<PAGE> 1
THE SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
Commission File No. 0-16472
COMC, INC.
FORMERLY AUTOMEDIX SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Illinois 36-3021754
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 N. Glenoaks Blvd.
Burbank, California 91502
(Address of principal executive offices)
(818) 556-3333
(Issuer's telephone number)
Check whether the issuer filed all required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter Period that the registrant was
required to file such reports), and has been subject to such filing
requirements for the past 90 days. Yes No X
The number of shares outstanding of Registrants Common Stock as of August
14, 1997 was 12,498,107.
Transitional Small Business Disclosure Format. Yes No X
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMC, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 41,991 $ 57,180
Accounts receivable 549,411 738,724
Loans receivable - officer 18,095
Inventories 88,838 97,040
Prepaid expenses and other 51,219 21,103
----------- -----------
TOTAL CURRENT ASSETS 749,554 914,047
PROPERTY AND EQUIPMENT, Net 129,962 115,177
OTHER ASSETS
Deposits 19,782 17,825
----------- -----------
$ 899,298 $ 1,047,049
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 154,054 $ 192,284
Accrued expenses 77,628 47,323
Income taxes payable 2,045
Current portion of long-term debt 50,000 50,000
Notes payable 220,000 300,000
----------- -----------
TOTAL CURRENT LIABILITIES 501,682 591,652
----------- -----------
LONG-TERM DEBT, net of current portion 146,249 166,667
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - authorized 40,000,000 shares, $.01 par value
issued and outstanding - 12,498,107 shares 124,981 124,981
Additional paid-in capital 210,022 210,022
Accumulated deficit (83,636) (46,273)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 251,367 288,730
----------- -----------
$ 899,298 $ 1,047,049
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 3
COMC, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30, June 30,
1997 1996
------------ ------------
<S> <C> <C>
REVENUES $ 1,619,403 $ 1,537,971
COST OF REVENUES 997,442 1,036,125
------------ ------------
GROSS PROFIT 621,961 501,846
OPERATING EXPENSES 634,367 453,870
------------ ------------
INCOME (LOSS) BEFORE
OTHER INCOME (EXPENSE) (12,406) 47,976
OTHER INCOME (EXPENSE)
Interest income 248 448
Interest expense (25,205) (16,221)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (24,957) (15,773)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (37,363) 32,203
INCOME TAXES 297
------------ ------------
NET INCOME (LOSS) $ (37,363) $ 31,906
============ ============
NET INCOME (LOSS) PER SHARE $ .00 $ .00
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 12,498,107 10,000,000
============ ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 4
COMC, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
June 30, June 30,
1997 1996
------------ ------------
<S> <C> <C>
REVENUES $ 598,834 $ 947,557
COST OF REVENUES 312,919 651,080
------------ ------------
GROSS PROFIT 285,915 296,477
OPERATING EXPENSES 287,498 131,650
------------ ------------
INCOME (LOSS) BEFORE
OTHER INCOME (EXPENSE) (1,583) 164,827
OTHER INCOME (EXPENSE)
Interest income 124 324
Interest expense (14,495) (10,244)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (14,371) (9,920)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (15,954) 154,907
INCOME TAXES 297
------------ ------------
NET INCOME (LOSS) $ (15,954) $ 154,610
============ ============
NET INCOME (LOSS) PER SHARE $ .00 $ .02
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 12,498,107 10,000,000
============ ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 5
COMC, INC AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 30,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (37,363) $ 31,906
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation 11,163 24,560
Gain on sale of marketable securities (7,931)
(Increase) decrease in:
Accounts receivable 189,313 3,731
Inventories 8,202 (115,231)
Prepaid expenses and other current assets (48,211) 6,501
Deposits (1,957)
Increase (decrease) in:
Account payable and accrued expenses (7,925) (16,608)
Income taxes payable and deferred income tax (2,045) (2,752)
---------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 111,177 (75,824)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (25,948) (37,507)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (25,948) (37,507)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowing 100,000
Loan from stockholder 125,776
Distribution to stockholder (51,863)
Principal payments on short-term borrowing (80,000)
Principal payments on long-term borrowing (20,418) (22,185)
---------- ---------
NET CASH PROVIDED BY(USED IN)
FINANCING ACTIVITIES (100,418) 151,728
---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15,189) 38,397
CASH AND CASH EQUIVALENTS, BEGINNING 57,180 172,350
---------- ---------
CASH AND CASH EQUIVALENTS, END $ 41,991 $210,747
---------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest $ 28,277 $ 16,221
========= =========
Cash paid for income taxes $ 2,045 $ 2,720
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 6
COMC, INC AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which
are for the interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the footnotes thereto contained in the Annual Report on
Form 10-KSB for the year ended December 31, 1996 of COMC, Inc. (the "Company"),
as filed with the Securities and Exchange Commission. The December 31, 1996
balance sheet was derived from audited consolidated financial statements, but
does not include all disclosures required by generally accepted accounting
principles.
