<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                               ------------------


                                   FORM 10-Q

(MARK ONE)

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934

For the 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: 811-854

                              IIC Industries, Inc.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                Delaware                                         13-567594
    (STATE OF OTHER JURISDICTION OF                         (IRS IDENTIFICATION
     INCORPORATION OR ORGANIZATION)                               NUMBER)


  420 Lexington Avenue; New York, N.Y.                             10170
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                         (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 297-6132

              FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT.

Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes x  No 

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,693,472 shares of common
stock outstanding at April 30, 1998.


<PAGE>


                             FINANCIAL INFORMATION



FINANCIAL STATEMENTS


                                                                 Page

              Consolidated Balance Sheets
              at March 31, 1998
              and December 31, 1997                                3

              Consolidated Statements of Operations and
              Comprehensive Loss for the Three Months
              Ended March 31, 1998 and March 31, 1997              5

              Consolidated Statement of Cash Flows
              for the Three Months Ended March 31,
              1998 and March 31, 1997                              6

              Notes to Consolidated Financial
              Statements                                           7


<PAGE>

                     IIC Industries, Inc. and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                (dollar amounts in thousands, except share data)






<TABLE>
<CAPTION>
                                                           MARCH 31,             December 31,
                                     ASSETS                  1998                   1997
                                                          -----------             ---------

<S>                                                          <C>                   <C>    
CURRENT ASSETS
    Cash and cash equivalents                                $22,631               $22,781
    Accounts receivable, net                                  37,378                37,487
    Inventories (Note C)                                      37,309                44,859
    Other current assets                                       6,877                10,484
                                                               -----              --------

         Total current assets                                104,195               115,611

RESTRICTED CASH                                                  291                   211

PROPERTY AND EQUIPMENT, NET                                   29,630                29,585

INVESTMENTS IN AND ADVANCES TO AFFILIATES                     26,828                28,361

OTHER ASSETS                                                   2,528                 2,274
                                                               -----             ---------

                                                            $163,472              $176,042
                                                            ========              ========
</TABLE>




The accompanying notes are an integral part of these statements.



                                      -3-
<PAGE>


                     IIC Industries, Inc. and Subsidiaries

                    CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                  (UNAUDITED)
                (dollar amounts in thousands, except share data)




<TABLE>
<CAPTION>
                                                                   MARCH 31,          December 31,
                      LIABILITIES AND STOCKHOLDERS' EQUITY           1998                 1997
                                                                  -----------          ---------


<S>                                                                 <C>                  <C>    
CURRENT LIABILITIES
    Accounts payable                                                $23,910              $22,301
    Bank loans                                                       17,512               23,490
    Current maturities of long-term debt                              1,607                1,661
    Accrued expenses and other payables                               8,910               13,405
    Advances from customers                                           3,145                3,932
                                                                      -----            ---------

         Total current liabilities                                   55,084               64,789

LONG-TERM DEBT, less current portion                                  2,103                1,508

DUE TO AFFILIATES                                                     1,413                1,692

OTHER LIABILITIES AND DEFERRED
    CREDITS                                                           5,304                5,759

MINORITY INTEREST IN SUBSIDIARIES                                    14,644               15,149
                                                                     ------             --------

                                                                     78,548               88,897

CONTINGENCIES (Note D)

STOCKHOLDERS' EQUITY
    Common stock, $1.00 par value per share;
       authorized 7,200,000 shares; issued
       6,343,224 shares                                               1,586                1,586
    Additional paid-in capital                                       22,941               22,941
    Retained earnings                                                96,575               97,426
    Foreign translation adjustment                                  (33,453)             (32,083)
    Less treasury stock - at cost (649,752 shares)                   (2,725)              (2,725)
                                                                     -------            --------

                                                                     84,924               87,145
                                                                     ------             --------

                                                                   $163,472             $176,042
                                                                   ========             ========
</TABLE>


The accompanying notes are an integral part of these statements.

