
(2,991,160 |
) |
|
$ |
(1,285,855 |
) |
|
|
|
|
|
|
|
|
|
NET
LOSS PER BASIC AND DILUTED SHARES
|
|
$ |
(0.20 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON
|
|
|
|
|
|
|
|
|
SHARES
OUTSTANDING
|
|
|
14,886,042 |
|
|
|
11,079,934 |
|
The accompanying notes are an intergral part of
these condensed consolidated financial statements.
INTERNATIONAL CONSOLIDATED COMPANIES,
INC.
(FORMERLY KNOWN AS SIGN MEDIA SYSTEMS,
INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
2008 AND 2007
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(2,991,160 |
) |
|
$ |
(1,285,855 |
) |
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss
|
|
|
|
|
|
|
|
|
to
net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
10,166 |
|
|
|
10,166 |
|
Issuance
of common stock for services
|
|
|
1,688,800 |
|
|
|
1,075,000 |
|
Issuance
of common stock for compensation
|
|
|
873,000 |
|
|
|
90,000 |
|
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase)
decrease in inventory
|
|
|
- |
|
|
|
7,462 |
|
(Increase)
decrease in prepaid expenses and other current assets
|
|
|
90,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
67,030 |
|
|
|
20,086 |
|
Total
adjustments
|
|
|
2,728,996 |
|
|
|
1,202,714 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
(262,164 |
) |
|
|
(83,141 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
|
- |
|
|
|
(3,280 |
) |
Increase
in interest receivable - related party
|
|
|
(7,200 |
) |
|
|
(204,360 |
) |
Cash
acquired from acquisition
|
|
|
270,442 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) investing activities
|
|
|
263,242 |
|
|
|
(207,640 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payments
on long-term debt
|
|
|
(3,052 |
) |
|
|
(2,289 |
) |
Proceeds
on common stock to be issued
|
|
|
250,000 |
|
|
|
- |
|
Increase
(decrease) on debt-related party
|
|
|
12,350 |
|
|
|
1,667 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
259,298 |
|
|
|
(622 |
) |
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
260,376 |
|
|
|
(291,403 |
) |
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
|
|
9,048 |
|
|
|
304,127 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
|
$ |
269,424 |
|
|
$ |
12,724 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash
paid during the year for interest
|
|
$ |
- |
|
|
$ |
73 |
|
Debt
reduced to trade in on vehicle
|
|
$ |
- |
|
|
$ |
20,491 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF NON CASH INFORMATION:
|
|
|
|
|
|
|
|
|
Common
stock issued for compensation
|
|
$ |
873,000 |
|
|
$ |
1,075,000 |
|
Common
stock issued for consulting
|
|
$ |
1,688,800 |
|
|
$ |
90,000 |
|
Acquistion
(see footnote)
|
|
|
|
|
|
|
|
|
The accompanying notes are an intergral part of
these condensed consolidated financial statements.
INTERNATIONAL
CONSOLIDATED COMPANIES, INC.
(FORMELY
KNOWN AS SIGN MEDIA SYSTEMS, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2008 AND 2007
NOTE
NOTE
1- ORGANIZATION AND BASIS OF
PRESENTATION
The
condensed consolidated unaudited interim financial statements included herein
have been prepared, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The condensed consolidated
unaudited financial statements and notes are presented as permitted on Form 10-Q
and do not contain information included in the Company’s annual condensed
consolidated unaudited statements and notes. Certain information and
footnote disclosures normally included in the financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed consolidated unaudited financial statements be read in conjunction
with the December 31, 2007 audited consolidated financial statements and the
accompanying notes thereto. While management believes the procedures
followed in preparing these condensed consolidated unaudited financial
statements are reasonable, the accuracy of the amounts are in some respects
dependent upon the facts that will exist, and procedures that will be
accomplished by the Company later in the year.
These
condensed consolidated unaudited financial statements reflect all adjustments,
including normal recurring adjustments which, in the opinion of management, are
necessary to present fairly the condensed consolidated operations and cash flows
for the periods presented.
International
Consolidation Companies, Inc (the “Company”) was previously known Sign Media
Systems Inc. The Company was incorporated on January 28, 2002 as a Florida
corporation. Upon incorporation, an officer of the Company contributed $5,000
and received 1,000 shares of common stock of the Company. Effective January 1,
2003, the Company issued 7,959,000 shares of common stock in exchange of $55,702
of net assets of Go! Agency, LLC, a Florida limited liability company (“Go
Agency”), a company formed on June 20, 2000, as E Signs Plus.com, LLC, a Florida
limited liability company. In this exchange, the Company assumed some
debt of Go Agency and the exchange qualified as a tax-free exchange under IRC
Section 351. The net assets received were valued at historical cost.
