SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 17, 1998
COMC, INC.
(Exact Name of Registrant as Specified in its Charter)
Illinois 0-16472 36-3021754
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification Number)
400 N. Glenoaks Boulevard, Burbank, California 91502
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (818) 556-3333
(Former Name or Former Address if Changed Since Last Report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
Complete audited financial statements for businesses acquired
(b) Pro Forma Financial Information
Complete pro forma information giving effect to the Exchange
(c) Exhibits*
(1) Agreement and Plan of Merger dated as of July 24, 1998, by and
among COMC, Inc., COMC Acquisition Corp., ICF Communication Systems Inc.,
William M. Burns and Charles E. Lincoln.**
(2) Amendment No. 1 to the Agreement dated August 3, 1998.
* Previously filed.
** The Agreement and Plan of Merger includes as exhibits the various
promissory notes, employment agreements and other ancillary documents executed
in connection with the Merger. However, the schedules delivered in connection
therewith are all in standard form and have been omitted in accordance with
rules and regulations promulgated by the Securities and Exchange Commission.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
Date: October 30, 1998
COMC, INC.
By: /s/
Albert P. Vasquez,
Acting Chief
Financial Officer
ICF COMMUNICATION SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors 1
Balance Sheets at December 31, 1997 and 1996 2
Statements of Income for the years ended December 31, 1997 and 1996 3
Statements of Cash Flows for the years ended December 31, 1997 and 1996 4
Notes to Financial Statements 5
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
ICF Communication Systems, Inc.
We have audited the accompanying balance sheets of ICF Communication
Systems, Inc. as of December 31, 1997 and 1996, and the related statements of
income and cash flows for the years 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 audits.
We conducted our audits 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
misstatement. 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 audits provide 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 ICF Communication
Systems, Inc. as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
HOLLANDER, LUMER & CO. LLP
Los Angeles, California
October 6, 1998
1
<PAGE>
ICF COMMUNICATION SYSTEMS, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
ASSETS
CURRENT ASSETS
Cash (including certificate of deposit
maturing currently) $ 589,379 $ 336,371
Accounts receivable, net of allowance for doubtful
accounts of $325,444 (1997) and $68,749 (1996) 3,984,808 3,894,089
Inventories 168,343 10,183
Prepaid expenses and other current assets 7,425 66,778
----- ------
TOTAL CURRENT ASSETS 4,749,955 4,307,421
PROPERTY AND EQUIPMENT, Net 632,567 293,802
OTHER ASSETS
Deferred income taxes 356,075 157,988
Deposits 26,206 1,780
------ -----
TOTAL OTHER ASSETS 382,281 159,768
------- -------
$5,764,803 $4,760,991
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank credit line payable $ - $ 300,138
Loans payable to officers - 192,132
Income taxes payable 1,786,488 1,271,669
Accounts payable 459,229 161,791
Accrued salaries 307,138 177,237
Accrued interest 167,671 46,724
Other current liabilities 121,435 117,375
------- -------
TOTAL CURRENT LIABILITIES 2,841,961 2,267,066
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; authorized - 200,000
shares; issued and outstanding - 100,000 shares 20,002 20,002
Retained earnings 2,902,840 2,473,923
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 2,922,842 2,493,925
--------- ---------
$5,764,803 $4,760,991
========== ==========
See accompanying notes to financial statements.
2
<PAGE>
ICF COMMUNICATION SYSTEMS, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
REVENUES
Service $ 12,851,812 $ 11,514,300
Material 2,427,118 3,404,876
--------- ---------
TOTAL REVENUES 15,278,930 14,919,176
---------- ----------
COST AND EXPENSES
Cost of service revenues 9,722,312 8,076,971
Cost of material revenues 1,779,327 2,503,585
Selling, general and administrative 2,099,919 2,243,224
Compensation of officers 647,216 1,055,431
Depreciation 138,498 94,281
------- ------
TOTAL COST AND EXPENSES 14,387,272 13,973,492
---------- ----------
INCOME FROM OPERATIONS 891,658 945,684
OTHER INCOME (EXPENSE)
Interest income 86,426 17,031
Interest expense (123,855) (51,529)
Loss on disposal of property and equipment (86,446) (1,431)
Other, net (1,434) -
------ -------
TOTAL OTHER INCOME (EXPENSE) (125,309) (35,929)
-------- -------
INCOME BEFORE INCOME TAXES 766,349 909,755
INCOME TAXES 337,432 408,343
------- -------
NET INCOME $ 428,917 $ 501,412
========= ============
See accompanying notes to financial statements.
