<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year ended September 30, 1996 Commission File Number 0-16472
COMC, INC.
FORMERLY AUTOMEDIX SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Illinois 36-3021754
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
400 N. Glenoaks Boulevard
Burbank, California 91502
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including Area Code: (818) 556-3333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value $.01 per share)
Title of Class
Indicate by check mark 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 twelve (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 ninety (90) days. Yes No x
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the registrant's best knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]
The aggregate market value of voting stock held by non-affiliates of
the Registrant: can not be determined as a result of the absence of an active
trading market for Registrant's securities.
The number of shares outstanding of Registrant's Common Stock as of
December 31, 1996: 12,500,000
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
COMC, Inc., an Illinois corporation (the "Company") was incorporated in
December 1978 under the name Automedix Sciences, Inc. Initially, its 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.
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.
Description of the Company's Business
The Company, through CCI, provides voice and data services to major
companies that are undergoing changes in their telecommunication and data
communication infrastructures.
The Company's objective is to take advantage of the opportunities
created by a number of circumstances. First, in order to remain competitive, an
increasing number of companies are introducing computers into their business.
Second, prior generations of computer equipment are becoming obsolete and must
be upgraded or replaced. Third, deregulation of the telecommunication industry
is creating the need for new systems that will enable the integration of the
computer, broadcasting, multi-media and cable industries. The Company believes
that CCI offers a low-cost alternative to similar services offered by larger and
more established telecommunications companies. In addition, by focusing on
reducing the time it takes to respond to clients' needs, it has been able to
develop a strong client base. Nevertheless, the Company is aware that the
computer and telecommunications businesses are highly competitive. There can
be no assurance that the Company will be able to compete effectively with
entities many of which are older and more established in this area and
possess greater financial and other resources than the Company.
The Company assists its clients by being a full-service provider in the
area of computer networks and telephone systems. Specifically, it provides,
among other things, services in the following areas:
Telecommunications Solutions - The Company sells and provides
support and consulting services with respect to telecommunications
systems. It designs network solutions for remote access and video and
desktop conferencing and provides installation and service of both
digital and analog telephone systems. CCI is an authorized dealer for
major telecommunications companies including AT&T.
LAN/WAN Solutions - The Company designs, implements and
maintains LAN and WAN networks, including installation and
configuration of computer hardware and software. It also offers
hardware and software solutions for mainframe and PC platforms.
Premise Wiring Services - The Company offers complete wiring
services, including voice data, fiber and video system application
design, installation and management services. Its technical personnel
participates in continuous certification programs offered by companies
such as AT&T and Pacific Bell.
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<PAGE> 3
Help Desk Solutions - The Company offers continuous
24-hour-a-day telephone support to its clients in the areas of computer
networks and telecommunications. In addition, it provides outsourcing
services in the area of telemarketing.
Internet Business Solutions - The Company provides services in
connection with the design, implementation and maintenance of web pages
on the internet. It attempts to improve the inter-active capabilities
of a particular design and provides, through third parties, credit card
clearing services that it believes are reliable and secure.
The Company's major clients include Bank of America and Cedar Sinai
Medical Center. Other entities it has served include The Walt Disney Company,
Warner Bros., Mattell, Inc., The Campbell Soup Company, Warner Brothers Company
and Wells Fargo.
CCI's revenues are generated by the sale of equipment and by services
provided in almost equal proportions. For the fiscal year ended December 31,
1995, CCI generated total revenues of approximately $3 million. Its gross
profits for the same period aggregated approximately $1.3 million with pre-tax
net profits totalling approximately $312,000.
In December 1996 the Company entered into a letter of intent with Able
Cable, Inc. ("ACI"), a provider of interconnect services relating to voice and
data communications systems. Under 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. 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.
SALES AND MARKETING
The Company believes long-term relationships with new and existing
customers are the most effective way of attaining its business objectives. To
that end, the Company intends to hire and train a support staff with the
objective of visiting prospective customers and to build close personal
relationships with such persons through the publication of monthly newsletters
and other promotional activities.
