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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Commission file number 1-11097

3CI COMPLETE COMPLIANCE CORPORATION
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (972) 375-0006

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share
(Title of class)

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o    No ý

        The aggregate market value of the voting stock held by non-affiliates of the registrant as reported on the OTC Bulletin Board on March 31, 2004 was $1,071,376 computed on the basis of the closing sales price on that day. The number of shares of the Company's Common Stock outstanding as of the close of business on December 20, 2004 was 9,739,611.

3CI COMPLETE COMPLIANCE CORPORATION TABLE OF CONTENTS*
ANNUAL REPORT ON FORM 10-K

*

This Table of Contents is inserted for convenience of reference only and is not a part of this Report as filed.

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FORWARD-LOOKING STATEMENTS

        THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS CONCERNING THE COMPANY'S BUSINESS AND OPERATIONS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, THESE EXPECTATIONS AND THE RELATED STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. THESE RISKS, UNCERTAINTIES AND OTHER FACTORS INCLUDE, BUT ARE NOT LIMITED TO, ADVERSE WEATHER CONDITIONS, FLUCTUATIONS IN CUSTOMER DEMAND, COMPETITIVE ACTIVITY AND PRICING PRESSURE AND GENERAL ECONOMIC CONDITIONS AFFECTING THE BIO-MEDICAL WASTE DISPOSAL INDUSTRY, AS WELL AS OTHER RISKS DETAILED IN THE COMPANY'S FILINGS WITH THE SEC. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATIONS TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN THE COMPANY'S EXPECTATIONS.

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PART I

Item 1. Business.

Company Overview

        3CI Complete Compliance Corporation ("3CI" or the "Company") is one of the largest and most established regional medical waste management service providers in North America. The Company's primary medical waste management service includes, but is not limed to, regulatory compliant containment, onsite collection, transportation and documentation of the disposal of regulated medical waste as defined by federal, state and local rules, regulations and guidelines. The Company utilizes a bar-code identification and tracking system for all containers of regulated medical waste.

        Since December 2001, the Company no longer treats or disposes of regulated medical waste; instead it collects and transports regulated medical waste to third-party facilities for treatment, processing and disposal. The Company contracts for waste treatment and disposal at fixed costs in order to allow for greater flexibility in the competitive pricing of the Company's services, which the Company believes directly benefits its customers. The Company also provides full-service, efficient and cost-effective regulated medical waste management programs, which the Company believes meet or exceed the needs of its customers.

        The Company provides services in Alabama, Arkansas, Georgia, Florida, Louisiana, Mississippi, Oklahoma, Tennessee and Texas. These states are serviced from eight customer service centers in Dallas, Texas; Houston, Texas; Schertz, Texas (Austin/San Antonio); New Orleans, Louisiana; Birmingham, Alabama; Jackson, Mississippi; Springhill, Louisiana and Bismark, Arkansas. The Company currently provides services to approximately 8,500 customers. The Company's customer base consists of two basic categories: (i) medical centers, major hospitals, major teaching institutions involved in medicine and research, surgery centers, outpatient clinics, blood banks and (ii) smaller healthcare providers and medical-related businesses such as physician and dental offices, nursing and convalescent homes and veterinarians.

        The Company's principal offices are located at 1517 West North Carrier Parkway, Suite 104, Grand Prairie, Texas 75050 and its telephone number is (972) 375-0006. The Company was incorporated in Delaware on August 26, 1991.

Industry Overview

        The regulated medical waste industry emerged with the Medical Waste Tracking Act of 1988 ("MWTA"), which Congress enacted in response to media attention after medical waste washed ashore on beaches in New York and New Jersey. Since the 1980s, government regulation has increasingly required the proper handling and disposal of regulated medical waste generated by the health care industry.

        Regulated medical waste is generally considered any medical waste that can cause an infectious disease, including: pathological wastes, such as tissues, organs and body parts; cultures and stocks of infectious agents; blood and the products or components of blood; sharp-edged medical waste, or "sharps," such as needles, syringes, razors, pipettes, scissors and scalpels; single-use disposable items, including some sharps, gloves and other medical supplies; pharmaceutical wastes; and various other biological wastes and discarded materials contaminated with or exposed to blood, excretion and secretions from human beings or animals.