                                      -4-
<PAGE>


                     IIC Industries, Inc. and Subsidiaries

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                  (UNAUDITED)
                (dollar amounts in thousands, except share data)




<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED MARCH 31,
                                                                      ----------------------------
                                                                        1998                 1997
                                                                        ----                 ----

<S>                                                                  <C>                   <C>    
Net sales                                                            $56,729               $60,441
Cost of sales                                                         46,113                48,354
                                                                      ------                ------

         Gross profit                                                 10,616                12,087

Selling, general and administrative expenses                          10,416                11,321
                                                                      ------                ------

         Operating income                                                200                   766
                                                                      ------                ------

Other income (expenses)
    Interest income                                                      523                   540
    Equity in (loss) earnings of affiliates                             (153)                 (516)
    Foreign currency loss (Note B)                                      (252)                  (87)
    Gain on sale of noncurrent assets, net                               116                 1,501
    Interest expense                                                    (949)               (1,709)
    Other, net                                                            76                   291
                                                                        ----                ------


         (Loss) Income before income taxes and
             minority interest                                          (439)                  786

Income taxes                                                            (414)                 (751)
                                                                        -----                ------

         (Loss) Income before minority interest                         (853)                   35

Minority Interest                                                          2                   262
                                                                        ----                 -----

         NET /LOSS/                                                     (851)                  297

Other comprehensive /loss/
           Foreign currency translation adjustments                   (1,370)               (2,275)
                                                                      -------               -------

           COMPREHENSIVE /LOSS/ INCOME                               $(2,221)              $(1,978)
                                                                     ========               =======

Basic net loss per common share                                       $(0.14)                $0.05
                                                                     ========               ======

Basic average number of common shares outstanding                  5,693,472             5,693,472
                                                                   =========             =========
</TABLE>



The accompanying notes are an integral part of these statements.


                                      -5-
<PAGE>

                     IIC Industries, Inc. and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

                         (dollar amounts in thousands)





<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED  MARCH 31,
                                                                            -----------------------------
                                                                             1998                   1997
                                                                             ----                   ----


<S>                                                                         <C>                   <C>   
Net cash provided by operating activities                                   $6,599                $4,803
                                                                            ------                ------
Cash flows from investing activities
    Purchase of property and equipment                                      (1,491)                 (900)
    Purchase of investments                                                                          (79)
    Proceeds on disposal of property and equipment                             201                   113
    Proceeds on disposal of investments                                          3                     3
    Restricted cash                                                            (80)                4,339
                                                                               ----                -----
         Net cash (used in) provided by investing activities                (1,367)                3,476
                                                                            -------                -----

Cash flows from financing activities
    Issuance of long-term debt                                                 637                    30
    Net payments of short-term bank loans                                   (5,974)               (6,232)
                                                                            -------               -------
         Net cash used in financing activities                              (5,337)               (6,202)
Effect of exchange rate on cash                                                (45)                 (333)
                                                                            -------               -------
         Net (decrease) increase in cash and cash equivalents
           during the period                                                  (150)                1,744
Cash and cash equivalents at beginning of period                            22,781                17,211
                                                                            ------                ------
Cash and cash equivalents at end of period                                 $22,631               $18,955
                                                                           =======               =======
Supplemental disclosure of cash flow information:
    Cash paid during the period for
       Interest                                                               $891                $1,361
       Income taxes                                                            242                   828
</TABLE>





The accompanying notes are an integral part of these statements.


                                      -6-
<PAGE>



                     IIC Industries, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE A - BASIS OF PRESENTATION

     The consolidated financial statements included herein which have been
     prepared by the Company, without audit, pursuant to the rules and
     regulations of the Securities and Exchange Commission, include the
     accounts of IIC Industries, Inc. and all material majority-owned
     subsidiaries (collectively the "Company"). All material intercompany
     transactions and balances have been eliminated. Certain information and
     footnote disclosures normally included in financial statements prepared in
     accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and regulations.

     In the opinion of management, the consolidated financial statements
     contain all adjustments which are those of a normal recurring accrual
     nature and disclosures necessary to present fairly the financial position
     of the Company as of March 31, 1998 and December 31, 1997 and the results
     of operations and cash flows for the three months ended March 31, 1998 and
     March 31, 1997.