The Company also intends to hire account managers who will focus on
customers located in Southern California. These managers will be networked to
the Company's office and work out of their homes located in their territories.
COMPETITION
The Company believes that it competes with entities with significantly
larger financial and other resources than the Company's, including AT&T, Pacific
Bell and U.S. Sprint. However, the Company believes that the services offered by
these companies are generally higher priced than the services provided by the
Company. In addition, these companies are mostly focused on large customers.
Also, there are a number of smaller companies with whom the Company
competes directly. The Company believes that most of these companies focus on
one aspect of the business only. As a result, some of these companies provide
hardware only or deliver exclusively cable and wire services.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 42 persons
of whom three are executive personnel,two are involved in marketing and 37 are
involved in operations.
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<PAGE> 4
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases approximately 3,500 square feet of space in an
office building located at 400 N. Glenoaks Boulevard, Burbank, California at a
monthly rent of approximately $3,000. The Company is investigating the
possibilities of relocating its offices after the expiration of its current
lease in April 1998. In addition, it leases approximately 1,000 square feet at
a warehouse nearby at a monthly rent of $2000 on a month to month basis.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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<PAGE> 5
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since the Company was inactive, no trading information is available for
the Company's securities.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
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.
Results of Operations
There have been no transactions for the fiscal years ended September
30, 1996 and 1995.
Liquidity and Capital Resources
The Company had no cash or cash equivalents on September 30, 1995 and
1994. In addition, its working capital position on each of these dates was zero.
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.
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 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. 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.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are included herein commencing on page F-1.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On December 6, 1996, the Company dismissed Oppenheim & Ostrick, CPA's
as its independent accountants ("Oppenheim"). This action had been approved by
the Company's Board of Directors. During the past two years Oppenheim did not
issue a report on Company's financial statements that either contained an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles. During the period of its
engagement, Oppenheim assisted only in the compilation of the Company's
financial statements in connection with the preparation of the Annual Report on
Form 10-K for the fiscal year ended September 30, 1995. As a result of the
Company's inactive status, as defined in Rule 3-11 under Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended, during
such period, the Company believes that it was not required to file audited
financial statements.
During the period of their engagement from June 1996 until December
1996, there were no reportable events or disagreements between the Company and
Oppenheim on any matter of accounting principles or practices, financial
statement disclosure, or audit scope and procedure, which disagreement, if not
resolved to the satisfaction of Oppenheim, would have caused them to make
reference to the subject matter of the disagreement in connection with any
report that was to have been prepared for the Company.
On December 12, 1996 the Board of Directors of the Company appointed
Hollander, Gilbert & Co. as its independent accountants.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John Ackerman 38 President, Chief Executive Officer and Director
Marvin Loeb 70 Director
Richard F. Horowitz 56 Director, Secretary
Donald Baker 67 Director
Ernie Mauritson 40 Controller
</TABLE>
JOHN ACKERMAN has been the Company's President and Chief Executive
Officer and a director since November 1996. He had been the President and Chief
Executive Officer of CCI since its inception in 1987. From 1984 until 1987 he
was a sound technician with Sunglo Electric where for a period of three years he
supervised a technical staff of 25 people. Prior thereto he worked as a
cameraman and, prior thereto, as an import/export broker.
MARVIN P. LOEB had been the Chairman and the President of the Company
since 1979 and 1980, respectively, until his resignation in November 1996. Since
1980, he has been Chairman of Trimedyne, Inc., a
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<PAGE> 7
publicly held corporation involved in the manufacture of medical lasers
("Trimedyne"). He has also been a director of Pharmos, Inc. (formerly Pharmatec,
Inc.), a publicly-held company which is developing drugs and drug delivery
systems since December 1982 and Chairman from that date until October 1992. Mr.