        The growth of the medical waste industry is driven by several factors, including the following:

        Pressure to Reduce Health Care Costs.    The health care industry is under constant pressure to reduce costs and improve efficiency. To accomplish these ends, it uses outside contractors to perform some services, such as medical waste management. The Company believes its medical waste

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management services help health care providers reduce costs by reducing their medical waste tracking, handling and compliance costs, reducing their potential liability related to employee exposure to blood-borne pathogens and other infectious material and reducing the amount of money invested in on-site treatment of medical waste.

        Shift to Off-Site Treatment.    The Company believes that managed care, federal reimbursement guidelines and other health care cost-containment pressures are causing patient care to continue to shift from institutional, higher-cost, acute-care settings to less expensive, smaller, off-site treatment alternatives. Many common diseases and conditions are now being treated in smaller non-institutional settings. The Company believes these non-institutional, alternate-site health care expenditures will continue to grow as cost-cutting pressures increase. Unlike some larger hospitals, most of these smaller facilities do not treat their medical waste on their premises and rely on outsourced collection and treatment of regulated medical waste to third parties like the Company.

        Aging of the U.S. Population.    According to industry statistics, the "baby boom" generation (births between 1946 and 1964) constitutes approximately 30% of the United States population. The relative size of this generation will continue to result in an increase in the average age of the population, while falling mortality rates ensure the average person will live longer. As people age, they typically require more medical attention and a wider variety of tests and procedures. In addition, as technology improves, more tests and procedures will become available. All of these factors lead to increased generation of medical care and related production of regulated medical waste.

        Environmental and Safety Regulation.    The Company believes many businesses, which are not using outsourced medical waste management services, are not knowledgeable on the current requirements regarding the handling of regulated medical waste, including the need for proper training of employees and Occupational Safety and Health Administration ("OSHA") regulations regarding medical waste. These businesses include, but are not limited to: manufacturing facilities, schools, restaurants, casinos, hotels and generally all businesses where employees may come into contact with blood-borne pathogens.

        The medical waste management industry is subject to extensive regulation beyond the MWTA. Federal, state and local agencies all generally have some regulation requirements for the medical waste industry. These regulations have increased the costs of operating medical waste incinerators and have resulted in significant closures of on-site treatment facilities, thereby increasing the demand for off-site treatment services. In addition, OSHA has adopted regulations concerning employee exposure to blood-borne pathogens and other potentially infectious materials that require, among other things, special procedures for the handling and disposal of regulated medical waste and annual training of all personnel who may be exposed to blood and other bodily fluids. These regulations have fueled the expansion of the Company's services to include OSHA compliance services for health care providers.

Governmental Regulation

        The collection, transportation, processing and disposal of medical waste are governed by numerous federal, state and local agencies under laws and ordinances relating to the definition, generation, segregation, handling and packaging of regulated medical waste. In addition, there are various laws and ordinances regulating the placement, construction and operations of facilities, occupational training and safety and air and water quality.

        Most aspects of the Company's business are subject to extensive and changing federal, state and local laws and regulations. This framework imposes compliance burdens and risks on the Company, including requirements to obtain and maintain government permits. These permits grant the Company the authority, among other things, to transport medical waste within and between jurisdictions and to operate regulated waste transfer facilities. Permits must be periodically renewed and are subject to

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modification or revocation by various regulatory authorities. The Company believes it is in compliance in all material respects with its permits and applicable laws and regulations. However, failure to comply with any significant government regulation could have a material adverse affect on the Company's business. Further, new regulations are frequently promulgated for permit holders, and the associated compliance cost with such new regulations could have a material adverse effect on the Company's business. The Company's management is not aware of any pending regulations to its permits in the jurisdictions in which the Company does business which would have a material adverse effect on its operations.

        Federal Regulation.    There are at least four federal agencies with authority to regulate the handling of regulated medical waste: the Environmental Protection Agency ("EPA"), OSHA, the Department of Transportation ("DOT") and the Food and Drug Administration ("FDA").