3
<PAGE>
ICF COMMUNICATION SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 428,917 $ 501,412
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities
Depreciation 138,498 94,281
Gain (loss) on disposal of property and equipment 86,446 1,431
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (90,719)(1,466,217)
Inventories (158,160) (10,183)
Prepaid expenses 59,353 (65,387)
Deferred income taxes (198,087) (49,344)
Increase (decrease) in:
Income taxes payable 514,819 409,471
Accounts payable 297,438 161,791
Accrued salaries 129,901 177,237
Accrued interest 120,947 46,724
Other current liabilities 4,060 83,901
----- ------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,333,413 (114,883)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits (24,426) -
Purchases of property and equipment (563,709) (168,120)
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (588,135) (168,120)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from bank credit line - 300,138
Repayments to bank credit line (300,138) -
Loans payable to officers - 192,132
Repayments of loans payable to officers (192,132) -
-------- -------
NET CASH PROVIDED BY (USED IN) (492,270) 492,270
FINANCING ACTIVITIES -------- -------
NET INCREASE IN CASH 253,008 209,267
CASH, BEGINNING OF PERIOD 336,371 127,104
------- -------
CASH, END OF PERIOD $589,379 $336,371
======== ========
CASH PAID FOR:
Interest $ 15,671 $ 12,579
Income taxes $ - $ 68,916
See accompanying notes to financial statements.
4
<PAGE>
ICF COMMUNICATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - ICF Communication Systems, Inc., a California
corporation, (the "Company") designs, installs and maintains various office
communication systems. Additionally, it provides outsourcing services for its
customers.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Cash equivalents - The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents. The certificate of deposit maturing currently is included in Cash.
Inventories - Inventories, consisting of various parts and equipment
for sale, are stated at lower of cost (determined on a first-in, first-out
basis) or market.
Property and Equipment - Property and equipment are stated at cost.
Depreciation is computed on the straight-line method over the estimated useful
lives of the assets which range from five to seven years. Leasehold improvements
are amortized on the straight-line method over the term of the lease or the
useful life of the asset, whichever is shorter.
Property and equipment are reviewed for impairment whenever events or
circumstances indicate that the asset's undiscounted expected cash flows are not
sufficient to recover its carrying amount. The Company measures an impairment
loss by comparing the fair value of the asset to its carrying amount. Fair value
of an asset is calculated as the present value of expected future cash flows.
Revenue Recognition - Contract revenue is recognized on the
percentage-of-completion method for most long-term contracts and upon
performance of contractual obligations for others. Material revenue is generally
recognized when the equipment has been shipped and installed.
Income Taxes - The Company accounts for income taxes utilizing the
asset and liability approach, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of temporary
5
<PAGE>
differences between the basis of assets and liabilities for financial
reporting purposes and tax purposes.
Concentration of Credit Risk - The Company maintains several bank
accounts at one bank. Accounts at an institution are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000. The amount in excess of the
FDIC limit totaled $917,294 as of December 31, 1997.
Financial Instruments - The Company's financial instruments include
cash, receivables, payables and accrued expenses. The carrying amount of such
financial instruments approximates fair value because of the short maturity of
these instruments.
Major Customers - As of December 31, 1997, three customers accounted
for approximately 84% of total accounts receivable. As of December 31, 1996,
three customers accounted for approximately 95% of total accounts receivable.
