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Previous: ELECTRONICS COMMUNICATIONS CORP, 10KSB/A, 1996-07-11 |
Next: ELECTRONICS COMMUNICATIONS CORP, 10QSB/A, 1996-07-11 |
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: June 28, 1996
(Date of earliest event reported)
ELECTRONICS COMMUNICATIONS CORP.
Exact name of registrant as specified in its charter
Delaware 1-13764 11-2649088
State of other jurisdiction of Commission File No. I.R.S. Employer
incorporation or organization ID No.
10 Plog Road, Fairfield, New Jersey 07004
(Address of principal executive offices)
Registrant's telephone number, including area code: (201) 808-8862
4 Madison Road, Fairfield, New Jersey 07004
(Former name or former address if changed since last report)
<PAGE>
Item 2. Acquisition and Deposition of Assets
On June 28, 1996, the Company completed the acquisition of 51% of the
issued and outstanding stock of Threshold Communications, Inc. ("TCI") for an
aggregate purchase price of $1,114,000. Previously, the Company loaned TCI an
aggregate of $725,000, which in addition to 194,500 shares of the Company's
Common Stock (at the time was $2.00 per share) represented the consideration
paid by the Company. TCI is a recently formed corporation engaged in the radio
paging business. TCI has recently acquired a paging subscriber base, associated
paging hardware and a paging carrier agreement with Skytel, a company that
provides nationwide paging, voice messaging and related messaging services to
subscribers and others. In addition, TCI owns a 900 megahertz FCC paging license
in the Paging Service Area and holds a long-term lease for a paging transmission
site.
On March 22, 1996 TCI acquired substantially all of the assets and assumed
certain liabilities of General Communications and Electronics, Inc. ("GCE"). As
part of the transaction with GCE, TCI, became a paging reseller with a
subscriber base of approximately 9,000 persons. TCI offers paging service
primarily through various paging carriers in the New York metropolitan area. TCI
offers national paging service through a sales and distribution agreement with
Skytel. Under this agreement, TCI pursues regional and national accounts through
its present dealer network in the Paging Service Area. TCI also has the
necessary infrastructure to operate a paging operation, including but not
limited to a full service technical shop and repair facility, engineering
capability, marketing and sales force, billing and collection systems and
ancillary product support capability for paging related products.
Item 7. Financial Statement and Exhibits
(a) Financial Statement of Business Acquired
Not Applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Consolidated Balance Sheet as of December 31, 1996...F-1 - F-2
Pro Forma Consolidated Statement of Operations for Year Ended
December 31, 1995 ...........................................F-3
Notes to Unaudited Pro Forma Consolidated Financial Statements
as of December 31, 1995 .....................................F-4 - F-6
Pro Forma Consolidated Balance Sheet as of March 31, 1996......F-7 - F-8
<PAGE>
Pro Forma Consolidated Statement of Operations for Quarter
Ended March 31, 1996.........................................F-9
Note to Unaudited Pro Forma Consolidated Financial Statements
as of March 31, 1996.........................................F-10 - F-11
The December 31, 1995 statements include the historical balance sheets of
the Company, Threshold Communications Inc. ("TCI"), and General Tower of America
Inc. ("GTA"). On March 22, 1996, TCI acquired substantially all of the assets of
General Communications and Electronics Inc. ("GCE") for $1,420,529 with the
assumption of liabilities in the amount of $469,746. Certain assets and
liabilities not included in the sale remained with GCE. The following GCE
balance sheet is a pro forma balance sheet with represents the assets and
liabilities acquired by TCI. GCE's statement of operations presented herein
represents historical data. For the purpose of Unaudited Pro Forma Consolidated
Financial Data, the purchase of GCE's assets was treated as a purchase of a
wholly owned subsidiary. On March 22, 1996, TCI purchased 56 2/3% of the common
stock of GTA for $1.
On June 28, 1996, the Company acquired 51% of the common stock of TCI for
$1,114,000.
The March 31, 1996 statements include the historical consolidated balance
sheets of the Company and TCI. GCE's historical balance sheet was omitted
because of the sale of its assets to TCI on March 22, 1996. GTA's historical
balance sheet and statement of operations is included by its consolidation with
TCI. GCE's statement of operations is representative of historical data.
The statements below reflect the acquisitions in a two part process. The
first part reflects TCI's acquisition of certain assets of GCE and creates a pro
forma consolidated TCI statement. The second part step consolidates the pro
forma TCI statement with the Company to arrive at the Unaudited Pro Forma
Consolidated Financial Data.
