Property and equipment consists of the following at September 30, 2008 and December 31, 2007:
| | | 2008 | | | 2007 | |
| | | | | | | |
| Equipment | | $ | 128,745 | | | $ | 128,745 | |
| Furniture and Fixtures | | | 112,448 | | | | 112,022 | |
| Transportation Equipment | | | 24,621 | | | | 24,621 | |
| | | | 265,814 | | | | 265,388 | |
| Less: Accumulated Depreciation | | | (255,827 | ) | | | (225,329 | ) |
| | | | | | | | | |
| Net Book Value | | $ | 9,987 | | | $ | 40,059 | |
Depreciation expense for the period ended September 30, 2008 and the year ended December 31, 2007 was $30,498 and $58,693.
NOTE 5- PREPAID EXPENSES
The company in 2007 issued 300,000 shares of stock to a consultant for services. The services were recognized at FMV of the stock $180,000. At September 30, 2008 the full amount was amortized.
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 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 ICCI. 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. 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 $639,727 including interest on September 30, 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 September 30, 2008 was $ - 0-.
NOTE 8- GOING CONCERN
The Company incurred a loss for the current nine-month period ended September 30, 2008 and has had recurring losses for years including and prior to December 31, 2007 and has an accumulated deficit account of $5,694,759.
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 9 - PROVISION FOR INCOME TAXES
There was no provision for income taxes during the nine months ended September 30, 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 September 30, 2008.
| | | 2008 | |
| | | | |
| Deferred taxes due to net operating loss | | | |
| carryforwards | | $ | (1,708,165 | ) |
| | | | | |
| Less: Valuation allowance | | | 1,708,165 | |
| | | | | |
| Net deferred tax asset | | $ | - | |
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.
INTERNATIONAL CONSOLIDATED COMPANIES, INC.
(FORMELY KNOWN AS SIGN MEDIA SYSTEMS, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008 AND 2007
NOTE 10- STOCKHOLDERS’ EQUITY
As of September 30, 2008 and December 31, 2007, there were 500,000,000 shares of common stock authorized.
The following is a list of the common stock transactions during the nine months ended September 30, 2008:
For the quarter ended March 31, 2008
The Company issued 236,111 shares of its common stock for $250,000 in cash.
The Company issued 2,100,000 shares of its common stock at a fair market value of $35,000, as compensation for an employee’s for services provided to the Company.
The Company issued 2,350,000 shares of its common stock at a fair market value of $1,688,800 for consulting services provided to the Company.
For the quarter ended June 30, 2008
The Company issued 300,000 shares of its common stock at a fair market value of $35,000, as compensation for an employee’s for services provided to the Company.
The Company received cash for its common stock for $183,750 in cash.
For the quarter ended September 30, 2008
The Company issued 1,287,862 shares of its common stock for $100,000 in cash.
The Company issued 2,000,000 shares of its common stock at a fair market value of $304,000 for consulting services provided to the Company.
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
On September 30, 2008 we rescinded China Gene LTD acquisition. Our quarterly results do not contain any revenue or income from the acquisitions.
The company and China Gene LTD decided to rescind the agreement as it became apparent that neither company would see the benefits of the transaction. The historical financial statements of ICCI have been presented removing any activity of China Gene LTD, going back to March 31, 2008 due to the rescission.
RESULTS OF CONTINUING OPERATIONS
The following tables set 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.
0; Nine Months Ended
0; September 30
| | | 2008 | | | 2007 | |
| | | | | | | |
| Total Revenue | | $ | -0- | | | $ | 24,784 | |
| Cost of Goods Sold | | | -0- | | | | 3,446 | |
| Gross profit | | | -0- | | | | 21,338 | |
| Total Operating Expenses | | | 3,685,939 | | | | 1,948,701 | |
Net Income (Loss) Before Other Income (Expense) | | | (3,685,939 | ) | | | (1,927,363 | ) |
Total Other Income (Expense) | | | 24,000 | | | | 5,302 | |
Net Income (Loss)Before Provision For Income Taxes | | | (3,661,939 | ) | | | (1,922,061 | ) |
Provision For Income Taxes | | | - | | | | - | |
Net Income (Loss) Applicable To Common Shares | | $ | (3,661,939 | ) | | $ | (1,922,061 | ) |
Net Income (Loss) Per Basic And Diluted Shares | | $ | (0.21 | ) | | $ | (0.17 | ) |
Weighted Average Number OF Common Shares Outstanding | | | 17,151,547 | | | | 11,456,234 | |
| Gross profit margin | | | 0 | % | | | 86 | % |
For the Nine months ended Sept 30, 2008, the Company had Zero Revenue, Cost of Goods Sold, or Gross Profit. Total Operating Expenses of $ 3,685,939, Net Income (Loss) before Other Income (Expense) of $(3,685,939), Total Other Income (Expense) $ 24,000, Net Income (Loss) Before Provision For Income Taxes of $(3,661,939), a Provision For Income Taxes of $0.00, Net Income (Loss) Applicable to Common Shares of $(3,661,939), and Net Income (Loss) Per Basic and Diluted Shares of $(0.21) based on 17,151,547 Weighted Average Number Of Common Shares Outstanding.