Four customers accounted for approximately 74% of total revenues in
1997. Twenty customers accounted for approximately 95% of total revenues in
1996.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1997
and 1996:
1997 1996
---- ----
Vehicles $316,341 $200,490
Furniture and office equipment 219,084 305,517
Computer equipment 175,935 --
Leasehold improvements 27,742 7,390
Software 39,270 --
Security alarm 6,768 --
----- -------
785,140 513,397
Less accumulated depreciation 152,573 219,595
------- -------
$632,567 $293,802
======== ========
3. BANK CREDIT LINE PAYABLE
In October 1996, the Company entered into a $1,000,000 revolving line of credit
(the "line of credit") with a Bank. The line of credit was secured by the
Company's accounts receivable, deposit accounts and general intangibles and bore
interest at the Bank's reference rate plus 0.75%, 9% at December 31, 1996. The
line of credit contained certain covenants relating to insurance, records, type
of business, purpose, secondary liabilities, acquisition or sale of business,
outside indebtedness and compliance with laws. As of December 31, 1996,
outstanding borrowings under the line of credit amounted to $300,138. The line
of credit was fully repaid in 1997. The line of credit expired on November 1,
1997.
In June 1998, the Company entered into a new $500,000 revolving line of credit
("new line of credit") with the same Bank. The new line of credit is
6
<PAGE>
secured by substantially all assets of the Company and bears interest at
the Bank's reference rate plus 0.75%. The line of credit contains certain
covenants relating to insurance, records, type of business, purpose,
secondary liabilities, acquisition or sale of business, outside
indebtedness and compliance with laws. The Company also agrees to provide
compiled financial statements within 90 days of each year-end, maintains
tangible net worth equal to at least $3,000,000 and maintains a ratio of
total liabilities to tangible net worth not exceeding 1:1. The new line of
credit will expire on June 1, 1999.
4. COMMITMENTS AND CONTINGENCIES
Operating Leases - The Company leases certain offices under operating
leases expiring on various dates through 2002. Total rent expense charged
to operations was $108,183 in 1997 and $101,744 in 1996. At December 31,
1997, the minimum future rental commitments under non-cancelable leases
payable over the remaining terms of the leases are:
Years Ending December 31,
1998 $202,106
1999 160,581
2000 142,168
2001 91,428
2002 83,809
---- ------
$680,092
========
Employment Agreements - At December 31, 1997, the Company had no employment
agreements. (See Note 8 - Subsequent Events)
5. TRANSACTIONS WITH RELATED PARTIES
Loans payable to officers consisted of the following at December 31, 1996:
Charles Lincoln, the Company's Chairman;
accrued interest of $6,363; accrued loan fees of $2,403,
principal balance of $ 96,132
William Burns, the Company's President;
accrued interest of $6,216; accrued loan fees of $2,400,
principal balance of 96,000
------
$ 192,132
=========
The loans payable to officers, including all accrued interest and loan
fees, were fully repaid in January 1997.
7
<PAGE>
6. DEFINED CONTRIBUTION PLAN
In April 1994, the Company established a defined contribution plan (the
"Plan") pursuant to Section 401(k) of the Internal Revenue Code. In April
1997, the Plan was amended so that all employees are eligible to
participate in the Plan after completing three months of service (formerly
one year) and attaining the age of 21. To be entitled to an allocation of
employer contributions, a participant must complete 1,000 hours of service
during the Plan year and must be employed by the Company on the last day of
the Plan year. Employees electing to participate in the Plan may contribute
up to 20% of their annual compensation. Contributions to the Plan are
limited to the maximum amount allowable under the provisions of the
Internal Revenue Code. The Company may choose to make contributions to the
Plan at its discretion. No discretionary contributions were made for the
year ended December 31, 1997 and 1996.
