<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, 1999

                                       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, 1999.


<PAGE>


                              FINANCIAL INFORMATION



  FINANCIAL STATEMENTS


                                                                         Page
                                                                         ----

       Consolidated Balance Sheets
       at March 31, 1999
       and December 31, 1998                                               3

       Consolidated Statements of Operations and Comprehensive Loss
       for the Three Months Ended March 31,
       1999 and March 31, 1998                                             5

       Consolidated Statement of Cash Flows
       for the Three Months Ended March 31,
       1999 and March 31, 1998                                             6

       Notes to Consolidated Financial
       Statements                                                          7



<PAGE>

                      IIC Industries, Inc. and Subsidiaries

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


                                               MARCH 31,         December 31,
                           ASSETS                1999               1998
                                               ---------         ------------

CURRENT ASSETS
    Cash and cash equivalents                  $12,075             $10,957
    Accounts receivable, net                    36,684              34,797
    Inventories, net (Note C)                   34,128              32,603
    Deposit                                      2,000               2,000
    Other current assets                         5,989               8,143
                                                 -----             -------

         Total current assets                   90,876              88,500

RESTRICTED CASH                                    434                 367

PROPERTY AND EQUIPMENT, NET                     32,025              34,738

INVESTMENTS                                     38,271              40,585

OTHER ASSETS                                     3,088               2,648
                                                 -----           ---------

                                              $164,694            $166,838
                                              ========            ========











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)




                                                      MARCH 31,    December 31,
          LIABILITIES AND STOCKHOLDERS' EQUITY          1999          1998
                                                      ---------    ------------


CURRENT LIABILITIES
    Accounts payable                                  $ 22,206      $ 18,492
    Bank loans                                          11,137        11,609
    Current maturities of long-term debt                   233           355
    Accrued expenses and other payables                 10,397        13,813
    Due to related parties                                 898         3,247
    Advances from customers                              6,649         4,655
                                                      --------      --------

         Total current liabilities                      51,520        52,171

LONG-TERM DEBT, less current portion                     3,774         3,281

DUE TO AFFILIATES                                        1,919         1,738

OTHER LIABILITIES AND DEFERRED
    CREDITS                                              7,690         6,477

MINORITY INTERESTS                                      14,198        14,738
                                                      --------      --------

                                                        79,101        78,405

CONTINGENCIES (Note D)

STOCKHOLDERS' EQUITY
    Common stock, $0.25 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                                  100,334       101,055
    Accumulated other comprehensive loss               (36,543)      (34,424)
    Less treasury stock - at cost (649,752 shares)      (2,725)       (2,725)
                                                      --------      --------

                                                        85,593        88,433
                                                      --------      --------

                                                      $164,694      $166,838
                                                      ========      ========


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)




THREE MONTHS ENDED MARCH 31,
                                                          1999          1998
                                                          ----          ----

Net sales                                               $39,922      $  56,729
Cost of sales                                            28,130         46,113
                                                      ---------      ---------

         Gross profit                                    11,792         10,616

Selling, general and administrative expenses             10,458         10,416
                                                      ---------      ---------

         Operating income                                 1,334            200
                                                      ---------      ---------

Other income (expenses)
    Interest income                                         290            523
    Equity in (loss) earnings of affiliates                (710)          (153)
    Foreign currency loss (Note B)                         (882)          (252)
    Gain on sale of noncurrent assets, net                   71            116
    Interest expense                                       (487)          (949)
    Other, net                                              118             76
                                                      ---------      ---------

         (Loss) Income before income taxes and
             minority interest                             (266)          (439)

Income taxes                                               (190)          (414)
                                                      ----------     ---------

         (Loss) Income before minority interest            (456)          (853)

Minority Interests                                         (265)             2
                                                      ---------      ---------

         NET LOSS                                          (721)          (851)

Other comprehensive loss:                                                
                                                         
           Foreign currency translation adjustments      (2,119)        (1,370)
                                                      ---------      ---------
           COMPREHENSIVE LOSS                            (2,840)        (2,221)
                                                      =========      =========

