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): February 13, 1997
INTERNATIONAL FIBERCOM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona
----------------------------------------------
(State or other jurisdiction of incorporation)
1-9690 86-0271282
- ------------------------ ------------------------------------
(Commission File Number) (IRS Employer Identification Number)
3615 South 28th Street, Phoenix, Arizona 85040
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 941-1900
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
(a) Effective October 31, 1996, International FiberCom, Inc. (the
"Company") acquired Concepts in Communications, Inc., a Tennessee corporation,
("CIC") for $4,800,000 from its two shareholders. The Company paid $1,500,000 at
the closing, which occurred on February 13, 1997, and the balance is payable in
monthly installments of $1,100,000 in March through May 1997, which balance is
represented by a promissory note bearing interest at the rate of 5% per annum.
The Note is secured by all of the shares of capital stock of CIC which the
Company purchased in the transaction. The Company obtained the funds to complete
the acquisition from the proceeds of a private placement of $1,500,000 principal
amount of 8% of Convertible Subordinated Debentures ("Debentures") and
$4,400,000 of shares of Series B Convertible Preferred Stock ("Preferred Stock")
which were sold in an exempt transaction under Regulation D under the Securities
Act of 1933, as amended (the "Securities Act").
The Debentures are due and payable in full on February 10,
1998 and are convertible into Common Stock commencing October 11, 1997, at a
price of $1.25 per share. The Debentures are subordinated to all Senior
Indebtedness of the Company. The Company has agreed to file a registration
statement respecting the Common Stock issuable upon conversion of the Debentures
under the Securities Act on or before April 11, 1997.
The Preferred Stock will be issued in four tranches of
$1,100,000 each on or before the 15th day of March, April, May and June 1997, at
which points payments for the shares of Preferred Stock are due and payable. The
Preferred Stock is convertible into Common Stock at a price equal to the lower
of the Average Stock Price on the date of each monthly subscription or the
Discounted Average Stock Price on the date of conversion. The "Average Stock
Price" is the average of the daily closing bid prices of the Common Stock for
the five consecutive trading days immediately preceding the relevant date. The
"Discounted Average Stock Price" is (i) 70% of the average of the daily closing
bid prices of the Common Stock for the five consecutive trading days immediately
preceding the date of conversion into Common Stock if the average of the daily
bid prices is at or below $3.00 per share or (ii) 75% of the average of such
daily closing bid prices if the average is above $3.00 per share. For a one-year
period after the issuance of the Preferred Stock, the floor on the Conversion
Price of the Common Stock will be the lower of $.75 per share or 50% of the
Average Stock Price. There will be no floor on the conversion price if the
Company fails to achieve certain levels of gross profit on a quarterly basis.
Dividends will be payable on the Preferred Stock at the rate of 4% per annum,
payable in shares of Common Stock or cash, at the option of the Company, on a
quarterly basis. The Preferred Stock is redeemable on or after 60 days after
issuance, in whole or in part, at 150% of the purchase price of the Preferred
Stock plus all accrued but unpaid dividends.
The Company also committed to issue 220,000 Common Stock
Purchase Warrants for each of the four tranches upon the funding of each tranche
of the Preferred Stock. The exercise prices range from $2.25 to $3.00 for the
Warrants. The Company has committed to file registration statements on or before
April 11, 1997 for first tranche and within 30 days of demand for tranches two
through four, but in any event within 30 days after the Company receives the
final subscription installment for the fourth tranche.
(b) CIC is a Nashville, Tennessee based company which also has
operations in Memphis and Knoxville providing systems integration services,
including design, engineering, installation and maintenance of structured cabled
systems, network hardware and software, work station peripherals and
-2-
<PAGE>
intercommunication systems, primarily within commercial, industrial and
governmental facilities. These systems, comprised of optical fiber and
unshielded twisted pair copper cable, transmit voice, data and video signals.
Customers of CIC include Nissan Motor Co., Kimberly Clark Corp., Nike Corp.,
Columbia/HCA Healthcare Corp., Autozone, The Trane Co., Caterpillar Financial
Services, Ingram Micro, the State of Tennessee, Vanderbilt University Medical
Center and Thomas Hospital.
Item 7. Financial Statements and Exhibits
(a) The Financial Statements of Business Acquired. The financial
statements and schedules are included herewith commencing on page F-1.
(b) Pro forma Financial Information. See (a) above.
(c) Exhibits.
The Stock Purchase Agreement, dated as of October 31, 1996,
and as amended on January 17, 1997 by and among CIC, Cherokee Equity
Corporation, a Tennessee corporation, H. Ray Tucker and the Company filed with
the Commission as a part of the Company's Current Event Report on Form 8-K on
March 10, 1997, is incorporated herein by reference.
-3-
<PAGE>
SIGNATURES
Pursuant to 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 hereunto duly authorized.
INTERNATIONAL FIBERCOM, INC.
/s/ Joseph P. Kealy
-------------------
Joseph P. Kealy
President
Dated: April 25, 1997
-4-
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
To The Stockholders and Board of Directors of
International FiberCom, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of International
FiberCom, Inc. and Subsidiaries as of December 31, 1996, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 1996 and 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 audits 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 consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of International
FiberCom, Inc. and Subsidiaries as of December 31, 1996, and the results of its
operations, changes in stockholders' equity, and its cash flows for the years
ended December 31, 1996 and 1995, in conformity with generally accepted
accounting principles.
Semple & Cooper, P.L.C.
