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Technology Stocks : ATC Communications ATCT -- Ignore unavailable to you. Want to Upgrade?

To: Northern Marlin who wrote (2565)	5/30/1998 11:04:00 PM
From: SR/WA	Respond to of 2636

Phil; Thanks again for your input & keeping this thread fully informed. Ken

To: Northern Marlin who wrote (2565)	5/31/1998 3:03:00 PM
From: JimieA	Read Replies (2) \| Respond to of 2636

ATCT & IQI Merger Comments on S4 1. Thayer gets warrants for up to 2.1 million shares of ATCT stock at less $2 per share for guaranty of $2M of addt'l. ATCT debt and plus Thayer paying $110K. (Potentially addt'l. 9% of ATCT Stock outstanding.) 2. Thayer will own 37% of stock of ATCT after merger, excluding warrants. 3. Santry must pay off at least 1/2 of his outstanding loan. $2M. 4. IQI is no profitable white knight rescuing ATCT. IQI has been losing money consistently for over the last year as well. It does generate a profit before interest and taxes though, which is more then can be said for ATCT. Though high interest expenses turns the bottom line red. 5. IQI has a high debt to equity ratio. Therefore the combined AGIS will be highly leveraged. Even more then ATCT alone. Combined company will have $62.7M in debt; $71.4M of equity; ONLY $1.6M in tangible equity. This is a VERY BAD situation. Especially since the combined company is losing about $1.7M per quarter. By the June 30th, tangible equity may be wiped out. The combined company needs to start making money. QUICKLY! Having Thayer around is nice. But they will be getting paid if they need to put in more equity. 6. Continue reliance on AT&T, as in fiscal 1997, approximately 43% of IQI's consolidated net revenue originated from one client, AT&T. 7. The negotiations and due diligence to get a merger agreement took from March 24, 1997 until April 7, 1998. Chrysler/Daimler Benz; Citicorp/Travelers took less time. 8. CIBC Oppenheimer indicated that IQI equity was valued at between $24M and $109M. This is equivalent to between $.80 and $3.65 per equivalent ATCT share. CIBC Oppenheimer valued ATCT at between $1.29 and $3.82 per share. 9. Proforma Per Share Information - March 1998 Quarter ATCT IQI AGIS Remarks Revenue $.98 $1.41 $1.23 Up 26% Gross Profit .25 .52 .40 Up 60% Operating Inc. (.06) .03 (.01) close to break-even Pretax Loss (.06) (.01) (.04) Loss down 50% Net Income (.04) (.02) (.04) No Change EBITDA - .11 .06 Interest Exp. .01 .04 .03 Increases 300% Debt .48 1.72 1.22 Up 154% Book Value 1.10 1.50 1.50 Up 36% Tang Book Value 1.04 (.43) .03 Just about Gone! Per Share - Revenue, Gross Profit, EBITDA, Operating Income and Pretax Loss all improved. Some dramatically. Interest Expense also increases. Combined company better start making money, because fixed interest costs will start eating them alive. Debt way up. Tangible Book Value has just about disappeared! Not much room to maneuver. 10. The key to this merger IMO is the working the combined synergies of getting more business through the combined entity. As well as cost saving by combining management and administration staffs. AGIS needs to do this fast before it runs out of cash.