NOTE B - FOREIGN CURRENCY TRANSLATION

     Investor Rt ("Investor"), a majority-owned subsidiary, uses the local
     currency, the Hungarian forint, as its functional currency and translates
     all assets and liabilities at year-end exchange rates, all income and
     expense accounts at average rates and records adjustments resulting from
     the translation in a separate component of shareholders' equity.

     The Israel Tractors and Equipment Company Limited ("Israel Tractor"), a
     wholly-owned subsidiary, uses the US dollar as the functional currency,
     since the dollar is the currency in which most of the significant business
     of Israel Tractor is conducted, or to which it is linked. Balton C.P.
     Limited ("Balton"), a majority-owned subsidiary, uses the US dollar as the
     functional currency for some of its operations, since the subsidiaries in
     Nigeria, Ghana and Zambia operate in hyperinflationary economies. These
     subsidiaries translate monetary assets and liabilities at historical
     rates. Income and expense accounts are translated at the rate of exchange
     prevailing at the date of transaction, except that depreciation is
     translated at historical rates. Adjustments resulting from the translation
     of these entities are included in results of operations. The remaining
     Balton subsidiairies, which operate in Ghana, Tanzania, Uganda, Kenya and
     the Cote D'Invoire, use the local currencies, as their functional currency
     and translate all assets and liabilities at year-end exchange rates, all
     income and expense accounts at average rates and record adjustments
     resulting from the translation in a separate component of shareholders'
     equity

     Transactions arising in a foreign currency are translated into the
     functional currency at the rate of exchange effective at the date of the
     transaction and gains or losses are included in results of operations.


                                      -7-
<PAGE>


                     IIC Industries, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)



NOTE C - INVENTORIES

     Inventories are as follows:

<TABLE>
<CAPTION>
                                              MARCH 31,         December 31,
                                                1998               1997
                                                ----               ----
          <S>                                 <C>                <C>    
          Raw materials                       $ 5,595            $ 5,826
          Work-in-progress                        511                519
          Finished goods                       31,203             38,514
                                               ------             ------

                                              $37,309            $44,859
                                              =======            =======
</TABLE>


NOTE D - CONTINGENCIES

     The Company has given a guarantee to the bankers of Balton amounting to
     $2.1 million. The guarantee is in respect of various outstanding letters
     of credit given by the bankers of certain of Balton's creditors. The
     Company has also agreed to indemnify a co-guarantor for any losses
     accumulating to $510,000.

     Balton has given guarantees to third parties in the amount of approximately
     $2,325,000.

     Investor and certain subsidiaries are potentially liable with respect to
     certain guarantees of debt and other financial instruments of other
     related and nonrelated companies to the extent of approximately $13
     million.


NOTE E - INVESTMENT IN AFFILIATE

     At March 31, 1998, the Company's effective ownership percentage of
     Danubius, Rt. ("Danubius"), a publicly traded company, was approximately
     30% at a cumulative cost of approximately $25 million. Danubius owns a 
     number of hotels in Hungary and specializes in spa facilities.




                                      -8-
<PAGE>

                     IIC Industries, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)





NOTE E (CONTINUED)

     Accordingly, the Company accounted for this investment under the equity
     method at March 31, 1998. Under this method, the investment is carried at
     cost plus the Company's share of earnings or losses less distributions.
     Since the Company's share of the underlying net assets of Danubius
     exceeded the cost at the various purchase dates, the excess of the fair
     value of the net assets acquired over the cost is amortized over a period
     of forty years.


     The following is summarized financial information of Danubius (in
     thousands), which was prepared in accordance with international accounting
     standards. There were no significant differences between international
     accounting standards and generally accepted accounting standards in the
     United States:


<TABLE>
<CAPTION>
                                            MARCH 31, 1998     March 31, 1997
                                            --------------     --------------


         <S>                                     <C>                <C>    
         Current assets                          $21,853            $21,388
         Noncurrent assets                       148,446            148,421
         Current liabilities                      11,917             11,478
         Noncurrent liabilities                   48,392             25,491
         Stockholders' equity                    109,990            132,840
</TABLE>




<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED       Three Months ended
                                                 MARCH 31, 1998          March 31, 1997
                                                 --------------          --------------

         <S>                                        <C>                      <C>
         Sales                                      $17,897                  $17,920
         Operating (loss) income                       (528)                  (2,342)
         Net (loss) income                             (650)                  (1,897)
</TABLE>