7. INCOME TAXES
The components of income taxes were as follows for the years ended December
31, 1997 and 1996:
1997 Federal State Total
---- -------- ------- --------
Current $ 428,332 $ 107,187 $ 535,519
Deferred (164,949) (33,138) (198,087)
-------- ------- --------
$ 263,383 $ 74,049 $ 337,432
========= ========= =========
1996
----
Current $ 359,251 $ 98,436 $ 457,687
Deferred (38,671) (10,673) (49,344)
------- ------- -------
$ 320,580 $ 87,763 $ 408,343
========= ========= =========
In June 1998, the Company agreed to Income Tax Examination Changes by the
Internal Revenue Service ("IRS") which resulted in additional income tax
liabilities to the IRS for years 1995, 1996 and 1997 of $1,114,827. At
December 31, 1997, the Company had income tax liabilities of $1,410,032 to
the IRS and $376,456 to the State. Interest of approximately $167,671 was
also accrued as of December 31, 1997.
The components of deferred tax assets were as follows at December 31, 1997
and 1996:
8
<PAGE>
1997 1996
---- ----
State income taxes $127,995 $ 93,149
Accrued interest 71,830 14,785
Allowance for doubtful accounts 139,420 29,768
Accrued vacation 13,224 20,286
Others 3,606 --
----- -------
$356,075 $157,988
======== ========
Based on the Company's earnings history and the expectation of continuing
increases in its business, it is probable that future taxable income will be
sufficient to realize the $356,075 deferred tax assets.
The actual tax expense differs from the expected tax expense, computed by
applying the Federal corporate tax rate of 34% to income before income taxes, as
follows:
1997 1996
Expected statutory tax expense $ 260,559 $309,317
Net tax effect of permanent differences 18,176 14,692
State income taxes, net of federal tax effect 48,872 57,924
Others 9,825 26,410
------ ------
$ 337,432 $408,343
========= ========
8. SUBSEQUENT EVENTS
On August 17, 1998, COMC, Inc., an Illinois corporation, ("COMC") consummated
the acquisition of the Company. Under the terms of the Agreement and Plan of
Merger dated July 24, 1998 (as amended on August 3, 1998, the "Agreement"), the
Company merged with and into a wholly-owned subsidiary of COMC that had been
especially organized for purposes of this transaction (the "Merger"). In
connection with the Merger, the Company's name will be changed to ICF
Communication Solutions, Inc. In consideration for the Merger, the two
principals of the Company received an aggregate payment valued at $14,000,000,
as follows: $1,500,000 in cash at the closing of the transaction; $1,500,000 in
promissory notes due and payable January 5, 1999, secured by all accounts
receivable of the Company; $1,000,000 in promissory notes due and payable
January 4, 1999; $1,000,000 in promissory notes due and payable August 17, 1999;
and 6,493,506 shares of COMC's common stock valued at $9,000,000 or $1.386 per
share. COMC has agreed to use its best efforts to register the shares of common
stock issued in connection with the Merger.
In addition, under the Agreement, Messrs. Charles Lincoln and William Burns, the
principal shareholders and executive officers of the Company, were elected to
COMC'c Board of Directors and were appointed Chairman and President of ICF
Communication Solutions, Inc., pursuant to two-year employment agreements with
each of Mr. Lincoln and Burns, providing, among
9
<PAGE>
other things, for annual salaries of $135,000 as well as annual bonuses at
the discretion of COMC's Board of Directors.
10
COMC, INC. AND SUBSIDIARY AND
ICF COMMUNICATION SYSTEMS, INC.
The following unaudited pro forma condensed financial statements give
effect to the acquisition by COMC, Inc. of 100% of the issued and outstanding
shares of common stock of ICF Communication Systems, Inc. and are based on the
estimates and assumptions set forth herein and in the notes to the statements.
This pro forma information has been prepared utilizing the historical financial
statements of each entity. The pro forma financial data is provided for
comparative purposes only and does not purport to be indicative of the results
which actually would have been obtained if he acquisition had been effected on
the date indicated or those results which may be obtained in the future.
The transactions were accounted for under the purchase method of
accounting. The pro forma adjustments are described in the accompanying notes.