Certified Public Accountants
April 7, 1997
F-1
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1996
ASSETS
Current Assets:
Cash and cash equivalents (Note 1) $ 3,972
Accounts receivable
- trade, net of allowance for doubtful accounts
(Notes 1, 2, 3 and 7) 2,458,477
- unbilled 196,815
- other 27,769
Prepaid expenses 37,912
Costs and estimated earnings in
excess of billings on
uncompleted contracts (Notes 1 and 4) 249,546
----------
Total Current Assets 2,974,491
----------
Property and Equipment, net (Notes 1, 5, 7 and 8) 2,899,055
----------
Other Assets:
Accounts receivable - long-term (Notes 1 and 2) 88,478
Loans receivable from related parties
(Note 3) 562,025
Deferred costs 234,367
Mortgage closing costs, net (Note 1) 6,034
Investment in limited partnership (Note 6) 28,781
Refundable deposits 9,480
----------
929,165
----------
Total Assets $6,802,711
==========
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-2
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
December 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable
- current portion (Note 7) $ 1,014,986
- related party (Note 3) 6,000
Obligations under capital leases
- current portion (Note 8) 110,355
Accounts payable
- trade 1,965,837
- related parties (Note 3) 24,610
Accrued expenses 358,585
Billings in excess of costs and
estimated earnings on uncompleted
contracts (Note 1 and 4) 185,119
-----------
Total Current Liabilities 3,665,492
-----------
Long-Term Liabilities:
Notes payable - long-term (Note 7) 544,833
Obligations under capital leases
- long-term (Note 8) 384,108
-----------
928,941
-----------
Commitments and Contingencies (Note 9) --
Stockholders' Equity: (Note 10)
Series A 9% convertible preferred stock, no par value;
10,000,000 shares authorized, 1,972 shares issued
and outstanding 1,680,997
Common stock, no par value; 100,000,000 shares
authorized; 6,572,489 shares issued, 6,393,799
shares outstanding 8,555,176
Common stock warrants 99,082
Additional paid-in capital 462,073
Accumulated deficit (7,921,033)
-----------
2,876,295
Less: treasury stock, 178,690 shares, at cost (668,017)
-----------
Total Stockholders' Equity 2,208,278
-----------
Total Liabilities and Stockholders' Equity $ 6,802,711
===========
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-3
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996 and 1995
1996 1995
---- ----
Contract Revenues $ 12,161,263 $ 12,050,075
Cost of Contract Revenues (11,387,706) (11,801,757)
------------ ------------
Gross Profit 773,557 248,318
General and Administrative Expenses (2,261,694) (2,455,110)
Goodwill Impairment (Note 1) (2,677,490) --
Provision for Doubtful Accounts (Note 12) -- (387,952)
------------ ------------
Loss from Operations (4,165,627) (2,594,744)
------------ ------------
Other Income (Expense):
Interest income 49,086 26,229
Interest expense (141) (2,936)
Other income 16,089 102,768
Gain on sale of fixed assets 50,781 69,485
------------ ------------
115,815 195,546
------------ ------------
Net Loss before Income Taxes (4,049,812) (2,399,198)
Income Taxes -- 210,815
------------ ------------
Net Loss (4,049,812) (2,188,383)
Preferred Stock Dividends (Note 10) (171,303) --
------------ ------------
Net Loss Attributable to Common Stockholders $ (4,221,115) $ (2,188,383)
============ ============
Net Loss per Share $ (.74) $ (.50)
============ ============
Weighted Average Shares Outstanding 5,716,600 4,417,072
============ ============
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-4
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For The Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Common Stock Common Additional
Preferred ------------------------ Stock Accumulated Paid-in Treasury
Stock Shares Issued Amount Warrants Deficit Capital Stock
----- ------------- ------ -------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholders' Equity,
December 31, 1994 $ -- 4,417,072 $ 7,274,929 $ 99,082 $(1,511,535) $ 352,073 $ (668,017)
Issuance of 2,750 shares
of Series A 9% convertible
preferred, net of costs 2,296,382 -- -- -- -- -- --
Net Loss, 1995 -- -- -- -- (2,188,383) -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Stockholders' Equity,
December 31, 1995 2,296,382 4,417,072 7,274,929 99,082 (3,699,918) 352,073 (668,017)
Issuance of 550 shares
of Series A 9% convertible
preferred stock, net of
costs 493,559 -- -- -- -- -- --
Conversion of 1,328 shares of
Series A 9% convertible
preferred stock to
common stock (1,108,944) 1,821,257 1,108,944 -- -- -- --
Issuance of preferred stock
dividend -- 155,470 171,303 -- (171,303) -- --
Options issued for
services -- -- -- -- -- 110,000 --
Net Loss, 1996 -- -- -- -- (4,049,812) -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Stockholders' Equity,
December 31, 1996 $ 1,680,997 6,393,799 $ 8,555,176 $ 99,082 $(7,921,033) $ 462,073 $ (668,017)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-5
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers $ 12,190,485 $ 12,928,576
Cash paid to suppliers and employees (13,379,188) (12,618,292)
Interest paid (141) (249,488)
Interest received 35,340 17,075
Income tax refunds received 26,000 192,565
------------ ------------
Net cash provided (used) by operating
activities (1,127,504) 270,436
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (145,605) (215,228)
Loans to related parties -- (3,236)
Disbursements for deferred acquisition costs (124,367) --
Collection of loans to related parties 117,294 100,000
Proceeds from sale of fixed assets 104,205 138,976
Payments for investment in limited partnership (4,240) (4,240)
------------ ------------
Net cash provided (used) by investing
activities (52,713) 16,272
------------ ------------
Cash flows from financing activities:
Proceeds from notes payable -- 370,308
Repayment of notes payable (1,525,491) (685,307)
Repayment of loans from stockholder (54,000) (12,000)
Repayment of obligations under capital leases (112,128) (37,438)
Proceeds from sale of preferred stock 493,559 --
Collection of stock subscriptions receivable 2,373,500 --
------------ ------------