The pro forma assumes that all of the acquisitions occurred at the
beginning of the period presented. The consolidation of TCI, GCE, GTA and the
Company have been prepared using the purchase method of accounting, whereby the
total cost of the acquisition was allocated to the tangible and intangible
assets acquired and liabilities assumed based upon their respective fair values
as of the date of the actual transaction. For the purpose of the Unaudited Pro
Forma Consolidated Financial Data, such allocations were made based upon
preliminary valuations and other studies. The final purchase price allocation in
the Company's 1996 audited consolidated financial statements may have a material
impact on the accompanying Unaudited Pro Forma Consolidated Financial Data. The
Unaudited Pro Forma Consolidated Financial Data does not purport to represent or
be indicative of what the results of operation or financial position of the
Company would actually have been if all the acquisitions and related
transactions had in fact occurred on such dates or to project the results of
operations or financial position of the Company for any future data or period.
The Unaudited Pro Forma Consolidated Financial Data
<PAGE>
should be read together with the consolidated financial statements of the
Company and related notes included elsewhere in this prospectus.
The following unaudited pro forma financial statements for the Company have
been prepared based upon certain pro forma adjustments to the historical
financial statements of the Company as of December 31, 1995 and March 31, 1996
set forth elsewhere.
<PAGE>
ELECTRONICS COMMUNICATION CORP.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL HISTORICAL PROFORMA NOTE
GCE TCI GTA ADJUSTMENTS
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
DECEMBER 31, 1995
CURRENT ASSETS:
CASH $2,833 $329 $6,001
ACCOUNTS RECEIVABLE 185,133 73,128
INVESTMENT IN TCI
LOANS RECEIVABLE 104,560
ADVANCE TCI
AUCTION DEPOSIT - FCC
INVENTORY 54,636 20,168
PREPAID EXPENSES 17,815
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 260,416 104,889 99,297
FIXED ASSETS:
PROPERTY & EQUIPMENT 502,100 150,000 11,486 (100,000) (7)
LESS: ACCUMULATED DEPRECIATION (5,355) (2,297) 3,572 (8)
--------------------------------------------------------------------------------
TOTAL FIXED ASSETS-CARRYING VALUE 502,100 144,645 9,189 (96,428)
OTHER ASSETS:
DEFERRED ACQUISITION COSTS 150,000
PAGING CARRIER AGREEMENT 375,217 150,097 (100,141) (7)
DEFERRED FCC COST
INTERCOMPANY-GTA 198,426 (198,426) (9)
SECURITY DEPOSITS AND OTHER ASSETS 22,542
--------------------------------------------------------------------------------
TOTAL OTHER ASSETS 596,185 300,097 (298,567)
--------------------------------------------------------------------------------
TOTAL ASSETS $1,358,701 $549,631 $108,486 ($394,995)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
PRO FORMA HISTORICAL PROFORMA NOTE PRO FORMA
CONSOLIDATED ELCC ADJUSTMENTS CONSOLIDATED
TCI FINANCIAL DATA
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
DECEMBER 31, 1995
CURRENT ASSETS:
CASH $9,163 $1,118,000 ($175,000) (11) $952,163
ACCOUNTS RECEIVABLE 258,261 2,204,789 2,463,050
INVESTMENT IN TCI (14)
LOANS RECEIVABLE 104,560 104,560
ADVANCE TCI 550,000 ($550,000) (11),(12)
AUCTION DEPOSIT - FCC 1,000,000 1,000,000
INVENTORY 74,804 476,796 551,600
PREPAID EXPENSES 17,815 78,849 96,664
-----------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 464,602 5,428,434 (725,000) 5,168,036
FIXED ASSETS:
PROPERTY & EQUIPMENT 563,586 335,858 $250,000 (15) 1,149,444
LESS: ACCUMULATED DEPRECIATION (4,080) (75,544) ($6,250) (12) (85,874)
-----------------------------------------------------------------------------------
TOTAL FIXED ASSETS-CARRYING VALUE 559,506 260,314 243,750 1,063,570
OTHER ASSETS:
DEFERRED ACQUISITION COSTS 150,000 225,787 375,787
PAGING CARRIER AGREEMENT 425,173 (602) $275,654 (15),(16) 700,225