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements. The
results of operations for the three months and six months ended June 30, 1997
are not necessarily indicative of the results to be expected for the full fiscal
year.
Net Income (loss) Per Share - Net income (loss) per share is based upon the
weighted average number of common shares outstanding during the periods
presented.
2. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements, primary earnings per share will be renamed basic earnings per
share and will exclude the dilutive effect of stock options. The impact will not
change primary earnings per share for the second quarter or six months ended
June 30, 1997 and June 30, 1996.
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
Reporting Comprehensive Income, which shall be effective for fiscal year
beginning after December 15, 1997. The Company will apply the requirements of
this statement on its fiscal year ended December 31, 1998. This statement
discusses how to report and display comprehensive income and its components.
Comprehensive income consists of net income and other comprehensive income.
Other comprehensive income refers to revenues, expenses, gains and losses that
under generally accepted accounting principles are included in comprehensive
income but excluded from net income.
In June 1997, the Financial Accounting Standards Board issued Statement No.131,
Disclosures about Segments of an Enterprise and Related Information, which shall
be effective for fiscal year beginning after December 15, 1997. The Company will
apply the requirements of this statement on its fiscal year ended December 31,
1998. This statement discusses how to report operating segments and certain
information about its products and services, the geographic areas in which they
operate, and its major customers.
3. Loans Receivable - Officer
As of June 30, 1997, the Company had outstanding loans receivable from its
President of $18,095. The loans bear interest at 1% per month and are due on
December 31, 1997.
<PAGE> 7
Item 2. Management Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with the financial
statements and related notes thereto of the Company included elsewhere herein.
Initially, the Company's purpose was the research and development of
medical technologies for the treatment of cancer and other conditions. Because
the Company was unable to raise capital to continue the clinical trials with
respect to the medical device for cancer treatment which it had designed, in the
spring of 1992, it ceased its operations. As a consequence, the Board of
Directors of the Company began to investigate the possibility of a new business
direction and to search for viable acquisition or merger candidates which would
enable the Company to maximize value to shareholders. As previously mentioned,
the Company completed the acquisition of Complete Communications, Inc.("CCI"),
in November 1996. The transaction was accounted for as a reverse acquisition.
Therefore, discussion in this section will be based on the operating results of
CCI for the six months ended June 30, 1997 and 1996.
Results of Operations
During the six months ended June 30, 1997 compared to six months ended
June 30, 1996 revenues increased approximately $81,000 or 5.3% primarily due to
a large contract for Bank of America where CCI is acting as subcontractor for
Western Carlson Design (general contractor). While this initial contract was
completed in May 1997, additional work at the site has continued for several
months in diminishing amounts. Cost of revenues decreased $39,000 or 3.7%. Price
and volume changes had little to no impact on revenues. Technician labor
decreased $321,000 or 42.1% while material purchased increased $291,000 or
117.2% to meet the needs of the Bank of America contract. Operating expenses
increased $180,000 or 39.8% due to professional and consulting fees for the
public entity plus merger and acquisition costs. These expenses were offset by
reductions in payroll, office supplies, travel and entertainment. Other expenses
increased $9,000 or 58.2% primarily due to additional interest expenses from two
new lines of credit required for acquisition costs incurred in 1995 and 1996. As
a result of the above, the loss before taxes was $37,363 a swing of $70,000.
During the three months ended June 30, 1997 compared to six months ended
June 30, 1996 revenues decreased $349,000 or 36.8% primarily due to a contract
with Digital Equipment Corp. which began in April 1996 and ran through the
summer months generating billings of $433,000. Price and volume changes had
little to no impact on revenues. Cost of revenues also decreased $338,000 or
51.9% which was the technician labor associated with the Digital Equipment
contract. Operating expenses increased $156,000 or 118.4% primarily due to
professional and consulting fees for the public entity plus merger and
acquisition costs. Other expenses increased $4,000 or 44.9% due to additional
interest expenses from two new lines of credit required for acquisition costs
incurred in 1995 and 1996. The quarter ended June 30, 1997 loss before taxes was
$15,954 a decrease of $170,100 from the quarter ended June 30, 1996.
CCI has depended on a few large customers for the majority of its revenue
to date. A loss of any one could have a material effect on the company's
liquidity. Due to the quality of the Company's major customers, the
collectibility of accounts receivable has not been a problem.
For the six months ended June 30, 1997 Western Carlson Design and Bank of
America accounted for 53% and 8% of the Company's revenue, respectively. Western
Carlson Design 1% of revenues for the six months ended June 30, 1996 while Bank
of America represented 3%.
For the three months ended June 30, 1997 Western Carlson Design and Bank
of American accounted for 45% and 13% of the Company's revenue, respectively.
Western Carlson Design had no revenue for the three months ended June 30, 1996
while Bank of America represented 3%.