The net assets of Go Agency that were exchanged for the shares of stock were as
follows:
Accounts
receivable $30,668
Fixed
assets, net of depreciation
112,214
Other
assets 85,264
Accounts
payable
(29,242)
Notes
payable
(27,338)
Other
payables (115,864)
Total $ 55,702
Go Agency
was formed to pursue third party truck side advertising. The
principal of Go Agency invested approximately $857,000 in Go Agency pursuing
this business. It became apparent that a more advanced truck side
mounting system would be required and that third party truck side advertising
alone would not sustain an ongoing profitable business. Go Agency
determined to develop a technologically advanced mounting system and focused on
a different business plan. Go Agency pre-exchange transaction was a
company under common control of the major shareholder of
SMS. Post-exchange transactions have not differed. Go Agency still
continues to operate and is still under common control.
Go Agency
and the Company developed a new and unique truck side mounting system, which
utilizes a proprietary cam lever technology, which allows an advertising image
to be stretched tight as a drum. Following the exchange, the Company
had 7,960,000 shares of common stock issued and outstanding. The
Company has developed and filed an application for a patent on its mounting
systems. The cam lever technology is considered an intangible asset
and has not been recorded as an asset on the Company’s condensed consolidated
balance sheet. This asset was not recorded due to the fact that there
was no historic recorded value on the books of Go Agency for this
asset.
On
November 17, 2003, the Company entered into a merger agreement by and among
American Power House, Inc., a Delaware corporation and its wholly owned
subsidiary, Sign Media Systems Acquisition Company, Inc., a Florida corporation
and Sign Media Systems, Inc. Pursuant to the merger agreement, Sign
Media Systems merged with Sign Media Systems Acquisition Company with Sign Media
Systems being the surviving corporation. The merger was completed on
December 8, 2003, with the filing of Articles of Merger with the State of
Florida at which time Sign Media Systems Acquisition ceased to exist and Sign
Media Systems became the surviving corporation. American Powerhouse
was not actively engaged in any engaged in any business engaged in any engaged
in any business at the time of the merger. However, sometime prior to
the merger, American Power House had acquired certain technology for the
manufacture of a water machine in the form of a water cooler that manufactures
water from ambient air. Prior to the merger, American Power House
granted a license to Sign Media Systems Acquisition to use that technology and
to manufacture and sell the water machines. The acquisition of this
license was the business purpose of the merger. As consideration for
the merger, Sign Media Systems issued 300,000 shares of its common stock to
American Power House, 100,000 shares in the year ending December 31, 2003, and
200,000 shares in the year ending December 31, 2004. The 300,000
shares of stock were valued at $1.50 per share based on recent private sales of
Sign Media Systems common stock. At the time of the merger the Company was in
negotiations with independent dealers in Central America who sold United States
products in Central and South America and who had expressed a desire to market
this product in that territory. Ultimately, the Company was unable to come to a
satisfactory agreement with these dealers for the sale of this
product.
Accordingly,
the Company is not currently engaged in the business of manufacturing and sale
of this product. The Company will not become engaged in the business of
manufacturing and selling this product until it can identify and come to a
satisfactory agreement with an independent dealer or dealers in that territory
for the sale of this product. The Company cannot currently predict when or if it
will identify and come to a satisfactory agreement with an independent dealer or
dealers in this territory for the sale of this product. Due to these problems
with the Company’s plans for marketing and distribution of the water machine
subsequent to the merger, the license has no carrying or book value for the
three months ended March 31, 2008 and 2007 in the Company’s condensed
consolidated financial statements for MARCH 31, 2008 and 2007. There were no
other material costs of the merger. There was and is no relationship between
American Powerhouse and either Sign Media Systems or GO! AGENCY.
NOTE
2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of
Consolidation
The
condensed consolidated unaudited financial statements include the accounts of
the Company and its wholly owned subsidiary. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of
Estimates
The
preparation of condensed consolidated unaudited financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Revenue and Cost
Recognition
The
Company had three primary sources of revenue in 2008 and 2007:
1.
|
The
sale and installation of their mounting
system;
|
2.
|
The
printing of advertising images to be inserted on trucks utilizing the
Company’s mounting systems; and
|
3.
Third party advertising.
NOTE
2-SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue and Cost Recognition
(continued)
The
Company’s revenue recognition policy for these sources of revenue is as follows.
The Company relies on Staff Accounting Bulletin Topic 13, in determining when
recognition of revenue occurs. There are four criteria that the Company must
meet when determining when revenue is realized or realizable and earned. The
Company has persuasive evidence of an arrangement existing; delivery has
occurred or services rendered; the price is fixed or determinable; and
collectibility is reasonably assured. The Company recognizes revenue from the
sale of its mounting systems and images when it completes the work and either
ships or installs the products. The Company recognizes revenue from third party
advertising only when it has the contractual right to receive such revenue. The
Company does retain a liability to maintain systems and images that are
installed for purposes of third party advertising. However, any damage caused by
the operator of the truck is the responsibility of the lessor of the space and
is not the Company’s liability.