Net cash used by financing
activities 1,175,440 (364,437)
------------ ------------
Net decrease in cash and cash equivalents (4,777) (77,729)
Cash and cash equivalents at beginning of year 8,749 86,478
------------ ------------
Cash and cash equivalents at end of year $ 3,972 $ 8,749
============ ============
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-6
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For The Years Ended December 31, 1996 and 1995
1996 1995
---- ----
Reconciliation of Net Loss to Net Cash
Provided (Used) by Operating Activities:
Net Loss $(4,049,812) $(2,188,383)
----------- -----------
Adjustments to Reconcile Net Loss to Net
Cash Provided (Used) by Operating Activities:
Depreciation and amortization 794,974 665,142
Gain on sale of fixed assets (50,781) (69,485)
Interest added to principal of loans
receivable from related parties (13,746) (46,885)
Accrued stock offering expenses -- (77,118)
Impairment of goodwill 2,677,490 --
Changes in Assets and Liabilities:
Accounts receivable
- trade (20,829) 1,102,501
- unbilled (196,815) --
- other 17,931 (11,700)
Inventory -- 132,000
Income tax refund receivable 26,000 192,565
Prepaid expenses 9,698 (19,985)
Accrued interest receivable -- 37,731
Costs and estimated earnings
in excess of billings
on uncompleted contracts 201,957 (111,973)
Accounts receivable - long-term 67,087 60,859
Refundable deposits 3,970 3,325
Bank overdraft (57,751) (122,239)
Accounts payable
- trade 179,838 141,373
- related parties (27,511) (131)
Accrued expenses (588,145) 620,497
Deferred income taxes
- current -- (146,146)
- long-term -- (64,669)
Billings in excess of costs
and estimated earnings on
uncompleted contracts (101,059) 173,157
----------- -----------
2,922,308 2,458,819
----------- -----------
Net Cash Provided (Used) by Operating Activities $(1,127,504) $ 270,436
=========== ===========
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
F-7
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies, Nature of Operations and Use
of Estimates:
Nature of Corporation:
International FiberCom, Inc. is a Corporation which has been duly formed
and organized under the laws of the State of Arizona. The Corporation,
which was originally named Miller Investments, Inc., was approved by the
State of Arizona on December 29, 1972. Since inception, the Company has
changed its name as follows:
Date of Change Name
-------------- ----
October, 1978 Miller Education & Communications Corporation
October, 1981 Miller Technology & Communications Corporation
May, 1987 Hospitality Capital Corporation
September, 1991 International Environmental Holdings,Inc.
June, 1994 International FiberCom, Inc.
In September, 1990, the Corporation acquired one hundred percent (100%)
of the outstanding common stock of International Environmental Corp.
On December 31, 1994, the Company adopted a formal plan to sell
International Environmental Corp. to a stockholder of International
FiberCom, Inc. in exchange for 158,154 shares of International FiberCom,
Inc.'s common stock, valued at $514,000. The stock is shown as treasury
stock in the Company's equity section at December 31, 1996.
On August 25, 1994, the Company acquired one hundred percent (100%) of
the issued and outstanding common stock of Kleven Construction, Inc.
Kleven Construction, Inc. is a Phoenix-based company specializing in the
design, installation and maintenance of fiber-optic and other cable for
the telecommunications and cable television industries. Through the
acquisition of Kleven Construction, Inc., the Company changed its
primary business focus to servicing the telecommunications and cable
television industries throughout the southwestern United States and into
Mexico.
The length of the Company's contracts vary, but are typically less than
one (1) year. Therefore, assets and liabilities are classified as
current and non-current, based on a one (1) year operating cycle.
F-8
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Summary of Significant Accounting Policies, Nature of Operations and Use
of Estimates: (Continued)
Principles of Consolidation:
The consolidated financial statements at December 31, 1996 include the
accounts of the Company and its wholly-owned subsidiary, Kleven
Construction, Inc. All significant intercompany transactions, accounts
and balances have been eliminated.
Pervasiveness of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue and Cost Recognition:
Revenues from fixed-price and modified fixed-price construction
contracts are recognized on the percentage-of-completion method,
measured by the percentage of costs incurred to date to the estimated
total costs for each contract.
Contract costs include, amongst other things, direct labor, field labor,
subcontracting, direct materials, direct overhead, and interest costs
incurred as a result of contracting activity. Selling, general, and
administrative costs are charged to expense as incurred. Project losses
are provided for in their entirety in the period in which such losses
are determined, without reference to the percentage-of-completion. As
contracts can extend over one or more accounting periods, revisions in
costs and estimated earnings during the course of the work are reflected
during the accounting period in which the facts that require such
revisions become known.
Cash and Cash Equivalents:
Cash and cash equivalents are considered to be all highly liquid
investments purchased with an initial maturity of three (3) months or
less.
Accounts Receivable - Trade:
Accounts receivable - trade represent the amounts billed but uncollected
on completed construction contracts and construction contracts in
progress.
The Company follows the allowance method of recognizing uncollectible
accounts receivable. The allowance method recognizes bad debt expense
based on a review of the individual accounts outstanding, and the
Company's prior history of uncollectible accounts receivable. At
December 31, 1996, an allowance has been established for potentially
uncollectible accounts receivable in the amount of $69,153.