Loeb was a Director of Gynex Pharmaceuticals, Inc. (now Biotechnology General
Corporation), a publicly-held company developing reproductive products, from
April 1986 until August 1993, and was its Chairman from April 1986 to August
1992. From April 1986 to June 1994, he was Chairman and a Director of
Xtramedics, Inc. (now Athena Medical Corporation), a publicly held company which
is engaged in the development of a feminine hygiene product. Mr. Loeb was
Chairman and a director from 1988 to June 1993 of Contracap, Inc., a publicly
held company, which was developing a contraceptive device and is now inactive.
Mr. Loeb was Chairman from 1983 to April 1986 and Vice Chairman from April 1987
to April 1992 of Petrogen, Inc., a privately held company which was developing
genetically engineered bacteria for oil and toxic waste cleanup and is now
inactive. Since May 1986, he has been Chairman and director of Cardiomedics,
Inc., a privately held company which is developing circulatory assist devices.
Since November 1988, he has been Chairman of Ultramedics, Inc., a privately held
company whose principal interest is its investment in Cardiomedics, Inc. and
which was formerly engaged in manufacturing ultraviolet devices for medical use.
Mr. Loeb has been President of Master Health Services, Inc., a family held
medical consulting firm, since 1973, and Marvin P. Loeb and Company, a family
held patent licensing firm, since 1983. Mr. Loeb holds an honorary Doctor of
Science Degree from Pacific State University and a Bachelor of Science Degree
from the University of Illinois.
RICHARD F. HOROWITZ has been a director of the Company since 1993. He
has been a director of Trimedyne since 1983. He was a director of Gynex from
August 1988 to August 1992 and has been a Director of Ultramedics, Inc. since
November 1988 and of Cardiomedics Inc. since 1992. Mr. Horowitz has been a
practicing attorney in New York City for the past 32 years. He has been a member
of the firm of Heller, Horowitz and Feit, P.C. & Feit) since January 1979.
Heller, Horowitz & Feit, P.C. has been securities counsel to the Company and to
other entities with which Mr. Loeb is associated. Mr. Horowitz is a graduate of
Columbia College and Columbia Law School.
DONALD BAKER has been a director of the Company since 1993. Mr. Baker
recently retired after 39 years as a partner of the law firm of Baker &
McKenzie. Mr. Baker recently retired as Secretary, General Counsel and a
Director of Air South, Inc., an airline operating in the Southeast. He holds a
J.D.S. degree from the University of Chicago Law School. He is a director of the
Mid-America Committee on International Business and Government Cooperation,
Chicago, and Cardiomedics, Inc., Santa Ana, California.
ERNIE MAURITSON has been the Company's controller since December 1996.
Prior thereto he was the controller at Penske Truck Leasing, which operates the
second largest full service equipment leasing business in the country, from 1994
until 1996. During 1993-1994 he was Chief Operating Officer at Custom Rotational
Molding, Inc., a plastic manufacturing and polymer processing company. From 1978
until 1993 he held positions at Dart International, a privately held
distribution company, as controller and Vice President Administration. Mr.
Mauritson holds a B.S. in business administration from the University of
Southern California.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the period from October 1, 1995 through September 30, 1996,
with the exception of a Form 4 for Mr. Loeb, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with.
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<PAGE> 8
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company during the three fiscal years ended September 30, 1996 to its President
and Chief Executive Officer. No employee of the Company received compensation in
excess of $100,000 per year during these periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Restricted
Year Salary Bonus Stock Awards
---- ------ ----- ------------
<S> <C> <C> <C> <C>
Marvin P. Loeb 1996 -0- -0- $62,500
1995 -0- -0- -0-
1994 -0- -0- -0-
</TABLE>
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<PAGE> 9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below sets forth, as of December 31, 1996, information