To date
the Company has experienced no cost for maintaining these leased systems. All
deposits are non-refundable.
In
addition, the Company offers manufacturer’s warranties. These warranties are
provided by the Company and not sold. Therefore, no income is derived from the
warranty itself.
Cost is
recorded on the accrual basis as well, when the services are incurred rather
than when payment is made.
Costs of
goods sold are separated by components consistent with the revenue categories.
Mounting systems, printing and advertising costs include purchases made, and
payroll costs attributable to those components. Payroll costs is included for
sales, engineering and warehouse personnel in cost of goods sold. Cost of
overhead is de minimus. The company is contemplating new source of
revenue.
Warranties
The
Company offers manufacturers warranties that covers all manufacturer defects.
The Company accrues warranty costs based on historical experience and
management’s estimates. The Company has not experienced any losses in the past
two years with respect to the warranties, therefore has not accrued any
liability for the three months ended March 31, 2008 and 2007. The following
table represents the Company’s losses in the past two years with respect to
warranties.
|
Balance
|
|
Charged
|
|
|
|
Balance
|
|
|
at
Beginning
|
|
to
Costs and
|
|
|
|
at
End of
|
|
|
of
Period
|
|
Expenses
|
|
Deductions
|
|
Period
|
|
|
|
|
|
|
|
|
|
|
Period
ended March 31, 2008
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
ended March 31, 2007
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Provision for Bad
Debt
Under SOP
01-6 "Accounting for Certain Entities (including Entities with Trade
Receivables) That Lend to or Finance the Activities of Others” the Company has
intent and belief that all amounts in accounts receivable are
collectible. The Company extends unsecured credit to its customers in
the ordinary course of business but mitigates the associated credit risk by
performing credit checks and actively pursuing past due accounts over 90
days.
Management's
policy is to vigorously attempt to collect its receivables
monthly. The Company estimated the amount of the allowance necessary
based on a review of the aged receivables from the major
customer. Management additionally instituted a policy for recording
the recovery of the allowance if any in the period where it is
recovered.
Bad debt
expense for the years ended March 31, 2008 and 2007 was $ -0- and $ -0-,
respectively.
Cash and Cash
Equivalents
The
Company considers all highly liquid debt instruments and other short-term
investments with an initial maturity of three months or less to be cash
equivalents.
The
Company maintains cash and cash equivalent balances at several financial
institutions that are insured by the Federal Deposit Insurance Corporation up to
$100,000.
Accounts
Receivable
Accounts
receivable are presented at face value, net of the allowance for doubtful
accounts. The allowance for doubtful accounts is established through provisions
charged against income and is maintained at a level believed adequate by
management to absorb estimated bad debts based on current economic
conditions.
Property and
Equipment
Property
and equipment are stated at cost. Depreciation is computed primarily
using the straight-line method over the estimated useful life of the
assets.
Furniture
and
fixtures 5
years
Equipment 5
years
Trucks 3
years
Advertising
Costs of
advertising and marketing are expensed as incurred. Advertising and
marketing costs were $ -0- and $ -0- for the year ended March 31, 2008 and 2007,
respectively.
Fair Value of Financial
Instruments
The
carrying amount reported in the balance sheets for cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of the immediate or short-term maturity of these financial
instruments.
Income
Taxes
The
provision for income taxes includes the tax effects of transactions reported in
the financial statements. Deferred taxes would be recognized for differences
between the basis for assets and liabilities for financial statement and income
tax purposes. The major difference relates to the net operating loss carry
forwards generated by sustaining deficits.
Stock-Based
Compensation
Employee
stock awards under the Company's compensation plans are accounted for in
accordance with Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to
Employees”, and related interpretations. The Company provides the
disclosure requirements of Statement of Financial Accounting Standards No. 123,
“Accounting for Stock-Based
Compensation” (“SFAS 123”), and related interpretations. Stock-based
awards to non-employees are accounted for under the provisions of SFAS 123 and
has adopted the enhanced disclosure provisions of SFAS No. 148 “Accounting for
Stock-Based Compensation- Transition and Disclosure, an amendment of SFAS No.
123”.
The
Company measures compensation expense for its employee stock-based compensation
using the intrinsic-value method. Under the intrinsic-value method of accounting
for stock-based compensation, when the exercise price of options granted to
employees is less than the estimated fair value of the underlying stock on the
date of grant, deferred compensation is recognized and is amortized to
compensation expense over the applicable vesting period. In each of the periods
presented, the vesting period was the period in which the options were granted.