DEFERRED FCC COST 293,810 293,810
INTERCOMPANY-GTA
SECURITY DEPOSITS AND OTHER ASSETS 22,542 38,915 61,457
-----------------------------------------------------------------------------------
TOTAL OTHER ASSETS 597,715 557,910 275,654 1,431,279
-----------------------------------------------------------------------------------
TOTAL ASSETS $1,621,823 $6,246,658 ($205,596) $7,662,885
===================================================================================
</TABLE>
<PAGE>
ELECTRONICS COMMUNICATION CORP.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL HISTORICAL PROFORMA NOTE
GCE TCI GTA ADJUSTMENTS
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES:
ACCOUNTS PAYABLE $560,263 $20,196
INTERCOMPANY DUE TO GCE 198,426 (198,426) (9)
NOTES PAYABLE-CURRENT
PRIVATE PLACEMENT ADVANCE
NOTES PAYABLE NITAS 350,000 (5)
LOAN PAYABLE 550,000 564,000 (5)
SHAREHOLDERS LOAN 7,043 1 (1)
ACCRUED EXPENSES 904 892
--------------------------------------------------------------------------------
TOTAL LIABILITIES 560,263 557,947 219,514 715,575
MINORITY INTEREST (48,109) (2),(4)
SHAREHOLDER EQUITY:
COMMON STOCK 914,000 49 (914,000) (5)
ADDITIONAL PAID IN CAPITAL 951
RETAINED EARNINGS (DEFICIT) (115,562) (9,316) (111,028) (130,228) (10)
EXCESS OF COST OVER BOOK VALUE (18,231) (2),(3)
NOTES RECEIVABLE FROM WARRANTS
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS EQUITY 798,438 (8,316) (111,028) (1,062,459)
--------------------------------------------------------------------------------
TOTAL LIABILITIES & EQUITY $1,358,701 $549,631 $108,486 ($394,993)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
PRO FORMA HISTORICAL PROFORMA NOTE PRO FORMA
CONSOLIDATED ELCC ADJUSTMENTS CONSOLIDATED
TCI FINANCIAL DATA
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES:
ACCOUNTS PAYABLE $580,459 $1,783,344 $2,363,803
INTERCOMPANY DUE TO GCE
NOTES PAYABLE-CURRENT 1,382,045 $1,382,045
PRIVATE PLACEMENT ADVANCE 116,223 $116,223
NOTES PAYABLE NITAS 350,000 389,000 (11) $739,000
LOAN PAYABLE 1,114,000 (1,114,000) (13)
SHAREHOLDERS LOAN 7,044 252,007 $259,051
ACCRUED EXPENSES 1,796 248,764 $250,560
---------------------------------------------------------------------------------
TOTAL LIABILITIES 2,053,299 3,782,383 (725,000) 5,110,682
MINORITY INTEREST (48,109) 366,944 (18),(19) 318,835
SHAREHOLDER EQUITY:
COMMON STOCK 49 150,186 (49) (13),(14) 150,186
ADDITIONAL PAID IN CAPITAL 951 5,320,629 (951) (13),(14) 5,320,629
RETAINED EARNINGS (DEFICIT) (366,134) (2,947,541) 153,460 (19),(23) (3,160,215)
EXCESS OF COST OVER BOOK VALUE (18,231) (14),(15) (18,231)
NOTES RECEIVABLE FROM WARRANTS (59,001) (59,001)
---------------------------------------------------------------------------------
TOTAL SHAREHOLDERS EQUITY (383,365) 2,464,273 152,460 2,233,368
---------------------------------------------------------------------------------
TOTAL LIABILITIES & EQUITY $1,621,825 $6,246,656 ($205,596) $7,662,885
=================================================================================
</TABLE>
<PAGE>
ELECTRONICS COMMUNICATION CORP.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL HISTORICAL PROFORMA NOTE
GCE TCI GTA ADJUSTMENTS
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
INCOME:
SALES-ELECTRONICS
SALES-COMMISSIONS
SALES-TCI 123,394
SALES-GTA 579,723
SALES-GCE 1,906,986 (123,394) (6)
SERVICE CHARGE-GTA 119,983 (119,983) (6)
---------------------------------------------------------------------------------
TOTAL INCOME 2,026,969 123,394 579,723 (243,377)
COST OF SALES
COST OF SALES-ELECTRONICS
COST OF SALES-COMMISSIONS
COST OF SALES-TCI 123,394 (123,394) (6)
COST OF SALES-GTA 335,264 (119,983) (6)
COST OF SALES-GCE 1,040,827
OTHER
---------------------------------------------------------------------------------
TOTAL COST OF SALES 1,040,827 123,394 335,264 (243,377)
---------------------------------------------------------------------------------