Basic net loss per common share                           (0.13)         (0.14)
                                                      =========      =========

Basic average number of common shares outstanding     5,693,472      5,693,472
                                                      =========      =========



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,
                                                                         -----------------------------
                                                                          1999                  1998
                                                                          ----                  ----

<S>                                                                   <C>                    <C>
Net cash (used in) provided by operating activities                    $(1,437)               $ 6,599
                                                                       -------                -------
Cash flows from investing activities
    Purchase of property and equipment                                    (590)                (1,491)
    Purchase of investments                                                (26)
    Proceeds on disposal of property and equipment                       1,123                    201
    Proceeds on disposal of investments                                                             3
    Restricted cash                                                        (67)                   (80)
                                                                       -------                -------
         Net cash provided by (used in) by investing activities            440                 (1,367)
                                                                       -------                -------
Cash flows from financing activities
    Issuance of long-term debt                                             278                    637
    Principal payments of long term debt                                  (100)
    Net receipts (payments) of short-term bank loans                     2,051                 (5,974)
                                                                       -------                -------
         Net cash provided by (used in) financing activities             2,229                 (5,337)
Effect of exchange rate on cash                                           (114)                   (45)
                                                                       -------                -------
         Net increase (decrease) in cash and cash equivalents
           during the period                                             1,118                   (150)
Cash and cash equivalents at beginning of period                        10,957                 22,781
                                                                       -------                -------
Cash and cash equivalents at end of period                             $12,075                $22,631
                                                                       =======                =======
Supplemental disclosure of cash flow information:
    Cash paid during the period for
       Interest                                                           $477                   $891
       Income taxes                                                        396                    242

</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, 1999 and December 31, 1998 and the results of
     operations and cash flows for the three months ended March 31, 1999 and
     March 31, 1998.


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 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:

                                         MARCH 31,         December 31,
                                           1999               1998
                                         ---------         ------------
        Raw materials                     $3,612             $ 5,380
        Work-in-progress                     363                 536
        Finished goods                    30,153              26,687
                                          ------             -------
                                                         
                                         $34,128             $32,603
                                         =======             =======
                                                                              

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
     $735,000.

     Balton has given guarantees to third parties in the amount of approximately
     $2,270,000.

     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 $10 million.


NOTE E - INVESTMENT IN AFFILIATE

     At March 31, 1999, the Company's effective ownership percentage of
     Danubius, Rt. ("Danubius"), a publicly traded company, was approximately
     37% at a cumulative cost of approximately $37 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, 1999. 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. (See the Investor section of the Management's Discussion and
     Analysis) There were no significant differences between international
     accounting standards and generally accepted accounting standards in the
     United States:


                                       MARCH 31, 1999         March 31, 1998
                                       --------------         --------------

      Current assets                       $37,864               $ 21,853
      Noncurrent assets                    135,077                148,446       
      Current liabilities                   28,771                 11,917
      Noncurrent liabilities                32,297                 48,392
      Stockholders' equity                 111,873                109,990



                                    THREE MONTHS ENDED     Three Months ended
                                      MARCH 31, 1999         March 31, 1998
                                    ------------------     ------------------


      Sales                               $18,489                $17,897       
      Operating income (loss)                  71                   (528)
      Net loss                             (2,048)                  (650)




                                      -9-


<PAGE>


                      IIC Industries, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)




NOTE F- NEW ACCOUNTING PRONOUNCEMENT

     In June 1998, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
     Derivative Instruments and Hedging Activities". SFAS No. 133 establishes
     accounting and reporting standards for derivative instruments and for
     hedging activities and is effective for all fiscal quarters of fiscal years
     beginning after June 15, 1999. The Company does not expect that the
     adoption of SFAS No. 133 will have a significant impact on the Company's
     results of operations.














                                      -10-






<PAGE>


ITEM 2.       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.


     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)      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, warehousing, retail and wholesale 
consumer products and Hungarian corporate.