All options were expensed to compensation in the period granted rather than the
exercise date.
NOTE
2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
The
Company measures compensation expense for its non-employee stock-based
compensation under the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”.
The fair
value of the option issued is used to measure the transaction, as this is more
reliable than the fair value of the services received. The fair value is
measured at the value of the Company’s common stock on the date that the
commitment for performance by the counterparty has been reached or the
counterparty’s performance is complete. The fair value of the equity instrument
is charged directly to compensation expense and additional paid-in
capital.
Income (Loss) per Share of
Common Stock
Historical
net income (loss) per common share is computed using the weighted-average number
of common shares outstanding. Diluted earnings per share (EPS)
include additional dilution from common stock equivalents, such as stock
issuable pursuant to the exercise of stock options and
warrants. Common stock equivalents are not included in the
computation of diluted earnings per share when the Company reports a loss
because to do so would be antidilutive for the periods presented.
The
following is a reconciliation of the computation for basic and diluted
EPS:
|
|
March 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(2,991,160 |
) |
|
$ |
(1,285,855 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,886,042 |
|
|
|
11,079,934 |
|
|
|
|
|
|
|
|
|
|
Weighted-average
common stock equivalents
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
- |
|
|
|
- |
|
Warrants
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
14,886,042 |
|
|
|
11,079,934 |
|
Recent Accounting
Pronouncements
In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements,” which provides a definition of fair value, establishes a
framework for measuring fair value and requires expanded disclosures about fair
value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The provisions of SFAS No. 157
should be applied prospectively. Management is assessing the potential impact on
Genesis’s financial condition and results of operations.
In
February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective
Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP
No. 157-2 defers the effective date of SFAS No. 157 to fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years, for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). Examples of items within the scope of FSP
No. 157-2 are nonfinancial assets and nonfinancial liabilities initially
measured at fair value in a business combination (but not measured at fair value
in subsequent periods), and long-lived assets, such as property, plant and
equipment and intangible assets measured at fair value for an impairment
assessment under SFAS No. 144.
The
partial adoption of SFAS No. 157 on January 1, 2008 with respect to
financial assets and financial liabilities recognized or disclosed at fair value
in the financial statements on a recurring basis did not have a material impact
on the Company's financial statements. See Note 12 for the fair value
measurement disclosures for these assets and liabilities. The Company is in the
process of analyzing the potential impact of SFAS No. 157 relating to its
planned January 1, 2009 adoption of the remainder of the
standard.
In
September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans”, which amends
SFAS No. 87 “Employers’ Accounting for Pensions”
(SFAS No. 87), SFAS No. 88 “Employers’ Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits” (SFAS No. 88), SFAS No. 106
“Employers’ Accounting for Postretirement Benefits Other Than Pensions”
(SFAS No. 106), and SFAS No. 132R “Employers’ Disclosures
about Pensions and Other Postretirement Benefits (revised 2003)”
(SFAS No. 132R). This Statement requires companies to recognize an
asset or liability for the overfunded or underfunded status of their benefit
plans in their financial statements. SFAS No. 158 also requires the
measurement date for plan assets and liabilities to coincide with the sponsor’s
year end. The standard provides two transition alternatives related to the
change in measurement date provisions. The recognition of an asset and liability
related to the funded status provision is effective for fiscal year ending after
December 15, 2006 and the change in measurement date provisions is
effective for fiscal years ending after December 15, 2008. This
pronouncement has no effect on Genesis Capital at this time.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Liabilities, including an amendment of FASB Statement No.
115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified
election dates, to measure many financial instruments and certain other items at
fair value that are not currently required to be measured at fair value.
Unrealized gains and losses shall be reported on items for which the fair value
option has been elected in earnings at each subsequent reporting date. SFAS No.
159 is effective for fiscal years beginning after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year that begins on or
before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). The
Company is currently assessing the impact that SFAS No. 159 will have on its
financial statements.
NOTE
3- ACCOUNTS
RECEIVABLE
Accounts
receivable consists of the following at March 31, 2008 and December 31,
2007:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
837,849 |
|
|
$ |
946 |
|
|
|
|
|
|
|
|
|
|
Less
allownace for doubtful accounts
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
accounts receivable, net
|
|
$ |
837,849 |
|
|
$ |
946 |
|
NOTE
4- PROPERTY AND
EQUIPMENT
Property
and equipment consists of the following at March 31, 2008 and December 31,
2007:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Equipment
|
|
$ |
128,745 |
|
|
$ |
128,745 |
|
Furniture
and Fixtures
|
|
|
112,022 |
|
|
|
112,022 |
|
Transportation
Equipment
|
|
|
24,621 |
|
|
|
24,621 |
|
Fixed
assets from Acquisition (see note 10)
|
|
|
5,470,787 |
|
|
|
- |
|
|
|
|
5,736,175 |
|
|
|
265,388 |
|
Less:
Accumulated Depreciation
|
|
|
(235,425 |
) |
|
|
(225,329 |
) |
|
|
|
|
|
|
|
|
|
Net
Book Value
|
|
$ |
5,500,750 |
|
|
$ |
40,059 |
|
Depreciation
expense for the period ended March 31, 2008 and the year ended December 31, 2007
was $10,166 and $58,693.