regarding the beneficial ownership of the Company's Common Stock based upon the
most recent information available to the Company for (i) each person known by
the Company to own beneficially more than five (5%) percent of the Company's
outstanding Common Stock, (ii) each of the Company's officers and directors and
(iii) all officers and directors of the Company as a group. Unless otherwise
indicated in the footnotes, the address for all parties is c/o COMC, Inc., 400
N. Glenoaks Boulevard, Burbank, California 91502.
<TABLE>
<CAPTION>
Name and Address Number of Percent of
of Owner Shares(1) Class
- -------- --------- -----
<S> <C> <C>
John Ackerman 10,000,000 80%
Marvin P. Loeb (2) 1,118,278 9%
Richard F. Horowitz (3) 373,000(3) 3%
292 Madison Avenue
New York, NY 10017
Donald Baker 20,000 *
Ernie Mauritson -0- *
All Officers and Directors
as a Group (5 persons) (2)(3) 11,511,278 92%
</TABLE>
- -------------------
* Less than one percent.
(1) Unless otherwise indicated, all shares are owned beneficially and of record.
(2) Includes 56,127 shares owned by The Marvin P. Loeb Irrevocable Living Trust,
of which Mr. Loeb is the sole trustee and by Mr. Loeb as nominee for his
children. Mr. Loeb disclaims beneficial ownership in such shares.
(3) Includes 17,300 shares beneficially owned by the law firm of Heller,
Horowitz & Feit, P.C, of which Mr. Horowitz is a principal.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
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PART IV
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) 1. and 2. Financial Statements and Schedules
The financial statements are listed in the Index to Financial
Statements on page F-1 and are filed as part of this annual report.
3. Exhibits
The Index to Exhibits following the Signature Page indicates the
exhibits which are being filed herewith and the exhibits which are incorporated
herein by reference.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the last quarter of the fiscal
year ended September 30, 1996.
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<PAGE> 11
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, Chairman and President
Dated: January 10, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below as of January 10, 1997 by the following
persons on behalf of Registrant and in the capacities indicated.
/s/ John Ackerman
-------------------------------------
John Ackerman, Chairman and President
(Chief Financial and Accounting Officer)
/s/ Donald Baker
-------------------------------------
Donald Baker, Director
/s/ Richard F. Horowitz
-------------------------------------
Richard F. Horowitz, Director
/s/ Marvin Loeb
-------------------------------------
Marvin Loeb, Director
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<PAGE> 12
EXHIBITS
2.01 Letter Agreement with Complete Communications, Inc. dated as
of June 3, 1996(1)
3.01 Certificate of Incorporation as amended(1)
3.02 By-laws(2)
16.1 Letter from Oppenheim & Ostrick, CPA's dated January 8, 1996
(3)
- ----------------------------
(1) Incorporated by reference to the Company's Information Statement dated
September 15, 1996
(2) Incorporated by reference to the Company's Registration Statement
(declared effective March 25, 1987)
(3) Incorporated by reference to the Company's Current Report on Form 8-K/A
dated January 9, 1997
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<PAGE> 13
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (UNAUDITED) AND 1996
<PAGE> 14
COMC, INC.
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1996
Report of Independent Auditors F-1
Balance Sheets at September 30, 1995 (Unaudited) and 1996 F-2
Statements of Operations - F-3
Years Ended September 30, 1995 (Unaudited) and 1996
and Inception to September 30, 1996 (Unaudited)
Statement of Stockholders' Equity - F-4
Statements of Cash Flows - F-5
Years Ended September 30, 1995 (Unaudited) and 1996
and Inception to September 30, 1996 (Unaudited)
Notes to Financial Statements F-6
<PAGE> 15
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
COMC, INC.
We have audited the accompanying balance sheet of COMC, INC. (formerly Automedix
Sciences, Inc.) (an Illinois corporation) as of September 30, 1996, and the
related statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of COMC, INC. as of September 30,
1996 and the results of operations, stockholders' equity and cash flows for the
year then ended, in conformity with generally accepted accounting principles.
Hollander, Gilbert & Co.
