<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 June 30, 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)

<TABLE>
<CAPTION>
<S>                                                                          <C>
                             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)
</TABLE>



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 July 31, 1998.


<PAGE>






                             FINANCIAL INFORMATION



FINANCIAL STATEMENTS


                                                                           Page

         Consolidated Balance Sheets
         at June 30, 1998
         and December 31, 1997                                              3

         Consolidated Statements of Income
         for the Six Months Ended
         June 30, 1998 and June 30, 1997                                    5

         Consolidated Statements of Income
         for the Three Months Ended
         June 30, 1998 and June 30, 1997                                    6

         Consolidated Statement of Cash Flows
         for the Six Months Ended
         June 30,1998 and June 30, 1997                                     7

         Notes to Consolidated Financial
         Statements                                                         8







                                      -2-
<PAGE>


                     IIC Industries, Inc. and Subsidiaries

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






<TABLE>
<CAPTION>
                                                           JUNE 30,      DECEMBER 31,
                          ASSETS                            1998             1997
                                                            ----             ----


<S>                                                       <C>              <C>    
CURRENT ASSETS
Cash and cash equivalents                                 $ 9,458          $22,781
Accounts receivable, net                                   34,081           37,487
Inventories (Note C)                                       35,758           44,859
Other current assets                                        5,057           10,484
                                                          -------          -------

Total current assets                                       84,354          115,611

RESTRICTED CASH                                                                211

PROPERTY AND EQUIPMENT, NET                                29,004           29,585

INVESTMENTS IN AND ADVANCES TO AFFILIATES                  40,657           28,361

OTHER ASSETS                                                2,052            2,274
                                                          -------          -------

                                                         $156,067         $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>
                                                             JUNE 30,              DECEMBER 31,
          LIABILITIES AND STOCKHOLDERS' EQUITY                1998                     1997
                                                              ----                     ----

<S>                                                         <C>                     <C>      
CURRENT LIABILITIES
   Accounts payable                                         $  25,715               $  22,301
   Bank loans                                                   7,642                  23,490
   Current maturities of long-term debt                            30                   1,661
   Accrued expenses and other payables                          8,509                  13,405
   Advances from customers                                      3,780                   3,932
                                                            ---------               ---------

        Total current liabilities                              45,676                  64,789

LONG-TERM DEBT, less current portion                            3,326                   1,508

DUE TO AFFILIATES                                               1,421                   1,692

OTHER LIABILITIES AND DEFERRED
  CREDITS                                                       5,308                   5,759

MINORITY INTEREST IN SUBSIDIARIES                              14,246                  15,149
                                                            ---------               ---------

                                                               69,977                  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                                           98,683                  97,426
   Foreign translation adjustment                             (34,395)                (32,083)
Less treasury stock - at cost (649,752 shares)                 (2,725)                 (2,725)
                                                            ---------               ---------
                                                               86,090                  87,145
                                                            ---------               ---------
                                                             $156,067                $176,042
                                                            =========               =========
</TABLE>



The accompanying notes are an integral part of these statements.



                                      -4-
<PAGE>






                     IIC Industries, Inc. and Subsidiaries

                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
                (dollar amounts in thousands, except share data)




<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED JUNE 30,
                                                                    -------------------------
                                                                  1998                     1997
                                                                  ----                     ----

<S>                                                          <C>                       <C>        
Net sales                                                    $   112,503               $   120,421
Cost of sales                                                     89,151                    95,813
                                                             -----------               -----------

Gross profit                                                      23,352                    24,608

Selling, general and administrative expenses                      21,496                    22,266
                                                             -----------               -----------
Operating income                                                   1,856                     2,342
                                                             -----------               -----------

Other income (expenses)
Interest income                                                      979                     1,041
Equity in earnings  of affiliates                                  1,652                     1,881
Foreign currency loss (Note B)                                      (290)                   (1,396)
Gain on sale of noncurrent assets, net                               (74)                    1,827
Interest expense                                                  (1,760)                   (2,473)
Other, net                                                           448                       434
                                                             -----------               -----------
Income before income taxes and
minority interest                                                  2,811                     3,656

Income taxes                                                      (1,488)                   (1,192)
                                                             -----------               -----------
Income before minority interest                                    1,323                     2,464

Minority Interest                                                    (66)                      170
                                                             -----------               -----------
NET INCOME                                                   $     1,257               $     2,634