NOTE
5- PREPAID
EXPENSES
The
company issued 300,000 shares of stock to a consultant for services amortized
over a six-month period. The services were recognized at FMV of the stock
($180,000). At March 31,2007 $60,000 was considered prepaid.
NOTE
6- RELATED PARTY
TRANSACTIONS
On
January 28, 2002, Sign Media Systems, Inc. was formed as a Florida Corporation
but did not begin business operations until April 2002. Most of the revenue that
Sign Media Systems, Inc. earned was contract work with Go! Agency, LLC., a
Florida limited liability company, a related party. Sign Media Systems, Inc.
would contract Go! Agency, LLC. to handle and complete jobs. There
was no additional revenue or expense added from one entity to the
other.
On January 3, 2003,
the Company entered into a loan agreement with Olympus Leasing Company, a
related party, and in connection therewith executed a promissory note with a
future advance clause in favor of Olympus Leasing, whereby Olympus Leasing
agreed to loan the Company up to a maximum of $1,000,000 for a period of three
years, with interest accruing on the unpaid balance at 18% per annum, payable
interest only monthly, with the entire unpaid balance due and payable in full on
January 3, 2006. As of March 31, 2008 and 2007, there was $0 and $0 due to
Olympus, respectively.
On
June 28, 2005, the Company loaned $1,200,000 to Olympus Leasing Company, a
related party. At June 28, 2005, Antonio F. Uccello, III, was, and is now the
President, Chairman, a minority owner of the issued and outstanding shares of
stock of Olympus Leasing and reports to its board of directors. Antonio F.
Uccello, III, was and is one of the Company’s officers and directors and an
indirect shareholder of Sign Media Systems, Inc. The loan is for a period of
five years with interest accruing on the unpaid balance at 5.3% per annum
payable annually, with the entire principle and unpaid interest due and payable
in full on June 28, 2010.
There
is no prepayment penalty. The purpose of the loan was to obtain a higher
interest rate than is currently available at traditional banking institutions.
Olympus Leasing’s primary business is making secured loans to chiropractic
physicians throughout the United States for the purchase of chiropractic
adjustment tables. The loans are generally for less than $3,000 each and are
secured by a first lien on each chiropractic adjustment table. The chiropractic
physician personally guarantees each loan. The rate of return on the Olympus
Leasing loans is between 15% and 25% per annum. To date, Olympus Leasing has
suffered no loss from any loan to a chiropractic physician for the purchase of a
chiropractic adjustment table. There is an excellent market for the re-sale of
tables, which may be the subject of a foreclosure. Olympus Leasing currently has
in excess of $1,000,000 in outstanding finance receivables from chiropractic
physicians secured by a first lien on each chiropractic adjustment
table.
The
remaining balance that was due from related party on the balance sheet was
$623,527 including interest on March 31, 2008 and $616,527 including interest on
December 31, 2007.
NOTE
7- SHORT-TERM
DEBT
Short-term
debt consists of an installment note with GMAC Finance. Balance due on March 31,
2008 was $1,526.
NOTE
8- BANK
LOANS
Bank
loans were obtained from several local banks in China through the Company’s
newly acquired subsidiary, with interest rates ranging from 5.841% to 7.728% per
annum. All loans are currently in default and are payable upon demand. The
majority of the loans are secured by the plant and equipments owned by the
subsidiary.
Bank
loans are summarized as follows:
|
|
|
Due
Date
|
|
Interest Rate
Per
Annum
|
|
March 31,
2008
|
1
|
|
Shanghai
Bank
|
November
27, 2004
|
|
5.841%
|
|
$
|
1,309,469
|
2
|
|
Aijian
Trust
|
November
12, 1999
|
|
7.728%
|
|
|
142,613
|
3
|
|
Industrial
commercial bank of China
|
June
30, 2000
|
|
7.185%
|
|
|
128,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,580,434
|
NOTE
9- NOTES PAYABLE – RELATED
PARTY
The
Company’s newly acquired subsidiaries periodically borrows from its directors
and affiliated companies to finance the operations whenever necessary. As of
March 31, 2008, the Company had notes payable from related parties totaling
$2,329,559. All notes are unsecured and it is not expected that they will be
repaid anytime soon.
