Com Systems Reports 3% Decline in Earnings

Com Systems, the Van Nuys long-distance company, reported a 3% drop in earnings to $516,000, or 10 cents a share, for the first quarter that ended March 31. Sales increased 39% to 12.5 million.

The company attributed the earnings drop to start-up costs in a subsidiary that provides telephone billing services for other companies. Com Systems provides long-distance telephone service to customers in California, Arizona and Nevada.

In a separate matter, Com Systems announced last week that it had completed raising $5.85 million in a private placement of preferred stock. Com Systems president Rex Licklider bought stock worth $300,000 himself. This infusion of capital includes a $5-million stake last month by a Swiss investment group, Inspectorate International SA.

Com Systems has also restructured $2 million worth of debt into preferred stock.

If all the preferred stock were converted into common stock, Licklider and other Com Systems insiders would control about 39% of the common shares. The Swiss group would control about 30%, Licklider said.

As a result of the latest financial moves, Com Systems will have a positive net worth--greater assets than liabilities--for the first time since 1984, and it plans to apply to have its stock re-listed by the computerized National Assn. of Securities Dealers Automatic Quotation System, or to be listed on the American Stock Exchange. Because of Com System’s weak balance sheet, its stock was dropped several years ago by NASDAQ and since then it has been a thinly traded “pink sheets” stock on the over-the-counter market with little following by investment analysts.