                                      -9-
<PAGE>


                     IIC Industries, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)





NOTE F- COMPREHENSIVE LOSS

         In 1997, the Financial Accounting Standards Board issued Statement No.
130 "Reporting Comprehensive Income" ("SFAS 130"), which is required to be
adopted for fiscal years beginning after December 15, 1997. This statement
establishes new rules for the reporting and display of comprehensive income and
its components. The adoption of this Statement had no impact on the Company's
net income or shareholders' equity. SFAS 130 requires foreign currency
translation adjustments to be included in other comprehensive income.




















                                     -10-
<PAGE>

                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL
     The Company is presently operated as a holding company with subsidiaries
in three principal operating geographic areas: (1) Investor RT, a Hungarian
holding company ("Investor" or "Investor Group"), which through its
subsidiaries, engages in a variety of commercial activities in Hungary; (2) The
Israel Tractors and Equipment Company Limited ("Israel Tractor"), an Israeli
corporation, which distributes tractors and related heavy machinery in Israel
and (3) Balton C.P. Limited, an English holding company with African
subsidiaries ("Balton CP") engaged in trading activities in several African
countries.

     Substantially all of the Company's revenues are derived from foreign
operations. As such, its income is significantly affected by fluctuations in
currency exchange rates and by currency controls. Most of the countries where
the Company operates such as Hungary and several African countries do not have
freely convertible currencies and their currencies have been subject to
devaluations in recent years. In particular, during 1997, the income from the
Company's Hungarian and African subsidiaries was significantly reduced by
losses arising from foreign exchange transactions due to significant currency
devaluations against the U.S. dollar. The Hungarian currency which is not
freely convertible and which floats against a basket of two currencies (the
U.S. Dollar and the European Currency Unit) underwent devaluations against the
U.S. Dollar at the rate of 24% during 1997. Since the beginning of 1998, the
Hungarian currency has been further devalued by approximately 3% against the
U.S. Dollar. Since the functional currency for Investor is the Hungarian
Forint, these devaluations have resulted in certain currency translation
adjustments directly impacting stockholders' equity. See Notes A(8) and N of
Notes to Registrant's Consolidated Financial Statements on Form 10-K for the
year ended December 31, 1997.

     The Company may be subject to tax in some or all of the foreign countries
in which it has operations. However, foreign taxes imposed on the Company's
income may qualify as a foreign income tax and therefore be eligible for credit
against the Company's United States income tax liability subject to certain
limitations set out in the Internal Revenue Code of 1986, as amended (or
alternatively, for deduction against income in determining such liability). The
limitations set out in the Code include, among others, computation rules under
which foreign tax credits allowable with respect to specific classes of income
cannot exceed the United States federal income taxes otherwise payable with
respect to each class of income. Foreign income taxes exceeding the credit
limitation for the year of payment or accrual can be carried back for two
taxable years and forward for five taxable years, in order to reduce United
States federal income taxes, subject to the credit limitations applicable in
each of such years. Other restrictions on the foreign tax credit include a
prohibition on the use of the credit to reduce liability for the United States
corporate alternative minimum taxes by more than 90%.





                                      11
<PAGE>


     The Company has three primary areas of operation with respect to its 
     subsidiaries:
     (a)      Investor and its subsidiaries in Hungary
     (b)      Israel Tractor in Israel
     (c)      Balton CP and its subsidiaries in Nigeria, Ghana, Zambia, 
              Tanzania, Kenya, Uganda and the Cote D'Ivoire.


     The Company has five principal business segments:
     (a)      vehicle sales and service
     (b)      export/import and processing/storage of agricultural products
     (c)      the distribution of tractors and other heavy equipment
     (d)      the sale of agricultural, communications and electrical equipment
     (e)      other industries including retail and wholesale consumer products
              and Hungarian corporate.

RESULTS OF OPERATIONS

              The table below sets forth for fiscal quarters ended March 31,
1998 and 1997 certain information with respect to the results of operations of
the Company and its principal subsidiaries.