The
notes payable consist of the following as of March 31, 2008:
|
|
|
Interest
|
Balance
|
No.
|
Payees
|
Relationship
|
Rate
|
March
31,
|
|
|
|
Per
Annum
|
2008
|
1
|
Shenzhen
Weiji Development Co.
|
Affiliate
|
-
|
$ 576,155
|
2
|
Dechang
Investment Development Co.
|
Affiliate
|
0.50%
|
499,144
|
3
|
Golden
Linker
|
Affiliate
|
0.49%
|
367,929
|
4
|
Mr.
Liu Xinyuan
|
Director
|
-
|
303,223
|
5
|
Ms.
Zhuang Heling
|
Director
|
-
|
285,225
|
6
|
Mr.
Yan Xiaoxia
|
Director
|
-
|
226,577
|
7
|
Mr.
Zhang Xiong
|
Director
|
-
|
71,306
|
|
Total
|
|
|
$ 2,329,559
|
NOTE
10- ACQUISITION
On
March 31, 2008, Grow Ease International Ltd., a wholly owned subsidiary of the
Company entered into a share exchange agreement with Aim Sky Ltd., a British
Virgin Islands corporation, to acquire 100% of the Common Stock of Aim Sky in
exchange for 42,500 shares of Grow Ease’s series A Preferred Shares. The Series
A Preferred Shares are convertible into 42,500 common shares of Grow Ease upon
the happening of certain corporate events including a spin off or public
offering of Aim Sky. Additionally, the agreement obligates the Company to
provide up to $2,000,000 in financing for the acquired business.
Aim
Sky Ltd., is the owner of 100% of China Genetic Ltd, which in turn owns 57% of
Shanghai Huaxin High Biotechnology Inc., a Chinese company located in Shanghai,
China, and has the right to vote 100%, and an option to purchase, the shares of
Sichuan Kelun Bio-Tech Pharmaceutical Co., Ltd., a Chinese company located in
Chengdu, China.
This
share exchange was accounted as an acquisition under purchase method of
accounting. The Company acquired net assets of $5,036,732 in the exchange. The
fair value was reduced by the same amount as a result of negative goodwill
obtained in the purchase.
NOTE
11- GOING
CONCERN
The
Company incurred a loss for the current three-month period ended March 31, 2008
and has had recurring losses for years including and prior to December 31, 2007
and has an accumulated deficit account of $5,023,980.
There
is no guarantee whether the Company will be able to generate enough revenue
and/or raise capital to support those operations. This raises substantial doubt
about the Company’s ability to continue as a going concern.
Management
states that they are confident that they can initiate new operations and raise
the appropriate funds to continue in its pursuit of a reverse merger or similar
transaction.
The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
These
matters raise substantial doubt about the ability to continue as a going
concern.
NOTE
12- PROVISION FOR INCOME
TAXES
There
was no provision for income taxes during the three months ended March 31,
2008.
In
conformity with SFAS No. 109, deferred tax assets and liabilities are classified
based on the financial reporting classification of the related assets and
liabilities, which give rise to temporary book/tax differences. Deferred taxes
were immaterial at March 31, 2008.
At
March 31, 2008, the deferred tax assets consist of the following:
|
|
2008
|
|
|
|
|
|
Deferred
taxes due to net operating loss
|
|
|
|
carryforwards
|
|
$ |
(1,507,194 |
) |
|
|
|
|
|
Less: Valuation
allowance
|
|
|
1,507,194 |
|
|
|
|
|
|
Net
deferred tax asset
|
|
$ |
- |
|
Additionally,
the Company established a valuation allowance equal to the full amount of the
deferred tax assets due to the uncertainty of the utilization of the operating
losses in future periods.
NOTE
13- STOCKHOLDERS’
EQUITY
As
of March 31, 2008 and December 31, 2007, there were 100,000,000 shares of common
stock authorized.
The
following is a list of the common stock transactions during the three months
ended March 31, 2007:
On
January 10, 2007, the Company issued 150,000 shares of its common stock at a
fair market value of $75,000, for services provided to the Company.
On
January 12, 2007, the Company issued 2,000,000 shares of its common stock at a
fair market value of $1,000,000, for consulting services provided to the
Company.
On
February 8, 2007, the Company issued 300,000 shares of its common stock at a
fair market value of $90,000, as additional compensation for an employee’s past
services to the Company.
The
following is a list of the common stock transactions during the three months
ended March 31, 2008:
On
January 18, 2008, the Company issued 600,000 shares of its common stock at a
fair market value of $270,000, as additional compensation for an employee’s past
services to the Company.
On
January 30, 2008, the Company issued 1,650,000 shares of its common stock at a
fair market value of $1,342,500, as additional compensation for an employee’s
past services to the Company.