Other comprehensive loss:
           Foreign currency translation adjustments               (2,312)                   (3,736)
                                                             -----------               -----------
           COMPREHENSIVE LOSS                                $    (1,055)              $    (1,102)
                                                             ===========               ===========

Basic net income per common share                            $      0.22               $      0.46
                                                             ===========               ===========

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

<TABLE>
<CAPTION>
                                             CONSOLIDATED STATEMENTS OF INCOME
                                                        (UNAUDITED)
                                      (dollar amounts in thousands, except share data)


                                                                      THREE MONTHS ENDED JUNE 30,
                                                                      ---------------------------
                                                                     1998                      1997
                                                                     ----                      ----


<S>                                                                <C>                       <C>     
Net sales                                                          $ 55,774                  $ 59,980
Cost of sales                                                        43,038                    47,459
                                                                   --------                  --------
Gross profit                                                         12,736                    12,521

Selling, general and administrative expenses                         11,080                    10,945
                                                                   --------                  --------
Operating income                                                      1,656                     1,576
                                                                   --------                  --------
Other income (expenses)
     Interest income                                                    456                       501
     Equity in earnings  of affiliates                                1,805                     2,397
     Foreign currency (loss) gain  (Note B)                             (38)                   (1,309)
     (Loss) Gain on sale of noncurrent assets, net                     (190)                      326
     Interest expense                                                  (811)                     (764)
     Other, net                                                         372                       143
                                                                   --------                  --------

          Income before income taxes and
              minority interest                                       3,250                     2,870

Income taxes                                                         (1,074)                     (441)
                                                                   --------                  --------
     Income before minority interest                                  2,176                     2,429

Minority Interest                                                       (68)                      (92)
                                                                   --------                  --------
     NET INCOME                                                     $ 2,108                   $ 2,337

Other comprehensive income:
           Foreign currency translation adjustments                    (942)                   (1,461)
                                                                   --------                  --------

           COMPREHENSIVE INCOME                                      $1,166                   $   876
                                                                   ========                  ========

Basic net income per common share                                    $ 0.37                   $  0.41
                                                                   ========                  ========

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


The accompanying notes are an integral part of these statements.


                                      -6-
<PAGE>

                     IIC Industries, Inc. and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

                         (dollar amounts in thousands)





<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED JUNE 30,
                                                                               -------------------------
                                                                               1998                 1997
                                                                               ----                 ----



<S>                                                                          <C>                   <C>     
Net cash provided by operating activities                                    $  9,304              $ 18,691
                                                                             --------              --------
Cash flows from investing activities
   Purchase of subsidiary shares, net of cash acquired                            (12)                 (336)
   Purchase of property and equipment                                          (2,489)               (2,303)
   Purchase of investments                                                    (12,992)               (2,159)
   Purchase of other assets                                                        (2)                   (5)
   Proceeds on disposal of property and equipment                                 522                 1,909
   Proceeds on disposal of investments                                             38                   191
   Restricted cash                                                                211                 4,339
                                                                             --------              --------

         Net cash (used in) provided by investing activities                  (14,724)                1,636
                                                                             --------              --------

Cash flows from financing activities
   Issuance of long-term debt                                                     652                 1,339
   Payments on long-term debt                                                    (208)
   Net payments of short-term bank loans                                       (8,252)              (19,724)
                                                                             --------              --------


       Net cash used in financing activities                                   (7,808)              (18,385)

Effect of exchange rate on cash                                                   (95)                 (634)
                                                                             --------              --------
       Net (decrease) increase  in cash and cash equivalents
         during the period                                                    (13,323)                1,308

Cash and cash equivalents at beginning of period                               22,781                17,211
                                                                             --------              --------
Cash and cash equivalents at end of period                                      9,458              $ 18,519
                                                                             ========              ========
Supplemental disclosure of cash flow information:
   Cash paid during the period for
     Interest                                                                $  1,453              $  2,590
     Income taxes                                                                 799                 1,555
</TABLE>





The accompanying notes are an integral part of these statements.



                                      -7-




<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 recurring nature and disclosures necessary to
present fairly the financial position of the Company as of June 30, 1998 and
December 31, 1997 and the results of operations and cash flows for the six
months ended June 30, 1998 and June 30, 1997.


NOTE B - FOREIGN CURRENCY EXCHANGE

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 balance sheet 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.