<PAGE>


RESULTS OF OPERATIONS

              The table below sets forth for fiscal quarters ended March 31,
1999 and 1998 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          (Loss) Income      Net Income (Loss)
------------------                ---------              ------------           before Income     -----------------
March 31, 1999                                                               Taxes and Minority
                                                                                  Interests    
                                                                             ------------------

                               Amount         %         Amount         %       Amount       %       Amount        %
                               ------         -         ------         -       ------       -       ------        -
                           (In thousands)           (In thousands)         (In thousands)       (In thousands)

<S>                          <C>          <C>          <C>         <C>         <C>       <C>         <C>        <C>
IIC Industries Inc.                --         --            --         --         (44)     (16.5)     (145)      (20.1)
(parent company)                                                                                               
                                                                                                               
Israel Tractors &             $14,703       36.8        $3,900       33.1         345      129.7       195        27.0
Equipment Co. (Israel)                                                                                         
                                                                                                               
Balton CP Group (Africa)       13,294       33.3         4,219       35.8         324      121.8       165        22.9
                                                                                                               
Investor RT Group              11,925       29.9         3,673       31.1        (891)    (335.0)     (936)     (129.8)
                              -------      -----       -------      -----       -----     ------     -----       -----
(Hungary)                                                                                                      
                                                                                                               
                              $39,922      100.0       $11,792      100.0       $(266)    (100.0)    $(721)      100.0
                              =======      =====       =======      =====       =====     ======     =====       =====
</TABLE>


<TABLE>
<CAPTION>

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

                               Amount         %         Amount         %       Amount       %       Amount        %
                               ------         -         ------         -       ------       -       ------        -
                           (In thousands)           (In thousands)         (In thousands)       (In thousands)

<S>                          <C>          <C>          <C>         <C>        <C>       <C>        <C>       <C>
IIC Industries Inc.                --         --            --         --        (74)     (16.9)     (108)     (12.7)
(parent company)                                                                                             
                                                                                                             
Israel Tractors &             $14,467       25.5        $3,811       35.9       (207)     (47.2)     (401)     (47.1)
Equipment Co. (Israel)                                                                                       
                                                                                                             
Balton CP Group (Africa)       11,857       20.9         3,787       35.7        337       76.8        99       11.6
                                                                                                             
Investor RT Group              30,405       53.6         3,018       28.4       (495)    (112.7)     (441)     (51.8)
                              -------      -----       -------      -----      -----     ------     -----     ------
(Hungary)                                                                                                    
                                                                                                             
                              $56,729      100.0       $10,616      100.0      $(439)    (100.0)    $(851)    (100.0)
                              =======      =====       =======      =====      =====     ======     =====     ======
</TABLE>
                                                                             


                                       12


<PAGE>


CONSOLIDATED RESULTS OF OPERATIONS

     Net Sales. Net Sales on a consolidated basis for the fiscal quarter ended
March 31, 1999 decreased by approximately $17 million as compared to the
comparable period in 1998. The decrease is primarily due to the rationalization
of Investor's agricultural commodity business.

     Gross Profit. Gross Profit on a consolidated basis for the fiscal quarter
ended March 31, 1999 increased by approximately $1.2 million or approximately
11%, to approximately $11.8 million, or approximately 29.5% of Net Sales, from
approximately $10.6 million, or approximately 18.7% of Net Sales, in the
corresponding period in 1998. This increase was mainly attributable to the
rationalization of Investor's agricultural commodity business.

     Operating income. Operating income on a consolidated basis for the first
fiscal quarter of 1999 increased by approximately $1.1 million, to $1.3 million,
or approximately 3.3% of net sales, from approximately $200,000, or
approximately 0.3% of Net Sales for the corresponding period in 1998. This
increase was principally due to the rationalization of Investor's agricultural
commodity business.

     Interest income. Interest income decreased for the quarter by $233,000, or
approximately 45%, to $290,000. This decrease was principally due to lower cash
balances and lower rates of interest in the various countries of operations.

     Interest expense. Interest expense in the quarter decreased by $462,000, or
approximately 49%, to approximately $487,000 due to the decrease in bank loans
and lower rates of interest.

     Loss before Income Taxes and Minority Interest. Loss before Income Taxes
and Minority Interest in the first fiscal quarter of 1998 was approximately
$266,000, compared to a Loss before Income Taxes and Minority Interest in the
first fiscal quarter of 1998 of approximately $439,000.