The Company deals with many material suppliers under various credit term
policies. It is CCI's practice to secure the most competitive pricing among
these suppliers. For the six months ended June 30,
<PAGE> 8
1997 Cable Connector Warehouse, Energy Electric Cable and GTE Supply accounted
for 27%, 16% and 45% of the companies total material purchases, respectively. Of
these suppliers, only Cable Connector Warehouse was used in the comparable
period last year and accounted for 7% of total material purchased. For the three
months ended June 30, 1997 Cable Connector Warehouse, Energy Electric Cable and
GTE Supply accounted for 34%, 16% and 5% of the companies total material
purchases, respectively. Of these suppliers, only Cable Connector Warehouse was
used in the comparable period last year and accounted for 4% of total material
purchased.
Liquidity and Capital Resources
In November 1996, the Company consummated the acquisition of Complete
Communications, Inc., a California corporation ("CCI"), in consideration for the
issuance of 10,000,000 shares of Common Stock to John Ackerman, the sole
shareholder of CCI. In connection with this transaction, the Company changed its
name to COMC, Inc.
Cash and cash equivalents decreased $15,189 at June 30, 1997 compared to
December 31, 1996. Cash provided by operating activities amounted to $111,177
and was primarily due to an increase in accounts receivable collections. Cash
used in investing activities decreased $25,948 at June 30, 1997 due to the
purchase of necessary operational equipment. Financing activities used $100,418
for principal payments on long-term and short-term borrowings.
The Company has a $250,000 term loan agreement with a bank, principal
payable in a monthly installment of $4,167 and interest at the bank's prime rate
plus 2.5%. The note matures on April 15, 2001 and has an outstanding balance of
$187,500 as of August 5, 1997. The Company has a revolving credit agreement
available for $300,000 with the same bank, interest at the bank's prime rate
plus 2.5% and as of August 5, 1997 has used $270,000. The Company has a $100,000
equipment line of credit with the same bank which was established in January
1997 and remains available.
In December 1996 the Company entered into a letter of intent with Able
Cable, Inc. ("ACI"), a provider of interconnect services of voice and data
communications systems. Under the terms of the letter of intent, the Company
will acquire ACI in consideration for a cash payment of $1,000,000 and the
issuance of Common Stock as well as payments in the amount of $960,000 over a
period of four years under employment and consulting agreements to be entered
into with the principals of ACI. Compilations provided to the Company indicate
that during its most recent fiscal year ACI generated revenues of $6.8 million,
while pre-tax profits amounted to $267,000. Consummation of the transaction is
contingent upon financing arrangements and the satisfactory completion of the
Company's due diligence investigation of ACI's affairs, neither of which can be
assured at this time. Recently, ACI has requested a modification to the letter
of intent in the form of an increased acquisition price based on better than
expected performance.
In April 1997, the Company entered into a letter of intent providing for a
business combination with ICF Communications Systems, Inc. ("ICF"). Pursuant to
the letter of intent, the Company will acquire ICF for a total consideration of
$12.1 million of which $9.6 million is payable in cash with the balance to be
paid by the issuance of the Company's Common Stock. Approximately $8 million is
due at the closing. Additional payments will be made annually over a two- year
period from the closing. It is currently anticipated that two of ICF's
principals will enter into employment agreements with the Company. ICF is a
telephone service provider based in the San Francisco area. According to
compilations provided to the Company, during its most recent fiscal year ICF
generated revenues of approximately $15 million. Its pre-tax profits during this
period aggregated approximately $1.3 million. Consummation of the transaction is
contingent, among other things, upon financing arrangements and the satisfactory
completion of the Company's due diligence investigation of ICF's affairs,
neither of which can be assured at this time. As of this date, the letter of
intent has expired although both parties are still in discussions.
The Company intends to continue its search for additional merger and
acquisition candidates that will expand its existing markets in related products
and services.
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal proceedings
The Company is not involved in any material legal proceedings.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Not applicable
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
COMC, INC.
By: /s/ John Ackerman
-------------------------------------
John Ackerman, Chairman and President
Dated: August 15, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below as of August 15, 1997 by the following persons on
behalf of Registrant and in the capacities indicated.
/s/ Ernest C. Mauritson
--------------------------------------------
Ernest C. Mauritson, Controller
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 41,991
<SECURITIES> 0
<RECEIVABLES> 549,411
<ALLOWANCES> 0
<INVENTORY> 88,838
<CURRENT-ASSETS> 745,554
<PP&E> 213,132
<DEPRECIATION> 83,170
<TOTAL-ASSETS> 899,298
<CURRENT-LIABILITIES> 501,682
<BONDS> 146,249
0
0
<COMMON> 124,981
<OTHER-SE> 126,386
<TOTAL-LIABILITY-AND-EQUITY> 899,298
<SALES> 0
<TOTAL-REVENUES> 1,619,403
<CGS> 0
<TOTAL-COSTS> 997,442
<OTHER-EXPENSES> 634,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,205
<INCOME-PRETAX> (37,363)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37,363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,363)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