On
February 12, 2008, the Company issued 300,000 shares of its common stock at a
fair market value of $135,000, as additional compensation for an employee’s past
services to the Company.
On
March 4, 2008, the Company issued 155,000 shares of its common stock at a fair
market value of $63,550, as additional compensation for an employee’s past
services to the Company.
On
March 17, 2008, the Company issued 1,200,000 shares of its common stock at a
fair market value of $468,000, as additional compensation for an employee’s past
services to the Company.
On
March 17, 2008, the Company issued 725,000 shares of its common stock at a fair
market value of $282,750, as additional compensation for an employee’s past
services to the Company.
There
were no options or warrants granted during the period beginning on January 28,
2002 (inception) ending March 31, 2008.
Item
2. Management's Discussion and Analysis or Plan of
Operation.
THE
FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
CONDITIONS.
RESULTS
OF OPERATIONS
General
During
the quarter ended March 31, 2008 we began to diversify into other businesses
separate from the truck-side advertising business. Our first acquisition is
described as follows: on March 31, 2008, Grow Ease International Ltd., a wholly
owned subsidiary of International Consolidated Companies, Inc. (the “Company” or
“We”) entered into a share exchange agreement with Aim Sky Ltd., a British
Virgin Islands corporation, to acquire 100% of the Common Stock of Aim Sky in
exchange for 42,500 shares of Grow Ease’s Series A Preferred Shares. The Series
A Preferred Shares are convertible into 42,500 common shares of Grow Ease upon
the happening of certain corporate events including a spin off or public
offering of Aim Sky. Additionally, the agreement obligates the
Company to provide up to $2,000,000 (Two Million US Dollars) in financing for
the acquired business. The share exchange agreement was accounted for
under the purchase method of accounting. The company acquired net
assets of $5,036,732. Fair value was reduced by the same amount which
was the result of negative good will obtained in the purchase.
Aim Sky
Ltd., is the owner of 100% of China Genetic Ltd, which in turn
owns 57% of: Shanghai Huaxin High Biotechnology Inc., a Chinese
company located in Pudong Shanghai, China, and has the right to vote
100%, and an option to purchase, the shares of Sichuan Kelun Bio-Tech
Pharmaceutical Co., Ltd. a Chinese company located in Chengdu,
China.
Our
quarterly results do not contain any revenue or income from the
acquisitions. Our balance sheet reflects the consolidated balance
sheet.
The
Following table sets forth certain of our summary selected unaudited operating
and financial data. The following table should be read in conjunction
with all other financial information and analysis presented herein.
Three
Months Ended
March
31
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Revenue-Sales,
net
|
|
|
- |
|
|
$ |
16,259 |
|
Cost
of Goods Sold
|
|
|
- |
|
|
|
18,697 |
|
Gross
profit (LOSS)
|
|
|
- |
|
|
|
(2,438 |
) |
Total
Operating Expenses
|
|
|
2,999,160 |
|
|
|
1,283,993 |
|
Net
Income (Loss) Before
Other
Income (Expense)
|
|
|
(2,999,160 |
) |
|
|
(1,286,431 |
) |
Total
Other Income
(Expense)
|
|
|
8,000 |
|
|
|
576 |
|
Net
Income (Loss)Before
Provision
For Income
Taxes
|
|
|
(2,991,160 |
) |
|
|
(1,285,885 |
) |
Provision
For Income
Taxes
|
|
|
(0 |
) |
|
|
(0 |
) |
Net
Income (Loss)
Applicable
To Common
Shares
|
|
$ |
(2,991,160 |
) |
|
$ |
(1,285,885 |
) |
Net
Income (Loss) Per
Basic
And Diluted Shares
|
|
$ |
(0.20 |
) |
|
$ |
(0.12 |
) |
Weighted
Average
Number
of Common
Shares
Outstanding
|
|
|
14,886,042 |
|
|
|
11,079,934 |
|
For the
three months ended March 31, 2008, the Company had Total Revenue-Sales, net of
-0-, Cost of Goods Sold of -0- , Gross loss of -0-, Total Operating Expenses of
$2,999,160, Net loss Before Other Income of $2,999,160, Total Other Income of
$8,000, Net Loss Before Provision For Income Taxes of $(2,991,160), a Provision
For Income Taxes of $(0), Net Loss Applicable To Common Shares of
$(2,991,160)and Net Loss Per Basic and Diluted Shares of $0.20 based on
14,886,042 Weighted Average Number Of Common Shares
Outstanding.