<TABLE>
<CAPTION>
Three Months Ended        Net Sales              Gross Profit          Income (Loss)      Net Income (Loss)
March 31, 1998            ---------              ------------          before Income      -----------------
--------------                                                           Taxes and  
                                                                     Minority Interests
                                                                     ------------------

                       Amount         %         Amount         %       Amount      %       Amount       %
                       ------         -         ------         -       ------      -       ------       -
                   (In thousands)           (In thousands)           (In thousands)      (In thousands)
                         <S>         <C>          <C>          <C>      <C>       <C>         <C>      <C>

IIC Industries                 --       --              --       --        (74)   (16.9)      (108)     (12.7)
Inc.
(parent company)

Israel Tractors &         $14,467     25.5          $3,811     35.9       (207)   (47.2)      (401)     (47.1)
Equipment Co.
(Israel)

Balton CP Group            11,857     20.9           3,787     35.7        33 7    76.8         99       11.6
(Africa)

Investor RT                30,405     53.6           3,018     28.4       (495)  (112.7)      (441)     (51.8)
Group (Hungary)            ------     ----           -----     ----       -----   ---------   -----    ------

                          $56,729    100.0         $10,616    100.0      $(439)   100.0      $(851)     100.0
                          =======    =====         =======    =====      ======   =====      ======     =====
</TABLE>

<TABLE>
<CAPTION>
Three Months Ended        Net Sales              Gross Profit          Income (Loss)      Net Income (Loss)
March 31, 1997            ---------              ------------          before Income      -----------------
--------------                                                           Taxes and
                                                                     Minority Interests
                                                                     ------------------
                       Amount         %         Amount         %       Amount      %       Amount       %
                       ------         -         ------         -       ------      -       ------       -
                   (In thousands)           (In thousands)           (In thousands)      (In thousands)
                         <S>          <C>          <C>         <C>          <C>   <C>           <C>       <C>

IIC Industries                 --       --              --       --         $17     2.2         $15       4.7
Inc.
(parent company)

Israel Tractors &         $20,761     34.3          $5,251     43.4         864   109.9         502     169.5
Equipment Co.
(Israel)

Balton CP Group            11,775     19.5           3,601     29.8         908   115.5         299     101.0
(Africa)

Investor RT                27,905     46.2           3,235     26.8      (1,003) (127.6)       (519)   (175.2)
                           ------     ----           -----     ----     -------   ---------   -----    ------
Group (Hungary)

                          $60,441    100.0         $12,087    100.0        $786   100.0        $297     100.0
                          =======    =====         =======    =====        ====   =====        ====     =====
</TABLE>



                                      12
<PAGE>

CONSOLIDATED RESULTS OF OPERATIONS

     Net Sales. Net Sales on a consolidated basis for the fiscal quarter ended
March 31, 1998 decreased by approximately $3,712,000 as compared to the
comparable period in 1997.  The decrease is primarily due to reduced demand of 
products in Israel Tractor.

     Gross Profit. Gross Profit on a consolidated basis for the fiscal quarter
ended March 31, 1998 decreased by approximately $1.5 million or approximately
12.2%, to approximately $10.6 million, or approximately 19% of Net Sales, from
approximately $12.1 million, or approximately 20% of Net Sales, in the
corresponding period in 1997. This decrease was mainly attributable to decreased
sales in Israel Tractor.


     Operating income. Operating income on a consolidated basis for the first
fiscal quarter of 1998 decreased by approximately $566,000, or approximately
74%, to $200,000, or approximately 0.3% of net sales, from approximately
$766,000 million, or approximately 1.3% of Net Sales for the corresponding
period in 1997. This decrease was principally due to the reasons stated in the
Gross Profit section.

     Interest income. Interest income decreased for the quarter by $17,000, or
approximately 3.1%, to $523,000.

     Interest expense. Interest expense in the quarter decreased by $760,000,
or approximately 44%, to approximately $949,000 due to reduction in bank loans.

     (Loss) Income before Income Taxes and Minority Interest. (Loss) before
Income Taxes and Minority Interest in the first fiscal quarter of 1998 was
approximately $439,000, compared to Income before Income Taxes and Minority
Interest in the first fiscal quarter of 1997 of approximately $786,000.