F-9
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Summary of Significant Accounting Policies, Nature of Operations and Use
of Estimates: (Continued)
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided
for on the straight-line and accelerated methods over the estimated
useful lives of the assets. The estimated useful lives are as follows:
construction equipment and vehicles, 7 years; building, 31 years, and
office furniture and equipment, 5 to 7 years. Maintenance and repairs
that neither materially add to the value of the property nor appreciably
prolong its life are charged to expense as incurred. Betterments or
renewals are capitalized when incurred. For the years ended December 31,
1996 and 1995, depreciation expense was $676,540 and $546,708,
respectively.
The Company's capital lease agreements are recorded at the lower of the
present value of the minimum lease payments, or the fair market value of
the assets. The assets are being depreciated over the lesser of their
estimated productive lives, or their lease term. Depreciation of the
assets under the capital leases is included in depreciation expense, as
noted above, for the years ended December 31, 1996 and 1995.
Goodwill:
During the year ended December 31, 1996, goodwill of $2,677,490, which
arose in connection with the acquisition of Kleven Construction, Inc.
was written off as it was deemed to have no continuing value due to
recurring operating losses. Amortization expense charged to operations
for each of the years ended December 31, 1996 and 1995, was $118,125.
Mortgage Closing Costs:
Mortgage closing costs are being amortized ratably over a 25 year
period. Amortization expense for the years ended December 31, 1996 and
1995 was approximately $300 per year. Accumulated amortization as of
December 31, 1996 is $1,702.
Income Taxes:
For financial and tax accounting purposes, the Company reports income
and expenses based on the percentage-of-completion method of accounting
for long-term construction contracts.
Deferred income taxes arise from timing differences resulting from
revenues and expenses reported for financial accounting and tax
reporting purposes in different periods. Deferred income taxes represent
the estimated tax liability on additional depreciation expense reported
based upon accelerated tax depreciation methods, and timing differences
in the utilization of net operating losses.
F-10
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Summary of Significant Accounting Policies: (Continued)
Earnings Per Share:
The computation of earnings per share is based on the weighted average
number of shares outstanding for each period. Fully diluted earnings per
share are not presented as they are anti-dilutive.
New Accounting Pronouncements:
Statements of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123) establishes a fair value method
of accounting for stock-based compensation plans and for transactions in
which an entity acquires goods or services from non-employees in
exchange for equity instruments. The Company adopted this accounting
standard on January 1, 1996. SFAS 123 encourages, but does not require
companies to record compensation cost for stock-based employee
compensation. The Company has chosen to continue to account for
stock-based compensation utilizing the intrinsic value method prescribed
in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly, compensation cost for stock options
is measured as the excess, if any, of the fair market price of the
Company's stock at the date of grant over the amount an employee must
pay to acquire the stock.
2. Accounts Receivable - Trade:
At December 31, 1996, accounts receivable - trade consist of the
following:
Contracts in progress $ 731,818
Contracts in progress - retention 115,621
Completed contracts 1,708,517
Completed contracts - retention 60,152
----------
2,616,108
Less: allowance for doubtful accounts (69,153)
----------
2,546,955
Less: long-term receivable (88,478)
----------
$2,458,477
==========
The long-term receivable arose from a litigation settlement on a
contract dispute, and is being paid on installments through October,
1999.
F-11
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Related Party Transactions:
Accounts Receivable - Trade:
As of December 31, 1996, accounts receivable - trade includes 137,986
due from a related entity.
Loans Receivable from Related Parties:
At December 31, 1996, loans receivable from related parties consist of
the following:
6.5% loan receivable from a corporate stockholder,
due in full December 31, 1997; secured by the
Company's common stock. $ 75,140
6.5% loan receivable from a corporate stockholder,
due in full December 31, 1997; secured by the
Company's common stock. 77,254
7.0% loan receivable from a corporate stockholder,
with sixty (60) monthly payments of $3,198, including
principal and interest, due in full April 1, 2000;
unsecured. (See Note 9) 192,126
7.0% loan receivable from a corporate stockholder,
with sixty (60) monthly payments of $791, including
principal and interest, due in full April 1, 2000;
unsecured. 67,942
7.0% loan receivable from a corporate stockholder,
with sixty (60) monthly payments of $2,577, including
principal and interest, due in full April 1, 2000;
unsecured. ( See Note 9) 149,563
----------
$ 562,025
==========
Based upon the opinion of the management of the company, the above
receivables have been classified as long-term in the accompanying
financial statements.
Accounts Payable - Related Parties:
Accounts payable - related parties consist of amounts owed to an officer
of the Company and to a related entity.
Notes Payable - Related Party:
At December 31, 1996, notes payable - related party consists of a $6,000
non-interest bearing note payable to a corporate stockholder, due on
demand; unsecured.
F-12
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Contracts in Progress:
At December 31, 1996, costs and estimated earnings in excess of billings
and billings in excess of costs and estimated earnings on uncompleted
contracts consist of the following:
Costs incurred on uncompleted contracts $1,536,120
Profit earned to date 299,123
----------
1,835,243
Less: billings to date (1,770,816)
----------
$ 64,427
==========
Included in the accompanying balance sheet under the following captions:
Costs and estimated earnings in excess
of billings on uncompleted contracts $ 249,546
Billings in excess of costs and estimated
earnings on uncompleted contracts (185,119)
----------
$ 64,427
==========
5. Property and Equipment:
At December 31, 1996, property and equipment consists of the following:
Building and land $ 373,201
Furniture and fixtures 192,423
Construction vehicles 296,083
Construction equipment 4,315,676
Leasehold improvements 54,812
----------
5,232,195
Less: accumulated depreciation (2,333,140)
----------
$2,899,055
==========
6. Investment in Limited Partnership:
The Company has a 12.475% ownership interest as a limited partner in the
Rio Verde Ranch Partnership. The partnership's sole activity is the
acquisition and sale of a parcel of raw land which is presently listed
for sale. Prior to the sale of the land, the Company will have future
annual funding requirements of approximately $4,000 per year due on
March 1 of each year through 1998. At December 31, 1996, the partnership
investment at cost, which management believes approximates market, was
$28,781.