Los Angeles, California
January 3, 1997
F-1
<PAGE> 16
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
(Unaudited)
<S> <C> <C>
STOCKHOLDERS' EQUITY
Common stock $.01 par value, authorized 20,000,000 shares;
issued and outstanding 1,125,542 and 1,650,542 for 1995
and 1996, respectively $ 112,555 $ 165,055
Class B Common stock, $.01 par value, authorized 2,250,000
shares; issued and outstanding 124,458 and 224,458
shares for 1995 and 1996, respectively 12,445 22,445
Additional paid-in capital 5,799,059 5,799,059
Accumulated deficit during the development stage (5,924,059) (5,986,559)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 0 $ 0
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
F-2
<PAGE> 17
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996
AND FROM INCEPTION TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Cumulative
from
Years Ended September 30, Inception to
--------------------------------------- September 30,
1995 1996 1996
------------------ ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES
Interest $ $ $ 783,037
Other 110,097
------------------ ------------------ ------------------
893,134
------------------ ------------------ ------------------
COSTS AND EXPENSES
Research and development 2,998,312
Salaries and wages 1,592,185
Legal and professional fees 505,659
Rent 161,902
Depreciation and amortization 227,287
Other general and administrative expenses 62,500 1,394,348
------------------ ------------------ ------------------
62,500 6,879,693
------------------ ------------------ ------------------
NET LOSS $ nil $ 62,500 $ (5,986,559)
================== ================== ==================
NET LOSS PER SHARE $ .00 $ (.04)
================== ==================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,250,000 1,875,000
================== ==================
</TABLE>
See accompanying Notes to Financial Statements.
F-3
<PAGE> 18
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Total Class B Additional During the Stock-
Common Stock Common Stock Paid-in Development holders'
Shares Amount Shares Amount Capital Stage Equity
--------- --------- ------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
At September 30, 1994 and 1995 (Unaudited) 1,125,542 $112,555 124,458 $ 12,445 $ 5,799,059 $(5,924,059) $
Common Stock issued for compensation expense 525,000 52,500 100,000 10,000 62,500
Net loss (62,500) (62,500)
--------- -------- --------- -------- ----------- ----------- --------
At September 30, 1996 1,650,542 $165,055 224,458 $ 22,445 $ 5,799,059 $(5,986,559) $
========= ======== ========= ======== =========== =========== ========
</TABLE>
NOTE: Gives effect to reverse stock split of 1 for 10 effective November 1996.
See accompanying Notes to Financial Statements.
F-4
<PAGE> 19
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996
AND FROM INCEPTION TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Cumulative
from
Years Ended September 30, Inception to
--------------------------------------- September 30,
1995 1996 1996
------------------ ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ $ 62,500 $ (5,986,559)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 243,209
Loss on sale of property and equipment 8,317
Compensation expense related to issuance of stock 62,500 338,174
Other current assets 6,967
Other assets 45,560
------------------ ------------------ ------------------
NET CASH USED BY OPERATING ACTIVITIES (5,344,332)
------------------ ------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposits
and marketable securities (3,599,636)
Redemption of certificates of deposits
and sale of marketable securities 3,599,636
Patents, licenses and organizational costs (32,827)
Disposals (purchase) of property and equipment, net (230,967)
------------------ ------------------ ------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (263,794)
------------------ ------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of ownership interest
prior to acquisition by Trimedyne 552,659
Proceeds from sale of common stock and
exercise of stock options 5,096,840
Capitalized lease obligations 79,263
Payments on capital lease obligations (79,263)
Purchase of long-term deposit and other assets (40,259)
Repurchase of 11,388 shares of Class B common stock (114)
------------------ ------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,608,126
------------------ ------------------ -----------------
NET DECREASE IN CASH
CASH, Beginning of period nil nil nil
------------------ ------------------ -----------------
CASH, End of period $ nil $ nil $ nil
================== ================== ==================
Non-cash Transaction -
Common stock issued for compensation $ 62,500 $ 338,174
================== ==================
</TABLE>
See accompanying Notes to Financial Statements.