     Minority Interests. Minority Interests for the first fiscal quarter of 1999
decreased by $267,000 as compared to the first fiscal quarter of 1998 as a
result of the reduction of losses in Agrimpex.

     Net Loss. Net Loss for the first fiscal quarter of 1999 was approximately
$721,000, compared to Net Loss in the first fiscal quarter of 1998 of
approximately $851,000.



                                       13


<PAGE>


     The table below sets forth for the three months ended March 31, 1999 and
1998 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, 1999                  Three Months Ended March 31, 1998

                                                     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 thousands)         (In thousands)       (In thousands)            (In thousands)
--------------------------------------------------------------------------------------------------------------------------

<S>                            <C>          <C>       <C>         <C>      <C>          <C>           <C>          <C>
Vehicle sales and               $ 3,304       8.3      $   107      40.2    $ 2,828        5.0         $   39         8.9
distribution (Investor)

Processing/storage of             6,783      17.0          280     105.3     27,208       47.9           (221)      (50.3)
agricultural products                                                         
(Investor)

Other Industries (Investor)       1,838       4.6       (1,322)   (497.0)       369        0.7           (387)      (88.2)
                                                                                                      
Tractors and heavy equipment     14,703      36.8          345     129.7     14,467       25.5           (207)      (47.2)
(Israel Tractor)

Agricultural, communications     13,294      33.3          324     121.8     11,857       20.9            337        76.8
and electrical equipment
(Balton CP)
                                -------     -----      -------    ------    -------      -----         ------      ------
                                $39,922     100.0      $  (266)   (100.0)   $56,729      100.0         $ (439)     (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.

     Vehicle Sales and Service Segment

     o   Net Sales for the three months ended March 31, 1999 increased by 
         approximately $476,000, or approximately 17%, as compared to the 
         corresponding period in 1998.

     o   There was Income before Minority Interests and Income Taxes for the 
         three months ended March 31, 1999 of $107,000 as compared to a loss of
         $39,000 in the corresponding period in 1998.

     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>


Processing/Storage of Agricultural Products Segment

     o   Net Sales for the three months ended March 31, 1999 decreased by
         approximately $20.4 million or 75%, as compared to the corresponding
         period in 1998. The decrease in Net Sales was primarily due to the
         rationalization of the agricultural commodity trading business.

     o   The Income before Income Taxes and Minority Interest for the three
         months ended March 31, 1999 was $280,000 compared to a Loss before
         Income Taxes and Minority Interest of $221,000 for the corresponding
         period in 1998. This increase in income was primarily due to
         the rationalization of the agricultural commodity trading business.

Other Industries

     o   Net Sales for the quarter ended March 31, 1999 increased by 
         approximately $1.47 million as compared to the corresponding period 
         in 1998.

     o   The Loss before Income Taxes and Minority Interest was approximately
         $1.3 million for the three months ended March 31, 1999, compared to a
         loss of approximately $387,000 for the three months ended March 31,
         1998. The increase in the loss arose primarily due a higher loss in the
         equity investment of Danubius, which, in turn, was due to a
         non-recurring additional depreciation charge of approximately $1.83
         million resulting from writing off of all fixed assets with a book
         value of less than $130.


         ISRAEL TRACTOR: TRACTORS AND HEAVY EQUIPMENT SEGMENT

     o   Net Sales for the three months ended March 31, 1999 increased by 
         $236,000 million, or approximately 1.6% as compared to the 
         corresponding period in 1998. This increase was due to an increase in 
         demand for the Company's products.

     o   The Income before Income Taxes and Minority Interest for the three
         months ended March 31, 1999 was $345,000 as compared to Loss before
         Income Taxes and Minority Interest of $207,000 for the corresponding
         period in 1998 as a result of a reduction of expenses.


         BALTON CP: AGRICULTURAL, COMMUNICATIONS AND ELECTRICAL EQUIPMENT 
         SEGMENT

     o   Net Sales for the three months ended March 31, 1999 increased by
         approximately $1.4 million or approximately 12%, as compared to the
         corresponding period in 1998. 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, 1999 decreased by approximately $13,000, as compared 
         to the corresponding period in 1998.