GROSS PROFIT 986,142 244,459
---------------------------------------------------------------------------------
OPERATING EXPENSES 986,141 5,073 318,722
DEPRECIATION & AMORTIZATION 195,472 7,899 2,297 (3,974) (3),(8)
---------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) (195,471) (12,972) (76,560) 3,974
INTEREST INCOME 4,560
INTEREST EXPENSE 121,934
GAIN OR (LOSS) ON SALE OF ASSET 201,844 201,844 (7)
MINORITY INTEREST IN LOSS 33,173
PROVISION FOR TAXES 904
---------------------------------------------------------------------------------
NET INCOME (LOSS) FOR PERIOD ($115,561) ($9,316) ($76,560) $238,991
=================================================================================
(LOSS) PER COMMON SHARE
AVERAGE SHARES OUTSTANDING
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
PRO FORMA HISTORICAL PROFORMA NOTE PRO FORMA
CONSOLIDATED ELCC ADJUSTMENTS CONSOLIDATED
TCI FINANCIAL DATA
--------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
INCOME:
SALES-ELECTRONICS $4,943,988 ($22,978) (20) $4,921,010
SALES-COMMISSIONS 3,792,527 (24,260) (22) 3,768,267
SALES-TCI 123,394 (3,889) (21) 119,505
SALES-GTA 579,723 579,723
SALES-GCE 1,783,592 1,783,592
SERVICE CHARGE-GTA
---------------------------------------------------------------------------------
TOTAL INCOME 2,486,709 8,736,515 (51,127) 11,172,097
COST OF SALES
COST OF SALES-ELECTRONICS 4,362,652 (3,889) (21) 4,358,763
COST OF SALES-COMMISSIONS 3,195,601 3,195,601
COST OF SALES-TCI (22,978) (20)
COST OF SALES-GTA 215,281 215,281
COST OF SALES-GCE 1,040,827 (24,260) (22) 993,589
OTHER 5,841 5,841
---------------------------------------------------------------------------------
TOTAL COST OF SALES 1,256,108 7,564,094 (51,127) 8,769,075
---------------------------------------------------------------------------------
GROSS PROFIT 1,230,601 1,172,421 2,403,022
---------------------------------------------------------------------------------
OPERATING EXPENSES 1,309,936 3,801,381 5,111,317
DEPRECIATION & AMORTIZATION 201,694 25,946 (16) 227,640
---------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) (281,029) (2,628,960) (25,946) (2,935,935)
INTEREST INCOME 4,560 4,560
INTEREST EXPENSE 121,934 121,934
GAIN OR (LOSS) ON SALE OF ASSET
MINORITY INTEREST IN LOSS 33,173 33,173
PROVISION FOR TAXES 904 904
---------------------------------------------------------------------------------
NET INCOME (LOSS) FOR PERIOD ($366,134) ($2,628,960) ($25,946) ($3,021,040)
=================================================================================
(LOSS) PER COMMON SHARE ($0.92)
AVERAGE SHARES OUTSTANDING 3,267,657
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet
and Statements of Operations for the period ending
December 31, 1995
Note 1
Purchase of GTA stock by TCI.
Note 2
To eliminate the investment account of TCI and set up the Minority Interest
ownership portion of GTA. The purchase price of GTA exceeded the book value and
there were no tangible assets to allocate value.
Note 3
To amortize the difference between the cost paid by TCI over the book value
of GTA for a 15 year period.
Note 4
To allocate 43.33% of the loss from GTA to the minority shareholders
(43.33% x $76,560).
Note 5
Purchase of GCE's assets by TCI.
Note 6
Elimination of intercompany sales between TCI, GCE and GTA.
Note 7
To eliminate the profit and stepped up basis on an intercompany sale of
pagers, customers list and paging carrier agreement that occurred on October 18,
1995 between TCI and GCE. The gross purchase price of the transaction was
$250,000.
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statements of Operations for the period ending
December 31, 1995
Note 8
To reverse the depreciation and amortization expense that was a result of
the stepped up basis from the transaction described in Note 7.
Note 9
To eliminate intercompany loans between GTA and GCE.