F-5
<PAGE> 20
COMC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
The Company was incorporated in December 1978. Initially, its purpose was the
research and development of medical technologies for the treatment of cancer
and other conditions. On March 25, 1987 the Company commenced an initial
public offering of its securities in which it raised $4,500,000. 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. In 1992,
the Company ceased making the required public filings under the Securities
and Exchange Act of 1934, as amended.
On November 21, 1996 the Company acquired 100% interest in Complete
Communications Incorporated (CCI) for 10,000,000 shares of the Company's
Common Stock (after the reverse stock split). Upon closing the sole selling
shareholder owned 80% of the Company's Common Stock. Effective as of the
closing date the acquisition is considered a reverse acquisition whereas the
CCI is deemed the accounting acquiror and subsequent financial statements
will reflect the operations of CCI.
CCI, a California corporation, provides voice and data services to major
companies that are undergoing changes in their telecommunication and data
communication infrastructures. It assists its clients by being a full-service
provider in the area of computer networks and telephone systems.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Loss Per Share - Net loss per share is computed on the basis of weighted
average shares outstanding for each period presented, adjusted to give effect
to stock dividends. Common stock equivalents (options and warrants) have been
excluded from the calculation for all periods presented because they were
determined to be anti-dilutive.
Research and Development Costs - Research and development costs are expensed
as incurred.
3. COMMON STOCK
In November 1996, the Board of Directors of the Company and the holders of
two thirds of the shares entitled to vote thereon adopted an amendment to the
Articles of Incorporation of the Company to (i) effect a one for ten reverse
stock split of the Company's currently issued and outstanding Common Stock,
(ii) increase the number of shares of Common Stock the Company is authorized
to issue to 40,000,000, (iii) change the Company's name to COMC, INC., and
(iv) eliminate the Class B Common Stock. Prior to the adoption, the Company
was authorized to issue 20,000,000 shares of Common Stock, $.01 par value and
2,250,000 shares of Class B Common Stock, $.01 par value.
Shares of Common Stock and Class B Common Stock carried identical rights,
except that holders of Class B Common Stock are entitled to elect a majority
of the Company's Board of Directors, and the Class B Common Stock is
convertible on a share-for-share basis at any time into common stock. Total
shares increased by 625,000 shares at $.01 per share or $62,500 related to
the reverse acquisition which needed stockholder approval as of September 30,
1996, 525,000 shares of common stock and 100,000 shares of Class B common
stock were issued for funding the acquisition.
-6-
<PAGE> 21
COMC, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. INCOME TAXES
As of September 30, 1996 the Company has net operating loss carryforwards
available of approximately $4,700,000 for financial reporting and federal
income tax purposes. Any difference in net operating losses for financial
reporting and federal income tax purposes is caused by timing differences in
the recognition of various expenses which, in certain instances, have been
capitalized for tax purposes and are insignificant. If not applied against
future taxable income the loss carryforwards will expire from 2004 to 2010.
The amount of loss carryforwards that can be utilized against income in any
given year is subject to an annual limitation triggered by the change in the
Company's ownership. No tax benefit relating to the losses has been recorded,
as its realization cannot be assured.
5. RELATED PARTY ACTIVITIES
The Company's past Chairman and President provided limited corporate
maintenance at no cost to the Company.
6. SUBSEQUENT EVENT
In December 1996, the Company entered into a letter of intent to acquire a
certain provider of interconnect services of voice and data for a cash
payment of $1,000,000 and the issuance of 450,000 shares of common stock as
well as payment of $960,000 over four years under employment and consulting
agreements with its principals. Consummation of the transaction is
contingent upon financing arrangements and the satisfactory completion of
due diligence of the acquiree's affairs.
-7-
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) the
Company's financial statements included in the Company's Annual Report on Form
- -10KSB for te year ended September 30, 1996. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH (B) financial statements.
</LEGEND>
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