     Minority Interests. Minority Interests in the quarter decreased by
$260,000 as a result of losses in the Investor group.

     Net (Loss) Income. Net (Loss) for the first fiscal quarter of 1998 was
approximately $851,000, compared to Net Income in the first fiscal quarter of
1997 of approximately $297,000.






                                      13
<PAGE>


     The table below sets forth for the three months ended March 31, 1998 and
1997 certain information with respect to the results of operations of the
Company and its five principal business segments.

<TABLE>
<CAPTION>
                          Three Months Ended March 31, 1998                  Three Months Ended March 31, 1997

                                               Income (Loss) before                             Income (Loss) before
                                                 Income Taxes and                                 Income Taxes and
                               Net Sales        Minority Interest           Net Sales            Minority Interest
                               ---------       --------------------         ---------           --------------------
                            Amount       %        Amount        %      Amount         %          Amount          %
                             (In                   (In                  (In                       (In
                          thousands)            thousands)            thousands)               thousands)
------------------------- ----------- -------- -------------- ------- ---------- ---- ------- ---------- --- ------- --
<S>                          <C>          <C>    <C>           <C>     <C>              <C>       <C>          <C>  
Vehicle sales and            $ 2,828      5.0    $  39          8.9    $ 2,179          3.6       $(31)        (3.9)
distribution (Investor)
Export and import of          27,208     47.9     (221)       (50.3)    25,413         42.1     (2,014)      (256.3)
agricultural products
(Investor)
Other Industries                 369      0.7     (387)       (88.2)       313          0.5      1,059        134.7
(Investor)

Tractors and heavy            14,467     25.5     (207)       (47.2)    20,761         34.3        864        110.0
equipment
(Israel Tractor)
Agricultural,                 11,857     20.9      337         76.8     11,775         19.5        908        115.5
communications and                                                                         
electrical equipment
(Balton CP)
                           --------    -----     -------       ----     -------       -----     ------        -----
                            $56,729     100.0    $ 439       (100.0)   $60,441        100.0       $786        100.0
                          =========     =====    ======      =======   =======        =====     ======        =====
</TABLE>


         INVESTOR

     The operations of three of the Company's segments are conducted in Hungary
through Investor. Investor's business is significantly affected by general
conditions in Hungary. General economic difficulties have contributed to a
recession in Hungary, which has had a negative effect on Investor's business.
With such conditions, despite management's actions in reducing overhead costs
and closing unprofitable operations, Investor has shown a loss for the quarter.

     Vehicle Sales and Service Segment

     o   Net Sales for the three months ended March 31, 1998 increased by
         approximately $649,000, or approximately 29.8%, as compared to the
         corresponding period in 1997.

     o   There was Income before Minority Interests and Income Taxes for the
         three months ended March 31, 1998 of $39,000 as compared to a loss of
         $31,000 in the corresponding period in 1997.

     The increase in Net Sales and in Income before Income Taxes and Minority 
Interests was primarily due to increased marketing activity resulting in more 
vehicles being sold, while maintaining the margin.


                                      14
<PAGE>

Export/Import and Processing/Storage of Agricultural Products Segment

     o   Net Sales for the three months ended March 31, 1998 increased by
         approximately $1,795,000, or 7.1%, as compared to the corresponding
         period in 1997. The increase in Net Sales was primarily due to 
         increased export sales of wheat and maize.

     o   The Loss before Income Taxes and Minority Interest for the three
         months ended March 31, 1998 decreased by approximately $1.8 million to
         a net loss of $221,000. This decrease was primarily due to an increase
         in margin from milling activities and a lower cost base as a result of 
         rationization.

Other Industries

     o   Net Sales for the quarter ended March 31, 1998 increased by
         approximately $56,000, or approximately 17.9%, as compared to the
         corresponding period in 1997.

     o   The Loss before Income Taxes and Minority Interest was approximately
         $313,000 for the three months ended March 31, 1998, compared to income
         of approximately $1,059,000 for the three months ended March 31, 1997.
         The decrease arose primarily due to the sale of land and investments
         in 1997.