                                       15

<PAGE>


INCOME TAXES

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%.


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 1999. At
March 31, 1999, IIC Industries Inc., (the "Parent Company"), and its
wholly-owned Israel Tractor subsidiary, had working capital of $28.2 million,
including cash and cash equivalents of $7.4 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, 1999, Israel Tractor, Investor and Balton Tractor had
outstanding short-term indebtedness of approximately $1.5 million, $6.9 million
and $2.7 million, respectively.

     At March 31, 1999, Israel Tractor, Investor and Balton had unused lines of
short-term credit of $2 million, $10.8 million and $4 million, respectively .

     During the first quarter of 1999, Israel Tractor, Investor, and Balton made
capital expenditures of $80,000; $296,000 and $214,000, respectively, for the
purchase of equipment and vehicles and improvements to property. Such
expenditures were made from internally generated funds. At March 31, 1999, the
Company had no significant capital commitments.



                                       16


<PAGE>


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 1998 and during the first quarter of
1999, and therefore did not significantly affect operations in that country.
Furthermore, there was a revaluation of the Israeli shekel against the U.S.
Dollar in the first three months of 1999 of 3.7%. (14.8% annualized)

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


NEW ACCOUNTING PRONOUNCEMENT

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities and is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. The Company does not expect that the adoption of SFAS No.
133 will have a significant impact on the Company's results of operations.


YEAR 2000 COMPLIANCE

         In July 1996, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board ("FASB") issued EITF 96-14, "Accounting for the Costs
Associated with Modifying Computer Software for the Year 2000," which requires
that costs associated with modifying computer software for the Year 2000 be
expensed as incurred.

The Company is in the process of conducting a comprehensive review of its
systems, equipment, product and services, suppliers, customers and building
facilities to identify its exposure to any adverse impact of Year 2000
non-compliance. The Company has implemented or will implement procedures that it
deems necessary to safeguard the Company from computer-related issues associated
with adverse effects as a result of improperly recognizing the millennial date
change. Based upon its review and efforts to date, the Company believes that
future external and internal costs to be incurred for the modification of
internal-use software to address Year 2000 issues will not have a material
adverse effect on the Company's financial position, cash flows or results of
operations.

The Company believes, based upon its review and efforts to date, that external
and internal remediation costs to be incurred for the modification of
internal-use software to address Year 2000 



                                       17


<PAGE>


issues will not be material. These cost estimates include the costs of external
contractors, non-capitalizable purchases of software and hardware, and the
direct cost of internal employees working on Year 2000 projects. The Company's
cost estimate does not include the cost of implementing contingency plans, which
are in the process of being developed, and also does not include any potential
litigation or warranty costs related to Year 2000 issues if the Company's
remediation efforts are not successful.

The Company has undertaken a program to alert its suppliers and dealers of Year
2000 issues. Based on its contacts with suppliers and dealers, the Company
believes that a majority of our most important suppliers are Year 2000
compliant, and the Company anticipates that most of its dealers will be Year
2000 compliant by mid-1999. The Company will continue to work with its remaining
suppliers and its dealers throughout 1999 to secure Year 2000 compliance by
December 31, 1999. Based on third-party representations and internal testing,
and subject to the Company's ongoing compliance efforts, the costs and
uncertainties relating to timely resolution of Year 2000 issues applicable to
the Company's business and operations are not reasonably expected by the Company
to have a material adverse effect on the Company's financial position, cash
flows or results of operations. For those suppliers and dealers that have not
adequately responded to our Year 2000 concerns, we are following up to
ultimately achieve an acceptable level of compliance within our supply chain. As
there can be no assurance that an acceptable level of Year 2000 compliance will
be achieved, the Company is in the process of developing contingency plans to
address potential issues.