                                      -8-
<PAGE>



                     IIC Industries, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)



NOTE C - INVENTORIES

Inventories are as follows:

<TABLE>
<CAPTION>
                                                 JUNE 30,            DECEMBER 31,
                                                  1998                  1997
                                                  ----                  ----
<S>                                             <C>                   <C>     
Raw materials                                   $ 3,787               $  5,826
Work-in-progress                                    580                    519
Finished goods                                   31,591                 38,514
                                                -------               --------

                                                $35,758               $ 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. Balton has agreed to
indemnify a co-guarantor for any losses accumulating to $735,000.

Balton has given guarantees to third parties in the amount of approximately
$1,590,000.

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 $4.9 million.


NOTE E - INVESTMENT IN AFFILIATE

At June 30, 1998, the Company's effective ownership percentage of Danubius, Rt.
("Danubius"), a publicly traded company, was approximately 37% at a cumulative
cost of approximately $38 million. Danubius owns a number of hotels in Hungary
and specializes in spa facilities.


                                      -9-
<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 June 30, 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>
                                   JUNE 30, 1998       JUNE 30, 1997
                                   -------------       -------------


<S>                                      <C>                <C>    
Current assets                           $33,496            $42,058
Noncurrent assets                        144,228             164,627
Current liabilities                       16,822              24,906
Noncurrent liabilities                    47,966              50,895
Stockholders' equity                     112,936             130,884
</TABLE>


<TABLE>
<CAPTION>
                         SIX MONTHS ENDED              SIX MONTHS ENDED
                            JUNE 30, 1998                 JUNE 30, 1997
                            -------------                 -------------
<S>                            <C>                            <C>    
Sales                          $50,229                        $50,183
Operating income                 8,140                          5,875
Net income                       5,105                          6,360
</TABLE>






                                     -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 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"), which are 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 6% 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 P 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 
    and Uganda.


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 operations.

RESULTS OF OPERATIONS

              The table below sets forth for the six months ended June 30, 1998
and 1997 certain information with respect to the results of operations of the
Company and its principal subsidiaries.

<TABLE>
<CAPTION>
Six Months Ended                    Net Sales                    Gross Profit               Income (Loss) before       
----------------                    ---------                    ------------                 Income Taxes and         
June 30, 1998                                                                                Minority Interests        
-------------                                                                                ------------------        
                                                                                                                       
                                Amount           %            Amount             %           Amount            %       
                                ------           -            ------             -           ------            -       
                                                                                                                       
                            (In thousands)                (In thousands)                 (In thousands)                
<S>                                 <C>           <C>               <C>           <C>               <C>          <C>   
IIC Industries Inc.                      --         --                  --          --            $(63)        (2.2)   
(parent company)                                                                                                       
Israel Tractors &                   $27,526       24.5              $8,107        34.7              231          8.2   
Equipment Co. (Israel)                                                                                                 
Balton CP Group                      35,059       31.2               9,257        39.6            1,766         62.8   
(Africa)                                                                                                               
Investor RT Group                    49,918       44.3               5.988        25.7              877         31.2   
                                     ------       ----                            ----                                 
(Hungary)                                                                                                              
                                                                                                                       
                                   $112,503      100.0            $23,352        100.0           $2,811        100.0   
                                   ========      =====            ========       =====           ======        =====   
                                                                                                                       
                                                                                                                       
Six Months Ended                     Net Sales                    Gross Profit               Income (Loss) before      
June 30, 1997                                                                               Minority Interests and     
                                                                                                 Income Taxes          
                                                                                                                       
                                 Amount           %            Amount            %             Amount            %     
                                 ------           -            ------            -             ------            -     
                                                                                                                       
                                                                                                                       
                             (In thousands)                (In thousands)                  (In thousands)              
                                                                                                                       
IIC Industries Inc.                       --         --                  --         --              $1           0.1   
(parent company)                                                                                                       
Israel Tractors &                    $35,015       29.1              $9,464       38.5             753          20.6   
Equipment Co. (Israel)                                                                                                 
Balton CP Group                       24,842       20.6               7,991       32.4           1,742          47.6   
(Africa)                                                                                                               
Investor RT Group                     60,564       50.3               7,153       29.1           1,160          31.7   
                                      ------       ----                           ----                                 
(Hungary)                                                                                                              
                                                                                                                       
                                    $120,421      100.0             $24,608      100.0          $3,656         100.0   
                                    ========      =====             =======      =====          ======         =====   
</TABLE>


<PAGE>

                    (RESTUBBED TABLE CONTINUED FROM ABOVE)



<TABLE>                                                    
<CAPTION>                                                  
Six Months Ended                 Net Income (Loss)         
----------------                -----------------          
June 30, 1998                                              
-------------                                              
                                                           