Note 10
To adjust Retained Earnings for the effect of the adjustments made to the
Statement of Operations:
$201,84 Add back on the gain on sale of equipment
(33,173) Less Minority Interest in loss
(5,276) Adjustment in depreciation and amortization
1,302 Amortization of the difference between cost and book
-------- value
$164,697
========
Note 11
To record funds loaned to TCI by the Company for their acquisition of GCE.
Note 12
To record 51% investment by the Company in TCI and its subsidiary.
Note 13
To record TCI's sale of securities to the Company.
Note 14
To eliminate the investment account and the related equities on the books
of the Company and TCI.
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statements of Operations for the period ending
December 31, 1995
Note 15
To allocate the cost over book value in order to restate identifiable
assets at fair value on TCI's books.
Book Fair Net Amount
Value Value Allocated
-------- -------- ----------
Paging Carrier Agreements $426,014 $721,364 $295,350
Leasehold Improvements -0- 250,000 250,000
-------- -------- --------
$426,014 $971,364 $545,350
======== ======== ========
Note 16
To amortize the step up in cost basis of the Paging Carrier Agreements in
Note 15 over a 15 year period.
Note 17
To depreciate the step up in cost basis of Leasehold Improvements in Note
15 over a 40 year period.
Note 18
To record the Minority Interest ownership of TCI and its subsidiary.
Note 19
To eliminate TCI's Minority Interest's portion of the net loss from
operations.
Notes 20, 21 & 22
To eliminate intercompany sales between the Company and TCI.
Note 23
To adjust Retained Deficit for the effects of adjustments made to the
Statement of Operations.
<PAGE>
ELECTRONICS COMMUNICATION CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA HISTORICAL PRO FORMA CONSOLIDATED
GCE TCI ADJUSTMENTS NOTE TCI
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
MARCH 31,1 996
CURRENT ASSETS:
CASH $20,868 $20,868
ACCOUNTS RECEIVABLE 268,470 $268,470
LOANS RECEIVABLE 106,560 $106,560
ADVANCE TCI
AUCTION DEPOSIT - FCC
LOANS & EXCHANGES
INVENTORY 54,636 $54,636
PREPAID EXPENSES 35,317 $35,317
INVESTMENT IN TCI
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 485,851 $485,851
FIXED ASSETS:
PROPERTY & EQUIPMENT 663,486 $663,486
LESS: ACCUMULATED DEPRECIATION (38,211) ($38,211)
--------------------------------------------------------------------------------
TOTAL FIXED ASSETS-CARRYING VALUE 625,275 $625,275
OTHER ASSETS:
DEFERRED PLACEMENT COSTS
PAGING CARRIER AGREEMENT 677,858 $677,858
DEFERRED FCC COSTS
SECURITY DEPOSITS 22,542 $22,542
OTHER ASSETS (5,323) ($5,323)
--------------------------------------------------------------------------------
TOTAL OTHER ASSETS 695,077 $695,077
--------------------------------------------------------------------------------
TOTAL ASSETS $1,806,203 $1,806,203
================================================================================
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL UNAUDITED
ELCC PRO FORMA PRO FORMA
(UNAUDITED) ADJUSTMENTS NOTE CONSOLIDATED
FINANCIAL DATA
<S> <C> <C> <C> <C>
BALANCE SHEET
MARCH 31,1 996
CURRENT ASSETS:
CASH $1,154,329 $1,175,197
ACCOUNTS RECEIVABLE 1,276,394 1,544,864
LOANS RECEIVABLE 106,560
ADVANCE TCI 1,114,000 (1,114,000) (5)
AUCTION DEPOSIT - FCC 1,000,000 1,000,000
LOANS & EXCHANGES 9,999 9,999
INVENTORY 550,099 604,735
PREPAID EXPENSES 72,589 107,906
INVESTMENT IN TCI (5),(7)
----------------------------------------------------------------------------
TOTAL CURRENT ASSETS 5,177,410 (1,114,000) 4,549,261
FIXED ASSETS:
PROPERTY & EQUIPMENT 454,755 250,000 (8) 1,368,241
LESS: ACCUMULATED DEPRECIATION (86,483) (1,562) (9) (126,256)
----------------------------------------------------------------------------
TOTAL FIXED ASSETS-CARRYING VALUE 368,272 248,438 1,241,985
OTHER ASSETS:
DEFERRED PLACEMENT COSTS 364,144 364,144
PAGING CARRIER AGREEMENT 295,099 (8),(9) 972,957