For the Nine months ended Sept 30, 2007, the Company had Total Revenue of $24,784, Cost of Goods Sold of $3,446, Gross Profit of $21,338, Total Operating Expenses $1,948,701, Net Income (Loss Before Other Income (Expense) of $(1,927,363), Total Other Income (Expense) $5,302, Net Income (Loss) Before Provision For Income Taxes of $(1,922,061), a Provision For Income Taxes of $0.00, Net Income (Loss) Applicable to Common Shares of $(1,922,061), and Net Income (Loss) Per Basic and Diluted Shares of $(0.17) based on 11,456,234 Weighted Average Number Of Common Shares Outstanding.
0; Three Months Ended &# 160; September 30
| | | 2008 | | | 2007 | |
| | | | | | | |
| Revenue | | $ | -0- | | | $ | 71 | |
| Cost of Goods Sold | | | -0- | | | | 46 | |
| Gross profit | | | -0- | | | | 25 | |
| Total Operating Expenses | | | 427,176 | | | | 163,234 | |
Net Income (Loss) Before Other Income (Expense) | | | (427,176 | ) | | | (163,209 | ) |
Total Other Income (Expense) | | | 8,000 | | | | (2,314 | ) |
Net Income (Loss)Before Provision For Income Taxes | | | (419,176 | ) | | | (165,523 | ) |
Provision For Income Taxes | | | - | | | | - | |
Net Income (Loss) Applicable To Common Shares | | $ | (419,176 | ) | | $ | (165,523 | ) |
Net Income (Loss) Per Basic And Diluted Shares | | $ | (0.02 | ) | | $ | (0.01 | ) |
Weighted Average Number OF Common Shares Outstanding | | | 18,862,563 | | | | 11,787,724 | |
| Gross profit margin | | | -0- | | | | 35 | % |
For the three months ended September 30, 2008, the Company had Total Revenue of $ -0-, Cost of Goods Sold of $ -0-, Gross profit of $ -0-, Total Operating Expenses of $427,176, Net Income (Loss) Before Other Income (Expense) of $(427,176), Total Other Income (Expense) of $(8,000), Net Income (Loss) Before Provision For Income Taxes of $(419,176), a Provision For Income Taxes of $-, Net Income (Loss) Applicable To Common Shares of $(419,176) and Net Income (Loss) Per Basic and Diluted Shares of $(0.02) based on 18,862,563 Weighted Average Number Of Common Shares Outstanding.
For the three months ended September 30, 2008, the Company had Total Revenue of $71, Cost of Goods Sold of $46, Gross profit of $25, Total Operating Expenses of $163,234, Net Income (Loss) Before Other Income (Expense) of $(163,209), Total Other Income (Expense) of $(2,314), Net Income (Loss) Before Provision For Income Taxes of $(165,523), a Provision For Income Taxes of $-, Net Income (Loss) Applicable To Common Shares of $(165,523) and Net Income (Loss) Per Basic and Diluted Shares of $(0.01) based on 11,787,724 Weighted Average Number Of Common Shares Outstanding.
Having rescinded the China Gene LTD acquisition, the company's sole business is truck side advertising. The operating expenses in total are up for the nine months and three months ended September 30, 2008 due to the costs associated with the acquisition and then the rescission of the China Gene transaction. Common stock issuance for consulting and payroll are up as well.
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.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with the rules required by the SEC for information required to be disclosed, in this quarterly report, the Company’s management evaluated, with the participation of the Company’s Chief Financial Officer and Chief Executive Officer, the effectiveness and the operation of the Company’s disclosure controls and procedures. Based upon their evaluation of these disclosure controls and procedures, the Chief Financial Officer and Chief Executive Officer have concluded that the Company’s disclosure controls and procedures were effective for accumulating recording, processing, summarizing and communicating, to the Company’s management, to ensure timely decisions regarding disclosure information needed within the time periods specified in the SEC rules and forms.
Controls and Procedures over Financial Reporting
The Company’s management is responsible for establishing adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurances regarding the reliability of our financial reporting for external purposes. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for the preparation of our financial statements; providing reasonable assurances that receipts and expenditures of Company assets are made with management authorization; and providing reasonable assurances that unauthorized acquisition use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Under the supervision of management, including the two executive officers, an evaluation was conducted to measure the effectiveness of the Company’s internal control over financial reporting. This evaluation was based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The evaluation was conducted to assess the effectiveness of the Company’s internal control as it related to the financial reporting as of September 30, 2008. Management believes that the Company’s internal control over financial reporting was effective as of September 30, 2008.
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 September 30, 2008.
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: November 17, 2008 | /s/Antonio F. Uccello, III Antonio F. Uccello, III Chief Executive Officer Chairman of the Board |