                                 Amount           %        
                                 ------           -        
                                                           
                            (In thousands)                 
<S>                                   <C>        <C>       
IIC Industries Inc.                   $(88)       (7.0)    
(parent company)                                           
Israel Tractors &                     (119)      (9.4))    
Equipment Co. (Israel)                                     
Balton CP Group                         541        43.0    
(Africa)                                                   
Investor RT Group                       923        73.4    
                                        ---        ----    
(Hungary)                                                  
                                                           
                                     $1,257        100.0   
                                     ======        =====   
                                                           
                                                           
Six Months Ended                  Net Income (Loss)        
June 30, 1997                                              
                                                           
                                                           
                                  Amount         %         
                                  ------         -         
                                                           
                                                           
                              (In thousands)               
                                                           
IIC Industries Inc.                  $(29)       (1.1)     
(parent company)                                           
Israel Tractors &                      100         3.8     
Equipment Co. (Israel)                                     
Balton CP Group                        549        20.8     
(Africa)                                                   
Investor RT Group                   $2,014        76.5     
                                    ------        ----     
(Hungary)                                                  
                                                           
                                    $2,634     100.0       
                                    ======     =====       
</TABLE>                                                   
                            



                                      12
<PAGE>

CONSOLIDATED RESULTS OF OPERATIONS

     Net Sales. Net Sales on a consolidated basis for the half year ended June
30, 1998 decreased by approximately $7.9 million as compared to the comparable
period in 1997. This decrease was mainly attributable to a reduction in demand
for Israel Tractor's products, and as regards, Investor, the difficult
agricultural and commodity trading market.

     Gross Profit. Gross Profit on a consolidated basis for the half year ended
June 30, 1998 decreased by approximately $1.3 million or approximately 5.1%, to
approximately $23.4 million, or approximately 20.8% of Net Sales, from
approximately $24.6 million, or approximately 20.4% of Net Sales, in the
corresponding period in 1997. This decrease was mainly attributable to a
reduction in demand for Israel Tractor's products, and reductions of margins in
the Investor group, primarily in the agricultural sector.

     Operating income. Operating income on a consolidated basis for the half
year ended June 30, 1998 decreased by approximately $486,000, or approximately
21%, to approximately $1.9 million, or approximately 1.6% of net sales, from
approximately $2.3 million, or approximately 1.9% of Net Sales for the
corresponding period in 1997. This decrease was principally due to the reasons
stated in the Gross Profits section.

     Interest income. Interest income decreased for the half year by
approximately $62,000, or approximately 6%, to approximately $979,000 due to
the cash purchase of additional shares in Danubius Hotel & Spa Rt. (the "Hotel
Company" or the "Danubius").

     Interest expense. Interest expense for the half year decreased by
approximately $713,000, or approximately 29%, to approximately $1.8 million due
to a decrease in bank loans.

     Income before Income Taxes and Minority Interest. Income before Income
Taxes and Minority Interest in the first six months decreased by approximately
$845,000, or approximately 23% to approximately $2.8 million in the first six
months (representing approximately 2.5% of Net Sales for that period) from
approximately $3.7 million for the corresponding period in 1997 (representing
approximately 3% of Net Sales for that period).

     Minority Interests. Minority Interests in the half year increased by
approximately $236,000.

     Net Income. Net Income for the half year decreased by approximately $1.4
million (or approximately 52%) to approximately $1.3 million (representing
approximately 1.1 % of Net Sales for that period) from approximately $2.6
million for the corresponding period in 1997 (representing approximately 2.2%
of Net Sales for that period).



                                      13
<PAGE>

     The table below sets forth for the six months ended June 30, 1998 and 1997
certain information with respect to the results of operations of the Company
and its five principal business segments.

<TABLE>
<CAPTION>                                                                              
                                      Six Months Ended June 30, 1998                   
                                                                 Income before         
                                                                Income Taxes and       
                                        Net Sales               Minority Interest      
                                    Amount          %           Amount         %       
                                (In thousands)              (In thousands)             
                                                                                       
---------------------------------------------------------------------------------------
<S>                                    <C>           <C>         <C>           <C>     
Vehicle sales and distribution         $ 6,353       5.6         $143          5.1     
(Investor)                                                                             
Export and import of agricultural       42,811      38.1         (653)       (23.2)    
products (Investor)                                                                    
Other Industries (Investor)                754       0.6        1,324         47.1     
                                                                                       
Tractors and heavy equipment            27,526      24.5          231          8.2     
                                                                                       