F-13
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Notes Payable:
At December 31, 1996, notes payable consist of the following:
Note payable to Wells Fargo Bank on a $1,500,000 revolving
line of credit, interest only payable monthly at Wells
Fargo Bank's base rate plus 3%, due March 1, 1997;
collateralized by trade accounts receivable, property and
equipment, and personal guarantees by the Company's
officers. The effective interest rate was 11.75% at
December 31, 1996. $ 578,000
Mortgage note payable to Bank of America, interest at
prime plus 2.5%, payable in variable monthly
installments, including principal and interest, due
July 15, 2016; collateralized by a Deed of Trust. The
effective interest rate was 11% at December 31, 1996. 270,975
7.4% note payable to Wells Fargo Bank in monthly
installments of $16,513, including principal and
interest, due in full on March 1, 1997;
collateralized by equipment. 66,838
7.38% note payable to Wells Fargo Bank in monthly
installments of $1,165, including principal and
interest, due in full on February 1, 1997;
collateralized by equipment. 3,725
7.94% note payable to Wells Fargo Bank in monthly
installments of $4,435, including principal and interest,
due in full on April 15, 1997; collateralized by
equipment. 17,385
8.44% note payable to Wells Fargo Bank in monthly
installments of $1,491, including principal and interest,
due in full on May 31, 1997; collateralized by
equipment. 8,877
9.23% note payable to Wells Fargo Bank in monthly
installments of $4,816, including principal and interest,
due in full on August 1, 1997; collateralized by equipment. 37,402
9.23% note payable to Wells Fargo Bank in monthly
installments of $1,471, including principal and interest,
due in full on May 1, 1998; collateralized by equipment. 14,200
10.95% note payable to CIT in monthly installments of
$2,512, including principal and interest, due in full
on February 5, 1997; collateralized by equipment. 3,418
Note payable to the City of Phoenix in monthly principal
installments of $2,334 plus interest at 6.9%, until paid
in full; collateralized by land and building. 10,081
F-14
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Notes Payable: (Continued)
8.5% note payable to KDC Financial in monthly
installments of $2,911, including principal and interest,
due in full on May 1, 1998; collateralized by equipment. 46,464
7.9% note payable to Case Credit Corp. in monthly
installments of $2,684, including principal and interest,
due in full on May 1, 1998; collateralized by equipment and
a personal guarantee from an officer of the Company. 22,531
10% note payable to Clark Credit Corp. in monthly
installments of $10,433, including principal and interest,
due in full on September 22, 1998; collateralized by equipment
and a personal guarantee from an officer of the Company. 208,851
14.5% note payable to Clark Credit Corp. in monthly
installments of $252, including principal and interest,
due in full on October 22, 1998; collateralized by equipment
and a personal guarantee from an officer of the Company. 4,873
10.5% note payable to Case Credit Corp. in monthly
installments of $6,093, including principal and interest,
due in full on October 16, 1999; collateralized by
equipment. 179,095
8.5% note payable to Atlas Copco in monthly
installments of $1,823, including principal and interest,
due in full on December 1, 1999; collateralized by
equipment. 57,750
7.5% note payable to Associates Commercial Corp. in
monthly installments of $1,934, including principal
and interest, due in full on April 15, 1998;
collateralized by equipment. 29,354
----------
1,559,819
Less: current portion of notes payable (1,014,986)
----------
$ 544,833
==========
F-15
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Notes Payable: (Continued)
A schedule of future minimum principal payments due on notes payable
outstanding at December 31, 1996, is as follows:
Year Ending
December 31, Amount
------------ ------
1997 $1,014,986
1998 208,765
1999 80,864
2000 5,826
2001 6,500
Subsequent 242,878
----------
$1,559,819
==========
8. Obligations Under Capital Leases:
At December 31, 1996, the Company was the lessee of construction and
office equipment, with an original cost of $741,604, under capital lease
agreements expiring through December, 2000.
Minimum future lease payments under the capital leases as of December
31, 1996, for each of the next four (4) years, are as follows:
Year Ending
December 31, Amount
------------ ------
1997 $ 151,579
1998 123,890
1999 123,890
2000 203,160
----------
Total minimum lease payments 602,519
Less: amount representing interest (108,056)
----------
Present value of net minimum lease payments 494,463
Less: current maturities of capital lease
obligations (110,355)
----------
$ 384,108
==========
F-16
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and Contingencies:
Operating Leases:
The Company leases vehicles and office equipment under operating lease
agreements, with terms of two (2) to four (4) years. Future minimum
lease payments under long-term operating lease agreements at December
31, 1996, are as follows:
Year Ended
December 31, Amount
------------ ------
1997 $ 132,665
1998 34,474
----------
$ 167,139
==========
For the years ended December 31, 1996 and 1995, total rent expense
approximated $246,186 and $226,972, respectively.
Employment Contracts:
The Company has entered into employment contracts with three (3)
officers through August, 1999, which provide for a minimum annual salary
and automobile allowance. In addition, one (1) of the agreements
contains incentives based on the Company's attainment of specified
levels of sales and earnings. As of December 31, 1996, the total
commitment was $1,074,150.
Litigation:
The Company has filed suit against two stockholders and former officers
of the Company to collect on unpaid promissory notes owed to the
Company. The two stockholders and former officers of the Company have
filed a countersuit against the Company alleging certain counter-claims.