DEFERRED FCC COSTS 306,410 306,410
SECURITY DEPOSITS 53,211 75,753
OTHER ASSETS 45,985 40,662
----------------------------------------------------------------------------
TOTAL OTHER ASSETS 769,750 295,099 1,759,925
----------------------------------------------------------------------------
TOTAL ASSETS $6,315,432 ($570,463) $7,551,171
============================================================================
</TABLE>
<PAGE>
ELECTRONICS COMMUNICATION CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA HISTORICAL PRO FORMA CONSOLIDATED
GCE TCI ADJUSTMENTS NOTE TCI
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
MARCH 31, 1996
LIABILITIES:
ACCOUNTS PAYABLE $549,959 $22,894 (3) $572,853
NOTES PAYABLE-CURRENT 1,464,000 $1,464,000
SHAREHOLDERS LOAN 9,141 $9,141
ACCRUED EXPENSES 3,476 $3,476
------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,026,576 22,894 $2,049,470
MINORITY INTEREST (91,447) 23,432 (1) ($68,015)
SHAREHOLDER EQUITY:
COMMON STOCK 49 $49
ADDITIONAL PAID IN CAPITAL 951 $951
RETAINED DEFICIT (67,005) (46,326) ($113,331)
EXCESS OF COST OVER BOOK (62,921) ($62,921)
NOTES RECEIVABLE FROM WARRANTS
TOTAL SHAREHOLDERS EQUITY (128,926) (46,326) ($175,252)
------------------------------------------------------------------------------------
TOTAL LIABILITIES & EQUITY $1,806,203 $1,806,203
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL UNAUDITED
ELCC PRO FORMA PRO FORMA
(UNAUDITED) ADJUSTMENTS NOTE CONSOLIDATED
FINANCIAL DATA
<S> <C> <C> <C> <C>
BALANCE SHEET
MARCH 31, 1996
LIABILITIES:
ACCOUNTS PAYABLE $963,901 $1,536,754
NOTES PAYABLE-CURRENT 1,450,974 (1,114,000) (6) 1,800,974
SHAREHOLDERS LOAN 198,948 208,089
ACCRUED EXPENSES 697,555 701,031
----------------------------------------------------------------------------------
TOTAL LIABILITIES 3,311,378 (1,114,000) 4,246,848
MINORITY INTEREST 490,819 (11),(12) 422,804
SHAREHOLDER EQUITY:
COMMON STOCK 163,383 (49) (6),(11) 163,383
ADDITIONAL PAID IN CAPITAL 5,812,654 (951) (6),(7),(11) 5,812,654
RETAINED DEFICIT (2,946,284) 53,719 (7),(11) (3,005,896)
EXCESS OF COST OVER BOOK (7),(8) (62,921)
NOTES RECEIVABLE FROM WARRANTS (25,701) (25,701)
TOTAL SHAREHOLDERS EQUITY 3,004,052 52,719 2,881,519
----------------------------------------------------------------------------------
TOTAL LIABILITIES & EQUITY $6,315,430 ($570,462) $7,551,171
==================================================================================
</TABLE>
<PAGE>
ELECTRONICS COMMUNICATION CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA HISTORICAL PRO FORMA CONSOLIDATED
GCE TCI ADJUSTMENTS NOTE TCI
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31,1996
INCOME:
SALES-ELECTRONICS
SALES-COMMISSIONS
SALES-TCI $289,005 $289,005
SALES-GTA
SALES-GCE $506,656 ($116,340) (4) $390,316
--------------------------------------------------------------------------------
TOTAL INCOME 506,656 289,005 (116,340) $679,321
COST OF SALES
COST OF SALES-ELECTRONICS
COST OF SALES-COMMISSIONS
COST OF SALES-TCI 239,622 (116,340) (4) $123,282
COST OF SALES-GTA
COST OF SALES-GCE 235,750 $235,750
--------------------------------------------------------------------------------
TOTAL COST OF SALES 235,750 239,622 (116,340) $359,032
--------------------------------------------------------------------------------
GROSS PROFIT 270,906 49,383 $320,289
--------------------------------------------------------------------------------
OPERATING EXPENSES 229,337 119,008 $348,345
DEPRECIATION & AMORTIZATION 45,381 33,398 $78,779
--------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) (3,812) (103,023) ($106,835)
INTEREST INCOME 2,000 $2,000
INTEREST EXPENSE 19,083 5 $19,088
GAIN OR LOSS ON SALE OF ASSET 164,863 (164,863) (2)
MINORITY INTEREST IN LOSS 43,339 (23,432) (1) $19,907
PROVISION FOR TAXES
--------------------------------------------------------------------------------
NET INCOME (LOSS) FOR PERIOD $141,968 ($57,689) ($188,295) ($104,016)