Based upon the Company's review and efforts to date, the Company currently
anticipates completion of critical Year 2000 compliance issues by mid-1999, and
the Company plans to continue integration testing throughout the balance of
1999. If the Company's Year 2000 compliance efforts, as well as the efforts of
the Company's suppliers and dealers, individually and in the aggregate, are not
successful, it could have a material adverse effect on the Company's financial
position, cash flows and results of operations. Factors that could cause actual
results to differ include unanticipated supplier or dealer failures, disruption
of utilities, transportation or telecommunications breakdowns, foreign or
domestic governmental failures, as well as unanticipated failures on our part to
address Year 2000 related issues. The Company's most reasonably likely worst
case scenario in light of these risks would involve a potential loss in sales
resulting from order, production and shipping delays throughout the Company's
supply chain caused by Year 2000 related disruptions. The degree of sales loss
impact would depend on the severity of the disruption, the time required to
correct it, whether the sales loss was temporary or permanent, and the degree to
which our primary competitors were also impacted by the disruption. The Company
is in the process of developing Year 2000 contingency plans that will be
designed to mitigate the impact on the Company if its Year 2000 compliance
efforts are not successful. The targeted completion date for the Company's
contingency planning is mid-1999. The Company's contingency plans may include
the use of alternative systems and non-computerized approaches to our business
including manual procedures for machine operation, collecting and reporting of
its business information, as well as alternative sources of supply. At this
time, the Company has not determined whether it will be necessary to stockpile
inventory or supplies as part of its contingency planning.

The information included in this "Year 2000" section represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. 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



                                       18


<PAGE>


believes that all software and hardware requirements to enable it to cope with
year 2000 issue have been or are being currently implemented. However, there can
be no assurance that unanticipated costs may arise in implementing these
requirements.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DISCLOSURE ABOUT FOREIGN CURRENCY RISK

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 1998, the income from the Company's
Hungarian, African and Israeli 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 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 7% during
1998. Since the beginning of 1999, the Hungarian currency has been further
devalued by approximately 8% against the U.S. Dollar. Since the functional
currency for Investor is the Forint, these devaluations have resulted in certain
currency translation adjustments directly impacting stockholders' equity.
Furthermore, certain of African countries such as Zambia and Uganda operate in
hyper-inflationary economies, and. the Israeli shekel devalued 17.6% against the
U.S. dollar in 1998, even though the devaluation was modest in previous years.
Since the beginning of 1999, the Israeli shekel has been revalued by
approximately 3.7% against the U.S. Dollar.

Derivative financial instruments are utilized by the Company to reduce foreign
exchange risk and price risk relating to its heavy equipment distribution and
agricultural commodity business. The Company does not hold or issue derivative
financial instruments for trading purposes.

Israel Tractor enters into foreign currency forward contracts and call option
contracts to reduce the impact of fluctuations of certain currencies against the
U.S. dollar. Gains and losses resulting from such transactions are reflected in
the results of operations. These contracts reduce exposure to currency movements
resulting primarily from nondollar-denominated trade receivables and the Israeli
tax effects of dollar-denominated trade purchases.

At March 31, 1999, Israel Tractor had foreign currency forward contracts, with
notional values of $4 million, to purchase and sell Israeli shekels. All of the
contracts mature in September 1999.

Current pricing models were used to estimate the fair values of foreign currency
forward contracts, and call options. The counterparties to these contracts are
creditworthy multinational commercial banks or other financial institutions,
which are recognized market makers.



                                       19


<PAGE>


DISCLOSURE ABOUT INTEREST RATE RISK

          The Company is subject to market risk from exposure to changes in
interest rates based on its financing, investing, and cash management
activities. The Company utilizes a balanced mix of debt maturities along with
both fixed-rate and variable-rate debt to manage its exposures to changes in
interest rates. The Company does not expect changes in interest rates to have a
material effect on income or cash flows in 1999, although there can be no
assurances that interest rates will not significantly change.

















                                       20


<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   








                                       21


<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 14, 1999
                                              IIC INDUSTRIES, INC.



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


                                              By: /s/ Michael M. Wreschner
                                                  -----------------------------
                                                  Michael M. Wreschner
                                                  Director, Principal Financial
                                                  Officer and Chief Accounting
                                                  Officer