In the opinion of legal counsel, no estimate can be made as to the time
or the amount of the ultimate recovery. In addition, the Company
believes the countersuit is without merit and intends to vigorously
defend its position.
The Company is a defendant in a lawsuit filed by a utility company
alleging that the Company caused damage to its property. Outside counsel
has advised the Company that a favorable outcome is unlikely.
Accordingly, a provision for a loss in the amount of $30,000 has been
charged to operations in the accompanying financial statements for the
year ending December 31, 1996.
10. Stockholders' Equity:
Preferred Stock:
As of December 31, 1996, the Company has 1,972 shares of Series A 9%
convertible preferred stock issued and outstanding. The preferred shares
are convertible into common shares at a price equal to a thirty percent
(30%) discount from the lower of the average closing bid price of the
common stock for the three (3) consecutive trading days prior to (i) the
date of subscription of the preferred stock or (ii) the date of the
conversion of the preferred stock.
During the year ended December 31, 1996, 1,328 shares of the Series A 9%
convertible preferred stock was converted into 1,821,257 shares of
common stock. In addition, the Company granted a nine percent (9%)
dividend on the preferred stock on a quarterly basis. The dividend was
paid through the issuance of a cumulative total of 155,470 shares of
common stock.
F-17
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Stockholders' Equity: (Continued)
Stock Options, Warrants and Restricted Stock Plans:
On January 7, 1997, the Board of Directors approved the 1997
International FiberCom, Inc. Stock Option Plan, which is subject to
shareholder approval. The Plan authorizes the Company to grant incentive
stock options and non-qualified stock options to key employees of the
Company. In addition, the Company has adopted the 1997 Restricted Stock
Plan. This Plan authorizes the granting of restricted shares of common
stock to key employees, consultants, researchers, and members of the
Advisory Board. Under the above Plans, 1,200,000 shares of common stock
are reserved for issuance. The Company issued 500,000 stock options and
90,000 non-qualified stock options under the 1997 International
FiberCom, Inc. Stock Option Plan. The options were granted in
recognition of services provided in 1996, and were given retroactive
application in the accompanying financial statements. The options are
exercisable at $.9375 per share and expire in May, 2002. None of the
options have been exercised.
During the year ended December 31, 1994, the Company adopted the 1994
Incentive Stock Option Plan and the 1994 Restricted Stock Plan. The
Plans authorized the granting of restricted shares of common stock and
common stock options to key employees, consultants, researchers, and
members of the Advisory Board. Under the above Plans, 441,707 shares of
common stock were reserved for issuance. During the year ended December
31, 1996, the Company issued 363,000 incentive stock options exercisable
at $1.125 per share, expiring in May, 2006. None of the options have
been exercised. In addition, during the year ended December 31, 1994,
the Company had previously issued 21,760 shares of restricted common
stock under the Plans.
During the year ended December 31, 1996, the Company issued 100,000
non-qualified stock options exercisable at $1.125 per share, expiring in
2006. None of the options have been exercised.
All stock options issued to employees have an exercise price not less
than the fair market value of the Company's common stock on the date of
grant. In accordance with accounting for such options utilizing the
intrinsic value method, there is no related compensation expense
recorded in the Company's financial statements for the years ended
December 31, 1996 and 1995. Had compensation cost for stock-based
compensation been determined based on the fair value of the options at
the grant dates consistent with the method of SFAS 123, the Company's
net income and earnings per share for the years ended December 31, 1996
and 1995, would have been reduced to the proforma amounts presented
below:
F-18
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Stockholders' Equity: (Continued)
Stock Options, Warrants and Restricted Stock Plans: (Continued)
1996 1995
---- ----
Net loss as reported $(4,221,115) $(2,188,393)
Proforma (4,282,034) (2,192,671)
Net loss per share as reported $ (.74) $ (.50)
Proforma (.75) (.50)
The fair value of option grants is estimated as of the date of grant
utilizing the Black-Scholes option-pricing model with the following
weighted average assumptions for grants in 1996 and 1995, expected life
of options of 1-3 years, expected volatility of 70%, risk-free interest
rates of 8.0%, and a 0% dividend yield. The weighted average fair value
at date of grant for options granted during 1996 and 1995 approximated
$.06 and $.11, respectively.
On November 5, 1996, the Company entered into a twenty-five (25) month
consulting agreement to assist the Company with investor communications
and relations. In consideration of the Agreement, the Company granted
its consultant a four (4) year option to purchase 1,900,000 shares of
the Company's common stock, exercisable at $1.12 per share, which
equalled the market price at the grant date. The Company has determined
that the value of the services to be received under this agreement is
$105,000, which is being amortized over the term of the agreement. The
options become exercisable on January 1, 1998.
In June, 1996, the Company entered into an agreement with a securities
broker-dealer to provide its services to seek potential acquisitions. In
consideration for the agreement, the Company granted the broker-dealer
warrants to purchase 300,000 shares of the Company's common stock for a
period of three (3) years. There are 150,000 warrants exercisable at two
dollars ($2) per share, and 150,000 warrants exercisable at four dollars
($4) per share, with a weighted average exercise price of three dollars
($3) per share. The Company has determined that the value of the
services to be received under this agreement is $5,000, which is being
amortized over the term of the agreement. As of December 31, 1996, none
of the warrants had been exercised.
11. Income Taxes and Deferred Income Taxes:
There is no provision for income taxes payable for tax reporting
purposes due to net operating losses for the years ended December 31,
1996 and 1995.