================================================================================
INCOME(LOSS) PER COMMON SHARE
AVERAGE SHARES OUTSTANDING
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL UNAUDITED
ELCC PRO FORMA PRO FORMA
(UNAUDITED) ADJUSTMENTS NOTE CONSOLIDATED
FINANCIAL DATA
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31,1996
INCOME:
SALES-ELECTRONICS $983,728 ($28,449) (13) $955,279
SALES-COMMISSIONS 1,279,798 1,279,798
SALES-TCI 289,005
SALES-GTA
SALES-GCE 390,316
------------------------------------------------------------------------------
TOTAL INCOME 2,263,526 (28,449) 2,914,398
COST OF SALES
COST OF SALES-ELECTRONICS 1,001,185 (28,449) (13) 972,736
COST OF SALES-COMMISSIONS 716,066 716,066
COST OF SALES-TCI 123,282
COST OF SALES-GTA
COST OF SALES-GCE 235,750
------------------------------------------------------------------------------
TOTAL COST OF SALES 1,717,251 (28,449) 2,047,834
------------------------------------------------------------------------------
GROSS PROFIT 546,275 866,564
------------------------------------------------------------------------------
OPERATING EXPENSES 534,004 882,349
DEPRECIATION & AMORTIZATION 11,014 6,564 (9),(10) 96,357
------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 1,257 (112,142)
INTEREST INCOME 2,000
INTEREST EXPENSE 19,088
GAIN OR LOSS ON SALE OF ASSET
MINORITY INTEREST IN LOSS 50,967 (12) 70,874
PROVISION FOR TAXES
------------------------------------------------------------------------------
NET INCOME (LOSS) FOR PERIOD $1,257 $50,967 ($58,356)
==============================================================================
INCOME(LOSS) PER COMMON SHARE ($0.02)
AVERAGE SHARES OUTSTANDING 3,267,657
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statements of Operations for the period ending
March 31, 1996
Note 1
To adjust the loss from GTA to reflect ownership from January 1, 1996
through March 21, 1996.
$45,940 Loss from operations of GTA for the quarter
ending 3/31/96
(26,033) $45,940 x 56.667%
-------
19,907 Minority Interest in Loss
43,339 Amount Allocated to Minority Interest Loss
-------
$23,432 Amount of Additional Loss to Realize
=======
Note 2
To eliminate the gain GCE realized on the sale of its assets.
Note 3
To record the loss from operations of GCE assuming the acquisition occurred
in the beginning of the period. It is assumed that TCI would have increased
liabilities in the event of an additional loss of $22,894.
Note 4
To eliminate intercompany sales between TCI and GCE.
Note 5
To record 51% investment by the Company in TCI and its subsidiary.
Note 6
To record TCI's sale of securities to the Company.
Note 7
To eliminate the investment account and the related equities on the books
of the Company and TCI.
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statements of Operations for the period ending
March 31, 1996
Note 8
To allocate the cost over book value in order to restate identifiable
assets at fair value on TCI's books.
Book Fair Net Amount
Value Value Allocated
-------- -------- ----------
Paging Carrier Agreement $677,858 $300,101 $ 977,959
Leasehold Improvements -0- 250,000 250,000
-------- -------- ----------
$677,858 $550,101 $1,227,959
======== ======== ==========
Note 9
To amortize the additional amount of fair value recognized in Note 8 for
the Paging Carrier Agreements over a 15 year period.
Note 10
To depreciate the additional amount of fair value recognized in Note 8 for
the Leasehold Improvements over a 40 year period.
Note 11
To record the Minority Interest ownership of TCI and its subsidiary.
Note 12
To eliminate TCI's Minority Interest portion of the net loss.
Note 13
To eliminate intercompany sales.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELECTRONICS COMMUNICATIONS CORP.
By: /s/ William S. Taylor
--------------------------------------------
William S. Taylor, CEO, President and
Chairman of the Board
Date: July 10, 1996
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