         ISRAEL TRACTOR: TRACTORS AND HEAVY EQUIPMENT SEGMENT

     o   Net Sales for the three months ended March 31, 1998 decreased by $6.3
         million, or approximately 30.3% as compared to the corresponding
         period in 1997. This decrease was due to a reduction in demand for the
         Company's products.

     o   The Loss before Income Taxes and Minority Interest for the three
         months ended March 31, 1998 was $207,000 as compared to Income before
         Income Taxes and Minority Interest of $864,000 for the corresponding
         period in 1997 as a result of lower trading activity.


         BALTON CP: AGRICULTURAL, COMMUNICATIONS AND ELECTRICAL EQUIPMENT 
         SEGMENT

     o   Net Sales for the three months ended March 31, 1998 increased by
         approximately $82,000, or approximately 0.6%, as compared to the
         corresponding period in 1997. This was due to increased demand for the
         Company's products.

     o   Income before Income Taxes and Minority Interests for the three months
         ended March 31, 1997 decreased by approximately $571,000, or
         approximately 63% as compared to the corresponding period in 1997.
         This decrease was due to an increase in operating expenses.



                                      15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its operations through funds generated internally
and through cash and cash equivalents available at the beginning of 1998. At
March 31, 1998, IIC Industries Inc. (the "Parent Company"), and its
wholly-owned Israel Tractor subsidiary, had working capital of $40.1 million,
including cash and cash equivalents of $19 million. Cash of subsidiaries that
are not wholly-owned (including the Investor Group and the Balton CP Group) is
generally not available for use by the Parent Company or other subsidiaries
(except to the extent paid to the Parent Company as reimbursement for general
overhead paid by the Parent Company or as management fees) other than in the
form of dividends, if and when declared. Dividends to the Parent Company from
its Israel Tractor subsidiary are subject to a withholding tax of 15% to 25%.
The Parent Company does not expect to receive cash dividends or other
distributions in the foreseeable future from any of its subsidiaries.

     At March 31, 1998, Investor and Balton Tractor had outstanding short-term
indebtedness of approximately $12.2 million and $5.3 million, respectively.

     At March 31, 1998, Investor , Israel Tractor, and Balton had unused lines
of short-term credit of $7.9 million, $3.6 million and $4.5 million,
respectively.

     During the first quarter of 1998, Investor, Israel Tractor, and Balton
made capital expenditures of $595,000; $137,000 and $759,000, respectively, for
the purchase of equipment and vehicles and improvements to property. Such
expenditures were made from internally generated funds. At March 31, 1998, the
Company had no significant capital commitments.


INFLATION

     Inflation has been a persistent aspect of the Hungarian economy in recent
years, although the annual rate of inflation has been predictable and has
therefore been taken into account by the government and private businesses.
Inflation has contributed to the devaluation of the Hungarian currency and has
therefore had an effect on Investor's financial condition.

     Inflation in Israel was moderate in 1997 and during the first quarter of
1998, and therefore did not significantly affect operations in that country.
Furthermore, the devaluation of the Israeli shekel against the U.S. Dollar for
the first three months of 1998 was an annual rate of 6%.

     Significant rates of inflation persisted in the African countries where
Balton CP operates, triggering significant devaluations of local currencies.


YEAR 2000 COMPLIANCE

     The Company has evaluated the impact of the Year 2000 issue on the
business and does not expect to incur significant costs with year 2000
compliance. The Company believes that all software and hardware requirements to
enable it to cope with year 2000 issue have been or being currently
implemented. However, there can be no assurance that unanticipated costs may
not arise in implementing these requirements.


                                      16
<PAGE>




                               OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         No reports on Form 8-K were filed during the period covered by this
report.


         EXHIBIT NO.                DESCRIPTION
         -----------                -----------
             27                     Financial Data Schedule

























                                      17
<PAGE>
                                   SIGNATURES


     In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.



Date:  May 20, 1998
                                               IIC INDUSTRIES, INC.



                                               By: /s/ Fortunee F. Cohen
                                                   ----------------------------
                                                   Fortunee F. Cohen, Secretary


<PAGE>


                                   SIGNATURES


         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.



Date:  ________________, 1998


                                               IIC INDUSTRIES, INC.



                                               By:_____________________________
                                                   Fortunee F. Cohen, Secretary