F-19
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Income Taxes and Deferred Income Taxes: (Continued)
As of December 31, 1996, the components of deferred income taxes, are as
follows:
Long-Term
Depreciation $ (280,000)
Benefit of net operating loss
carryforward 1,500,000
-----------
1,220,000
Less: valuation allowance (1,220,000)
-----------
Total Deferred Taxes $ -
===========
The Company has established a valuation allowance equal to the full
amount of the deferred tax asset, as a result of its recent operating
losses.
At December 31, 1996, the Company had federal and state net operating
loss carryforwards in the approximate amount of $4,300,000 available to
offset future federal and state taxable income primarily through
December 31, 2011.
12. Provision for Doubtful Accounts:
Included in the provision for doubtful accounts expense in the amount of
$387,952 for the year ended December 31, 1995, is approximately $350,000
which the Company incurred for development costs and progress billings
on various projects with the Government of Romania, Ministries of
Transport and Communications, and the Credit Bank of Romania. It is
management's belief that this relationship, which is primarily for
fiber-optic engineering and installation with Romania, will eventually
be realized. However, the receivable has been written off as of December
31, 1995 due to the lack of financial performance over the last year on
the part of the Government of Romania.
13. Major Customers:
For the year ended December 31, 1996, the Company had three (3) major
customers representing 45%, 12%, and 10% of revenues, respectively. At
December 31, 1996, the amount due from the three (3) customers included
in accounts receivable was $1,186,713.
For the year ended December 31, 1995, the Company had five (5) major
customers representing 24%, 15%, 13%, 12%, and 11% of revenues,
respectively.
F-20
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Statements of Cash Flows:
Non-Cash Investing and Financing Activities:
During the year ended December 31, 1996, the Company recognized
investing and financing activities that affected its assets,
liabilities, and stockholders' equity, but did not result in cash
receipts or payments.
These non-cash activities are as follows:
Financed the purchase of construction equipment in the amount of
$288,138, through the issuance of notes payable.
Goodwill was written off in the amount of $2,677,490.
Converted 1,328 shares of preferred stock in the amount of
$1,108,744 into 1,821,257 shares of common stock.
Issued 155,470 shares of common stock valued at $171,303, as a
preferred stock dividend.
Accrued interest on loans receivable from related parties, in the
amount of $13,746, was added to the principal balance.
Issued common stock options and warrants for services rendered in
the cumulative amount of $110,000 (See Note 10).
During the year ended December 31, 1995, the Company recognized
investing and financing activities that affected its assets and
liabilities, but did not result in cash receipts or payments. These
non-cash activities are as follows:
Financed the purchase of construction and office equipment in the
amount of $1,080,627, through the issuance of notes payable and
capital leases.
Issued 2,750 shares of preferred stock for a $2,373,500
subscription receivable, and accrued costs in relation to the
offering of $77,118.
Accrued interest on loans receivable from related parties, in the
amount of $46,855, was added to the principal balance.
F-21
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Subsequent Events:
Acquisition:
Effective January 1, 1997, the Company acquired one hundred percent
(100%) of the common stock of Concepts in Communications, Incorporated
for $4,800,000. The Company obtained the funds to complete the
acquisition from the proceeds of a Private Placement of $1,500,000 of
eight percent (8%) convertible subordinated debentures, and $4,400,000
from shares of Series B 9% convertible preferred stock (See Note 16).
F-22
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Unaudited Proforma Condensed Consolidated Financial Statements:
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by International FiberCom, Inc. of Concepts In
Communications, Incorporated pursuant to the Purchase Agreement between the
parties, and are based on the estimates and assumptions set forth herein and in
the notes to such statements. This pro forma information has been prepared
utilizing the historical financial statements and notes thereto, which are
incorporated by reference herein. The pro forma financial data does not purport
to be indicative of the results which actually would have been obtained had the
purchase been effected on the dates indicated or of the results which may be
obtained in the future.
The pro forma financial information is based on the purchase method of
accounting for the acquisition of Concepts In Communications, Incorporated. The
pro forma entries are described in the accompanying footnotes to the unaudited
pro forma condensed consolidated financial statements. The pro forma unaudited
condensed consolidated statements of operations assume the acquisition took
place on the first day of the period presented, while the unaudited proforma
condensed combined balance sheet assumes the acquisition took place on the
balance sheet date.
Acquisition:
In January, 1997, International FiberCom, Inc., agreed to acquire Concepts in
Communications, Incorporated, a privately-held Nashville, Tennessee based
company which also has operations in Memphis and Knoxville. Concepts in
Communications, Incorporated provides systems integration services including
design, engineering, installation and maintenance of structured cabled systems,
network hardware and software, work station peripherals and intercommunication
systems, primarily within commercial, industrial and governmental facilities.
Under the terms of the agreement, the Company acquired all of the issued and
outstanding common stock of Concepts In Communications, Incorporated for
$4,800,000.
F-23
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
December 31, 1996
Proforma Financial Information:
The following represents a proforma condensed consolidated balance sheet as of
December 31, 1996, assuming the Company's acquisition of Concepts In
Communications, Incorporated was consummated as of that date.