Agricultural, communications and        35,059      31.2        1,766         62.8     
electrical equipment (Balton CP)                                                       
                                      --------     -----      -------       ------     
                                      $112,503     100.0       $2,811        100.0     
                                      ========                =======       ======     
</TABLE>

                    (RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
                                                       Six Months Ended June 30, 1997                  
                                                                               Income before           
                                                                             Income Taxes and          
                                                 Net Sales                   Minority Interest         
                                          Amount            %              Amount             %        
                                            (In                        (In thousands)                  
                                        thousands)                                                     
---------------------------------       ---------------------------------------------------------------
<S>                                       <C>               <C>            <C>               <C>       
Vehicle sales and distribution            $ 5,289           4.4            $(11)             (0.3)     
(Investor)                                                                                             
Export and import of agricultural          54,649          45.4          (2,233)            (61.1)     
products (Investor)                                                                                    
Other Industries (Investor)                   626           0.5           3,405              93.1      
                                                                                                       
Tractors and heavy equipment               35,015          29.1             753              20.6      
                                                                                                       
Agricultural, communications and           24,842          20.6           1,742              47.7      
electrical equipment (Balton CP)                                                                       
                                          -------         -----          ------             -----      
                                         $120,421         100.0          $3,656             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.
Despite such conditions, following management's actions in reducing overhead
costs and closing unprofitable operations, Investor has shown a profit for the
first six months of 1998.

     Vehicle Sales and Service Segment

     o       Net Sales for the six months ended June 30, 1998 increased by
             approximately $1,064,000, or approximately 20%, as compared to the
             corresponding period in 1997.

     o       There was Income before Minority Interests and Income Taxes for
             the six months ended June 30, 1998 of $143,000 as compared to a
             loss of $11,000 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 six months ended June 30, 1998 decreased by
     approximately $11.8 million, or 21.7% as compared to the corresponding
     period in 1997, due to difficult market conditions.

o    The Loss before Income Taxes and Minority Interest for the six months
     ended June 30, 1998 decreased by approximately $1.6 million to a net loss
     of $653,000. This decrease was primarily due to an increase in margin from
     milling activities and a lower cost base as a result of rationalization.


     Other Industries

o    Net Sales for the six months ended June 30, 1998 increased by
     approximately $128,000, or approximately 20%, as compared to the
     corresponding period in 1997.

o    There was a Profit before Income Taxes and Minority Interest of
     approximately $1.3 million for the six months ended June 30, 1998,
     compared to a profit of approximately $3.4 million for the six months
     ended June 30, 1997. This decrease is as a result of the 1997 figure
     having included non-recurring income.

      ISRAEL TRACTOR: TRACTORS AND HEAVY EQUIPMENT SEGMENT

o    Net Sales for the six months ended June 30, 1998 decreased by
     approximately $7.5 million or approximately 21.3% as compared to the
     corresponding period in 1997, due to a reduction in demand for the
     Company's products.

o    Income before Income Taxes and Minority Interest for the six months ended
     June 30, 1998 decreased by approximately $522,000, or approximately 69% as
     compared to 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 six months ended June 30, 1998 increased by
     approximately $10.2 million, or approximately 41.1%, as compared to the
     corresponding period in 1997. This was due to the increased demand for the
     Company's products.

o    Income before Income Taxes and Minority Interests for the six months ended
     June 30, 1998 increased by approximately $24,000 , or approximately 1.4%
     as compared to the corresponding period in 1997. This decrease was mainly
     due to an increase in operating activities.




                                      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
June 30, 1998, IIC Industries Inc., the parent company (the "Parent Company"),
and its wholly-owned Israel Tractor subsidiary, had working capital of $27.4
million, including cash and cash equivalents of $6 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 June 30, 1998, Investor, Israel Tractor, and Balton had outstanding
short-term indebtedness of approximately $3.2 million, $1 million and $3.4
million, respectively.

     At June 30, 1998, Investor, Israel Tractor and Balton had unused lines of
short-term credit of approximately $8.9 million, $5.3 million and $7.7 million,
respectively.

     During the first half of 1998, Investor, Israel Tractor and Balton made
capital expenditures of $665,000; $213,000; and $1.4 million, respectively, for
the purchase of equipment and vehicles and improvements to property. Such
expenditures were made from internally generated funds.

     At June 30, 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 half 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 six months of 1998 was at an annual rate of 7%.

     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 will
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:  August 14, 1998
                                               IIC INDUSTRIES, INC.



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