The Unaudited Pro Forma Condensed Balance Sheets assumes that the acquisition
was consummated on June 30, 1998. The Unaudited Pro Forma Condensed Statements
of Income assumes that the acquisition was consummated on January 1, 1997.
1
COMC, INC. AND SUBSIDIARY AND ICF COMMUNICATION SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
JUNE 30, 1998
<TABLE>
COMC, Inc. ICF
and Communication Pro Forma Pro Forma
Subsidiary Systems, Inc. Adjustments Totals
------------ -------------- -------------- ----------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash (including certificate of deposit
maturing currently) $ 8,041 $ 1,015,649 $ 1,023,690
Accounts receivable, net 323,742 3,518,819 3,842,561
Loans receivable from officers 73,008 - 73,008
Inventories 71,384 77,885 149,269
Prepaid expenses and other current assets 70,464 194,911 265,375
------ ------- -------
TOTAL CURRENT ASSETS 546,639 4,807,264 5,353,903
PROPERTY AND EQUIPMENT, Net 90,629 670,833 761,462
OTHER ASSETS
Deferred income taxes - 356,075 356,075
Goodwill - - 10,871,879 10,871,879
Deposits 12,015 34,453 46,468
------ ------ ------
TOTAL OTHER ASSETS 12,015 390,528 11,274,422
------ ------- ----------
$ 649,283 $ 5,868,625 $ 17,389,787
========= =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank credit line payable $ 236,500 $ - $ 236,500
Current portion of long-term debt 50,000 - 50,000
Notes payable to officers - - 3,500,000 3,500,000
Income taxes payable - 1,447,567 1,447,567
Accounts payable 142,019 670,187 812,206
Accrued salaries - 382,777 382,777
Accrued interest - 167,671 167,671
Other current liabilities 82,658 188,349 120,000 391,007
------ ------- -------
TOTAL CURRENT LIABILITIES 511,177 2,856,551 6,987,728
------- --------- ---------
LONG-TERM DEBT, net of current portion 91,667 - 91,667
SHAREHOLDERS' EQUITY
Common stock 124,981 20,002 55,233 200,216
Additional paid-in capital 210,022 - 10,304,765 10,514,787
Retained earnings (288,564) 2,992,072 (3,108,119) (404,611)
-------- --------- --------
TOTAL SHAREHOLDERS' EQUITY 46,439 3,012,074 10,310,392
------ --------- ----------
$ 649,283 $ 5,868,625 $ 17,389,787
========= =========== ============
</TABLE>
2
<PAGE>
COMC, INC. AND SUBSIDIARY AND ICF COMMUNICATION SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
COMC, Inc. ICF
and Communication Pro Forma Pro Forma
Subsidiary Systems, Inc. Adjustments Totals
------------- ---------------- ------------- -----------
<S> <C> <C> <C> <C>
REVENUES $ 881,615 $ 8,701,527 $ 9,583,142
COST AND EXPENSES
Cost of revenues 486,905 6,333,346 6,820,251
Selling, general and administrative 457,689 2,156,092 2,613,781
Amortization of goodwill - - 271,797 271,797
Depreciation 19,461 78,667 98,128
------ ------ ------
TOTAL COST AND EXPENSES 964,055 8,568,105 9,803,957
------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (82,440) 133,422 (220,815)
OTHER INCOME (EXPENSE)
Interest income 219 5,516 5,735
Interest expense (13,813) (8) (13,821)
Gain (loss) on disposal of property and equipment - -
Other, net 9,381 9,381
----- -----
TOTAL OTHER INCOME (EXPENSE) (13,594) 14,889 1,295
------- ------ -----
INCOME (LOSS) BEFORE INCOME TAXES (96,034) 148,311 (219,520)
INCOME TAXES - 59,079 59,079
------- ------ ------
NET INCOME (LOSS) $ (96,034) $ 89,232 (271,797) $ (278,599)
========= ======== ======== ==========
EARNINGS (LOSS) PER SHARE $ (0.01)
------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20,021,613
==========
</TABLE>
3
<PAGE>
COMC, INC. AND SUBSIDIARY AND ICF COMMUNICATION SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
COMC, Inc. ICF
and Communication Pro Forma Pro Forma
Subsidiary Systems, Inc. Adjustments Totals
<S> <C> <C> <C> <C>
REVENUES $ 2,650,386 $ 15,278,930 $ 17,929,316