<TABLE>
<CAPTION>
ASSETS
International
FiberCom, Concepts In Proforma
Inc. and Communications, Proforma Consolidated
Subsidiary Incorporated Adjustments Amounts
---------- ------------ ----------- -------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 3,972 $ 56,608 $ 60,580
Accounts receivable 2,683,061 2,644,209 5,327,270
Inventory - 462,973 462,973
Other current assets 37,912 61,830 99,742
Costs and estimated earnings
in excess of uncompleted
contracts 249,546 1,392,886 1,642,432
----------- ----------- -----------
Total Current Assets 2,974,491 4,618,506 7,592,997
Property and Equipment, Net 2,899,055 473,767 3,372,822
Loans Receivable from Related Parties 562,025 70,000 632,025
Other Assets, Net 367,140 39,921 1,906,345 (1) 1,910,245
(403,161) (2)
----------- ----------- -----------
Total Assets $ 6,802,711 $ 5,202,194 $13,508,089
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Long-term debt - current portion $ 1,131,341 $ 629,921 $ 1,761,262
Accounts payable 1,990,447 741,583 2,732,030
Accrued expenses 358,585 377,822 736,407
Income taxes payable
- current - 57,321 57,321
- deferred - 403,161 (403,161) (2) -
Billings in excess of costs
and estimated earnings on
uncompleted contracts 185,119 71,805 256,924
----------- ----------- -----------
Total Current Liabilities 3,665,492 2,281,613 5,543,944
Long-Term Liabilities:
Long-term debt 928,941 - 1,500,000 (1) 2,428,941
Deferred compensation - 26,926 26,926
Stockholders' Equity 2,208,278 2,893,655 3,300,000 (1) 5,508,278
(2,893,655) (1)
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 6,802,711 $ 5,202,194 $13,508,089
=========== =========== ===========
</TABLE>
(1) Record the issuance of convertible subordinated debentures and preferred
stock for the acquisition of Concepts In Communications, Incorporated.
(2) Reclassify deferred income taxes payable.
F-24
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For The Year Ended December 31, 1996
Proforma Consolidated Financial Statements:
The following represents proforma condensed statements of operations for the
year ended December 31, 1996, assuming the acquisition of Concepts In
Communications, Incorporated was consummated as of January 1, 1996.
<TABLE>
<CAPTION>
International
FiberCom, Concepts In Proforma
Inc. and Communications, Proforma Consolidated
Subsidiary Incorporated Adjustments Amounts
---------- ------------ ----------- -------
<S> <C> <C> <C> <C>
Contract Revenues $12,161,263 $14,426,376 $26,587,639
Cost of Contract Revenues (11,387,706) (10,610,612) (21,998,318)
----------- ----------- -----------
Gross Profit 773,557 3,815,764 4,589,321
General and Administrative Expenses (2,261,694) (2,931,202) (108,503) (1) (5,301,399)
Goodwill Impairment (2,677,490) - (2,677,490)
----------- ----------- -----------
Income (Loss) from Operations (4,165,627) 884,562 (3,389,568)
Other Income (Expense): 115,815 (57,400) (120,000) (3) (61,585)
----------- ----------- -----------
Net Income (Loss) before Benefit
for Income Taxes (4,049,812) 827,162 (3,451,153)
Benefit (Provision) for Income Taxes - (324,066) 324,066 (2) -
----------- ----------- -----------
Net Income (Loss) (4,049,812) 503,096 (3,451,153)
Preferred Stock Dividends (171,303) - (132,000) (3) (303,303)
----------- ----------- -----------
Net Income (Loss) Attributable to
Common Stockholders $(4,221,115) $ 503,096 $(3,754,456)
=========== =========== ===========
Earnings (Loss) per Share $ (0.74) $ (0.66)
=========== ===========
Weighted Average Number of Shares
Outstanding 5,716,600 5,716,600
=========== ===========
</TABLE>
(1) To amortize goodwill in connection with the purchase of Concepts In
Communications, Incorporated on a straight-line basis over fifteen years.
(2) To revise the provision for income taxes based on the foregoing proforma
results of operations.
(3) To record interest on the convertible subordinated debentures and the
dividend on the preferred stock issued to fund the acquisition.
F-25
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For The Year Ended December 31, 1995
Proforma Consolidated Financial Statements:
The following represents proforma condensed statements of operations for the
year ended December 31, 1995, assuming the acquisition of Concepts In
Communications, was consummated as of January 1, 1995.
<TABLE>
<CAPTION>
International
FiberCom, Concepts In Proforma
Inc. and Communications, Proforma Consolidated
Subsidiary Incorporated Adjustments Amounts
---------- ------------ ----------- -------
<S> <C> <C> <C> <C>
Contract Revenues $12,050,075 $11,623,216 $23,673,291
Cost of Contract Revenues (11,801,757) (7,953,455) (19,755,212)
----------- ----------- -----------
Gross Profit 248,318 3,669,761 3,918,079
General and Administrative Expenses (2,843,062) (2,666,328) (108,503) (1) (5,617,893)
----------- ----------- -----------
Income (Loss) from Operations (2,594,744) 1,003,433 (1,699,814)
Other Income (Expense): 195,546 (50,597) (120,000) (3) 24,949
----------- ----------- -----------
Net Income (Loss) before Benefit
for Income Taxes (2,399,198) 952,836 (1,674,865)
Benefit (Provision) for Income Taxes 210,815 (359,024) 359,024 (2) 210,815
----------- ----------- -----------
Net Income (Loss) (2,188,383) 593,812 (1,464,050)
Preferred Stock Dividends - - (132,000) (3) (132,000)
----------- ----------- -----------
Net Income (Loss) Attributable to
Common Stockholders $(2,188,383) $ 593,812 $(1,596,050)
=========== =========== ===========
Earnings (Loss) per Share $ (0.50) $ (0.36)
=========== ===========
Weighted Average Number of Shares
Outstanding 4,417,072 4,417,072
=========== ===========
</TABLE>
(1) To amortize goodwill in connection with the purchase of Concepts In
Communications, Incorporated on a straight-line basis over fifteen years.
(2) To revise the provision for income taxes based on the foregoing proforma
results of operations.
(3) To record interest on the convertible subordinated debentures and the
dividend on the preferred stock issued to fund the acquisition.
F-26
