Hiya DuGen,
Tuesday November 17, 7:30 am Eastern Time
Company Press Release
SOURCE: ComTech Consolidation Group, Inc.
ComTech Consolidation Group, Inc., Clarifies Results for the
Third Quarter and Nine Months Ended September 30, 1998
HOUSTON, Nov. 17 /PRNewswire/ -- ComTech Consolidation Group, Inc., (OTC Bulletin Board: CCGI - news) today
announced further clarification as to sales and earnings statements made in its Nov. 11 press release. The Company stated that this
further clarification comes as a result of investor inquiries subsequent to the press release. The Company also stated that customary
annual quarterly comparisons are not available as the Company first became public in late 1997.
Revenue for the third quarter increased 400% to $4,361,662 compared to $1,100,342 for the six month period (first and second
quarters) of 1998. Management attributed the increased revenue to the Company's acquisition of 14 healthcare properties in the third
quarter. Net income was $296,966 for the third quarter, or 2 cents per share, compared to $69,999, or .01 cent per share, in the first
six month period (first two quarters) of 1998.
EARNINGS RECAP Six Months Ended Three Months Ended Nine Months Ended
June 30, 1998 September 30, 1998 September 30, 1998
(Audited) (Unaudited) (Unaudited)
Revenues $1,100,342 $4,361,662 $5,473,070
Net income (loss) $ 69,999 $ 296,966 $ 375,965
Net income (loss)
per common share $ 0.01 $ 0.02 $ 0.02
In regard to changes in accounting methods, on certain acquisitions, ComTech's Chairman, Roger Stewart explained, ''During the
final review of the purchase agreements in place and prior to the close of the transactions, it was discovered that certain healthcare
acquisition transactions could not meet the technical accounting rule requirements to be treated as a pooling of interests. The
acquisitions were then restructured for accounting purposes using purchase accounting rules. This impacted reported revenue, as
previous sales and earnings forecasts were based on the pooling of interests method of accounting, under which all year to date
accounts are consolidated back to the beginning of the year (January 1, 1998 forward). In addition to the pooling of interests change
final due diligence revealed certain contingent liabilities in one of the transactions. After an in-depth review of the situation the
acquisition went forward but was restructured as an asset purchase to eliminate the contingent liability issue.
''The acquisitions and the decisions to restructure were considered in the best long term interest to ComTech and its shareholders.
Forgoing short term recognition of consolidated sales and earnings between January and September 1998 (roughly $15 million sales
and $1.0 million earnings) eliminated potential contingent liabilities as high as $4.0 million. To avoid possible liability ComTech
restructured this acquisition transaction in the third quarter, as an asset purchase, reported its results using the purchase method of
accounting and sales and earnings are consolidated forward from the next reporting period following the closing date of the
transaction.
''A significant portion of the 14 acquisitions took place in the month of September. ComTech recognized the operating results of
those acquisitions completed prior to the end of August and reflected those in its sales and earnings figures for the period ended
September 30, 1998. This is what was meant by the statement ComTech recognized only a pro rata portion of the operating results
of the acquired assets in the quarter ended September 30, 1998. The full impact of the sales and earnings from September
acquisitions forward and the additional growth will be reflected in the fourth quarter.''
EARNINGS FORECAST Three Months Ended Twelve Months Ended
December 31, 1998 December 31, 1998
(Projected) (Projected)
Revenues $13,490,069 $18,995,073
Net income (loss) $1,168,498 $1,544,908
Net income per share $.08 $.10
Mr. Stewart went on to state, ''therefore, based on current circumstances ComTech is now forecasting 1998 sales in the range of
$19 million with earnings between $.09 - $.12 per share.''
Statements regarding financial matters in this press release other than historical facts are ''forward-looking statements'' within the
meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is
defined in the Private Securities Litigation Reform Act of 1995. The Company intends that such statements about the Company's
future expectations, including future revenues and earnings, and all other forward-looking statements be subject to the safe harbors
created thereby. Since these statements (future operational results and sales) involve risks and uncertainties and are subject to
change at any time, the Company's actual results may differ materially from expected results.
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