COST AND EXPENSES
Cost of revenues 1,579,152 11,501,639 13,080,791
Selling, general and administrative 1,167,095 2,747,135 3,914,230
Amortization of goodwill - - 543,594 543,594
Depreciation 12,772 138,498 151,270
------ ------- -------
TOTAL COST AND EXPENSES 2,759,019 14,387,272 17,689,885
--------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (108,633) 891,658 239,431
OTHER INCOME (EXPENSE)
Interest income 3,450 86,426 89,876
Interest expense (50,424) (123,855) (174,279)
Gain (loss) on disposal of property and equipment - (86,446) (86,446)
Other, net 9,350 (1,434) 7,916
----- ------ -----
TOTAL OTHER INCOME (EXPENSE) (37,624) (125,309) (162,933)
------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (146,257) 766,349 (76,498)
INCOME TAXES - 337,432 337,432
------- -------
NET INCOME (LOSS) $ (146,257) $ 428,917 543,594 $ (260,934)
========== ========= ==========
EARNINGS (LOSS) PER SHARE $ (0.01)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20,021,613
</TABLE>
4
<PAGE>
COMC, INC. AND SUBSIDIARY AND
ICF COMMUNICATION SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS
1. On August 17, 1998, COMC, Inc., an Illinois corporation, ("COMC")
consummated the acquisition of ICF Communication Systems, Inc. ("ICF").
Under the terms of the Agreement and Plan of Merger dated July 24, 1998 (as
amended on August 3, 1998, the "Agreement"), ICF merged with and into a
wholly-owned subsidiary of COMC that had been especially organized for
purposes of this transaction (the "Merger"). In connection with the Merger,
ICF's name will be changed to ICF Communication Solutions, Inc. In
consideration for the Merger, the two principals of ICF received an
aggregate payment valued at $14,000,000, as follows: $1,500,000 in cash at
the closing of the transaction; $1,500,000 in promissory notes due and
payable January 5, 1999, secured by all accounts receivable of ICF;
$1,000,000 in promissory notes due and payable January 4, 1999; $1,000,000
in promissory notes due and payable August 17, 1999; and 6,493,506 shares
of COMC's common stock valued at $9,000,000 or $1.386 per share. COMC has
agreed to use its best efforts to register the shares of common stock
issued in connection with the Merger.
In addition, under the Agreement, Messrs. Charles Lincoln and William
Burns, the principal shareholders and executive officers of ICF, were
elected to COMC'c Board of Directors and were appointed Chairman and
President of ICF Communication Solutions, Inc., pursuant to two-year
employment agreements with each of Mr. Lincoln and Burns, providing, among
other things, for annual salaries of $135,000 as well as annual bonuses at
the discretion of COMC's Board of Directors.
The transaction was accounted for as a purchase. The transaction resulted
in a Goodwill of $10,871,879, the excess of cost of $14,000,000 over the
net assets acquired of $3,128,121 (using the August 31, 1998 Unaudited
Balance Sheet)
2. In August 1998, the Company received $1,500,000 from private investors in
exchange for a private placement of common stock and warrants in the form
of Units at $15.00 per Unit. Each Unit consists of ten (10) shares of
Common Stock and two (2) warrants which give the right to purchase common
stock at $2.00 per share for a two year period. The proceeds of this
private placement were used to finance the consummation of the merger with
ICF. The Company engaged a placement agent to secure these funds and will
be compensated for services rendered in the form of (1) a sales commission
of $120,000 in cash and 30,000 shares of common stock, (2) a two year
warrant to purchase a number of shares equal to 10% of the underlying
shares of Common Stock sold as Units sold at a purchase price of $1.50 per
share.
5