For the
three months ended March 31, 2007, the Company had Total Revenue-Sales, net of
$16,259, Cost of Goods Sold of $18,697, Gross loss of $2,438, Total Operating
Expenses of $1,283,993, Net loss Before Other Income of $1,286,431, Total Other
Income of $576, Net Loss Before Provision For Income Taxes of $1,285,885, a
Provision For Income Taxes of $(0), Net Loss Applicable To Common Shares of
$1,285,855 and Net Loss Per Basic and Diluted Shares of $0.12 based on
11,079,934 Weighted Average Number Of Common Shares Outstanding.
Revenue
decreased $16,259 from the same period last
year. Cost of goods decreased $18,697 from the same period last
year. Total operating expenses increased $1,715,167 from the same period last
year. Net Income (Loss) Before other Income (Expense) increased $
1,712,729 from the same period last year. Total Other Income
(Expense) increased $7,424 from the same period last
year. Net Income (Loss) Before Provision For Income Taxes inecreased
$1,705,305 from the same period last year. The Provision For Income
Taxes remained the same from the same period last year. Net Income
(Loss) Applicable To Common Shares increased $1,705,305 from the same period
last year. Net Income (Loss) Per Basic And Diluted Shares increased
$0.08 from the same period last year.
MANAGEMENT’S
DISCUSSION
The
Company attributes the decreases in Revenue-Sales, net, Gross Profit, Net Income
Before Other Income, Net Income Before Provision For Income tax, Net Income
Applicable to Common Shares and Net Income Per Basic And Diluted Shares
primarily to a large amount of stock issued for services.
The
Company attributes the decrease in Cost Of Goods Sold to its lack of sales and
focus on aquisitions.
The
Company attributes the increase in Total Operating Expenses due to the issuance
of stock certificates for services.
The
Company attributes the decrease in Total Other Income to the interest income on
the Olympus note.
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
Management
of the Company has also evaluated, with the participation of the Chief Executive
Officer of the Company, any change in the Company's internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the period covered by this Interim Report on
Form 10-Q. There was no change in the Company's internal control over financial
reporting identified in that evaluation that occurred during the period covered
by this Interim Report on Form 10-Q that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
The
Company does not have a standing nominating committee or a committee performing
similar functions as the Company's Board of Directors consists of only two
members and therefore there would be no benefit in having a separate nominating
committee that would consist of the same number of members as the full board of
directors. Both members of the Board of Directors participate in the
consideration of director nominees.
The
Company attributes the decrease in the Provision For Income Taxes to net loss
incurred during the period.
The
Company will require significant capital to implement both its short term and
long-term business strategies. However, there can be no assurance
that such additional capital will be available or, if available, that the terms
will be favorable to the Company. The absence of significant
additional capital whether raised through a public or private offering or
through other means, including either private debt or equity financings, will
have a material adverse effect on the Company’s operations and
prospects.
The
Company’s operations have consumed and will continue to consume substantial
amounts of capital, which, up until now, have been largely financed internally
through cash flows, from loans from related parties, and private
investors. The Company expects capital and operating expenditures to
increase. Although the Company believes that it will be able to
attract additional capital through private investors and as a result thereof its
cash reserves and cash flows from operations will be adequate to fund its
operations through the end of calendar year 2008, there can be no assurance that
such sources will, in fact, be adequate or that additional funds will not be
required either during or after such period. No assurance can be
given that any additional financing will be available or that, if available, it
will be available on terms favorable to the Company. If adequate
funds are not available to satisfy either short or long-term capital
requirements, the Company may be required to limit its operations significantly
or discontinue its operations. The Company’s capital requirements are
dependent upon many factors including, but not limited to, the rate at which it
develops and introduces its products and services, the market acceptance and
competitive position of such products and services, the level of promotion and
advertising required to market such products and services and attain a
competitive position in the marketplace, and the response of competitors to its
products and services.
PART
II — OTHER INFORMATION
Item 1. Legal
Proceedings.
There are
no pending or threatened legal proceedings against the Company or any of its
subsidiaries.
Item
2. Changes in Securities.
NONE
Item 3. Defaults Upon
Senior Securities
NONE
Item 4. Submission of
Matters to a Vote of Security Holders.
NONE
Item 5. Other
Information.
NONE
Item
6. Exhibits and Reports on Form 8-K.
NONE
INDEX
TO EXHIBITS.
Exhibit
Number
31.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
the
|
|
Sarbanes-Oxley
Act of 2002.
|
31.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
the
|
|
Sarbanes-Oxley
Act of 2002.
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the
|
|
Sarbanes-Oxley
Act of 2002.
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the
|
|
Sarbanes-Oxley
Act of 2002.
|
The
Company filed no Reports on Form 8-K for the quarter ended March 31,
2007.
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
INTERNATIONAL
CONSOLIDATED COMPANIES, INC.
(Registrant)
|
Date
May 20, 2008
|
/s/Antonio F. Uccello, III
Antonio
F. Uccello, III
Chief
Executive Officer
Chairman
of the Board
|