        Medical Waste Tracking Act of 1988.    In the late 1980s, the EPA outlined a demonstration program pursuant to MWTA. The MWTA was adopted in response to health and environmental concerns over infectious medical waste after medical waste washed ashore in the summer of 1988 on New York and New Jersey beaches. Public safety concerns grew following media reports of careless management of medical waste. The MWTA was intended to be the first step in addressing these problems. The primary objective of the MWTA was to ensure regulated medical wastes generated in a covered state and which posed environmental problems, including an unsightly appearance, were delivered to disposal or treatment facilities with minimum exposure to the public and waste management workers. The MWTA's tracking requirements included accounting for all waste transported and imposed civil and criminal sanctions for violations.

        In regulations implementing the MWTA, the EPA defined regulated medical waste and established guidelines for its segregation, handling, containment, labeling and transport. The MWTA demonstration program expired in 1991, but the MWTA established a model followed by many states in developing their specific medical waste regulatory frameworks.

        Occupational Safety and Health Act of 1970.    The Occupational Safety and Health Act of 1970 authorizes OSHA to issue occupational health and safety standards, including requirements related to the management of infectious medical waste. OSHA regulations require employers to provide a place of employment free from recognized and preventable hazards likely to cause serious physical harm to employees. Related regulations under OSHA require employers to give notice to employees regarding the presence of hazardous chemicals, such as those that could be present in infectious medical waste, and to train employees in the proper use of such substances.

        OSHA regulations contain additional rules concerning exposure to blood-borne pathogens, which increase the cost of providing medical waste management services. These rules impose, among other things, engineering and work practice controls, use of personal protective clothing and equipment, training, medical surveillance, labeling and record-keeping requirements with respect to occupational exposure to blood and other potentially infectious materials.

        Resource Conservation and Recovery Act of 1976 ("RCRA").    RCRA establishes regulatory standards administered by the EPA covering the generation, storage, transportation, treatment and disposal of hazardous waste. RCRA contains extensive regulatory requirements related to: reporting to the EPA, record keeping, labeling, the use of containers, the furnishing of information to persons handling hazardous waste and the tracking of hazardous waste from the point of generation to the point of disposal, including transportation manifests.

        Waste is not considered hazardous unless it contains certain qualities or concentration levels; meets specified descriptions; or exhibits specific hazardous characteristics. The EPA has not listed most types of medical waste and infectious medical waste as hazardous waste, nor has the EPA designated infectiousness as one of the characteristics of a hazardous waste. Thus, the handling of infectious

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medical waste is not currently subject to RCRA, although the EPA has issued informal guidance outlining practical approaches to infectious waste management.

        The Company's service agreements with waste generators require such customers to exclude various forms of hazardous and radioactive materials from the waste they provide to the Company for disposal.

        DOT Regulations.    The Company's medical waste transportation activities are subject to federal regulation by the DOT pursuant to the Hazardous Waste Materials Transportation Act of 1994. The DOT regulations contain packaging and labeling requirements imposed on different waste categories depending on the perceived hazards of each category. The regulations impose the most stringent requirements on packages containing over four liters gross volume of "etiologic agents," which are defined as "viable microorganism(s) or (their) toxin(s), which cause or may cause human disease," and are limited to certain agents listed in the Hazardous Materials Regulations. These standards are intended to prevent the release of such agents into the environment. The DOT requirements are intended to supplement etiologic waste regulations promulgated by the Public Health Service of the U.S. Department of Health and Human Services.

        A significant portion of the waste handled by the Company is "regulated medical waste," as defined in the DOT regulations, which include cultures and stocks, pathological waste, human blood and any blood products, sharps, animal waste and isolation waste. Packages containing these wastes must be rigid, leak-resistant, impervious to moisture, of sufficient strength to prevent tearing or bursting while under normal conditions of use and handling, sealed to prevent leakage during transport, puncture-resistant and tightly sealed for fluids in quantities greater than 20 cubic centimeters. The DOT regulations also prescribe labeling standards for all infectious and regulated waste and testing protocols for manufacturers and suppliers of packaging. In addition, the Company may be subject to statutes and regulations, some of which specifically pertain to the transport of medical waste and which address, among other things, vehicle operating procedures and the training of persons to operate commercial vehicles.

        The Company's drivers are trained in the appropriate handling and transport of regulated hazardous materials, medical waste and infectious substances. Employees are qualified to deal with emergency spills and releases of materials, and the Company has a written contingency plan for these events. The Company's vehicles are outfitted with spill control equipment, and the drivers are trained in its use.

        Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA").    CERCLA established a regulatory and remedial program to provide for the investigation and cleanup of facilities that have released or threaten to release hazardous substances into the environment. CERCLA and state laws similar to it may impose strict, joint and several liability on the current and former owners and operators of facilities from which releases of hazardous substances have occurred and on the generators and transporters of the hazardous substances that come to be located at these facilities. Responsible parties may be liable for substantial site investigation and cleanup costs and natural resource damages, regardless of whether they exercised due care and complied with applicable laws and regulations. If the Company were found to be a responsible party for a particular site, the Company could be required to pay the entire cost of the site investigation and cleanup, even though other parties also may be liable. This result could occur if the Company was unable to identify other responsible parties, or if those parties were financially unable to contribute money to the cleanup.

        Federal Food, Drug and Cosmetic Act.    The Company is subject to regulation by the FDA and the corresponding agencies of the states in which the Company sells its products. Such regulation, among other things, relates to the testing, marketing, export and manufacture of medical devices. The FDA considers containers used by the Company to transport and dispose of sharps to be "medical devices,"

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as defined under the Federal Food, Drug and Cosmetic Act, and as such, the Company and its facilities are subject to inspection by the FDA on a regular basis to determine compliance with applicable federal requirements.

        State and Local Regulation.    The states in which the Company operates generally have their own regulations governing the storage, treatment, labeling, transport and disposal of regulated medical waste. Although there are differences among state laws and regulations, many states have followed the medical waste model under the MWTA and have implemented programs under RCRA. State agencies involved in regulating the medical waste industry are frequently the departments of health and environmental protection agencies. In addition, many local governments have ordinances, local laws and regulations, such as zoning and health regulations that affect the Company's operations.

        States usually regulate medical waste as a solid or "special" waste and not as a hazardous waste under RCRA. State definitions of regulated medical waste include microbiological waste (cultures and stocks of infectious agents), pathology waste (human body parts from surgical procedures and autopsies), blood and blood products and sharps. Most states require segregation of different types of medical waste at hospitals or other locations where they were created. A majority of states require the universal biohazard symbol or a similar label appear on medical waste containers. Storage regulations may apply to the party generating the waste, the treatment facility, the transport vehicle or all three. Storage rules seek to identify and secure the storage area for public safety as well as set standards for the manner and length of storage. Many states require employee training for safe environmental cleanup through emergency spill and decontamination plans and require transporters carry spill equipment in their vehicles.

        The Company maintains numerous state and local governmental permits and licenses to conduct its business. These permits vary from state to state based upon the Company's activities within that state and on applicable state and local laws and regulations and include transport permits for solid waste and regulated medical waste; permits to construct and operate transfer stations; and various business operator licenses. Several states in which the Company currently operates require waste transportation permits. Some states require permits only if waste is picked up in that state, while others require permits to transport waste through the state. These permits generally require driver safety and training and proper waste packaging, labeling and tracking. The Company currently holds all necessary hauling permits in each state in which it conducts operations. There can be no assurance, however, any of the Company's current permits will be renewed, or if the Company is able to identify and secure waste processing facilities or additional transfer stations, all necessary permits will be obtained or if such permits are granted they will be granted in a timely manner or under conditions that will be acceptable to the Company.

        Companies in the medical waste disposal industry often face resistance to their permit applications from local and regional organizations, citizens groups and residents because of the nature of waste and the perceived threat to the environment and public health caused by waste transportation and processing. It is often necessary for the Company to conduct a public relations campaign, with an emphasis on education, to overcome local opposition, which is often highly political and emotional. Once granted, permits are often subject to continuing review and may be challenged either in court or otherwise even after construction or operations have commenced. Accordingly, the Company's operations could be subject to suspension or termination even after substantial funds have been expended in reliance upon state or local regulatory approvals.

        If the Company were to construct any new waste transfer facilities in the future, the Company would be required to first obtain a construction permit. Once a facility is constructed, the state may issue public notice of its intent to issue an operating permit and may provide an opportunity for public opposition or other action that could impede the Company's ability to construct or operate a planned facility.

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Services and Operations

        The Company collects regulated medical waste from medical waste generators, including medical centers, major hospitals, major teaching institutions involved in medicine and research, surgery centers, outpatient clinics, blood banks, physician and dental offices, veterinarians, laboratories, mortuaries and retirement homes, and transports such waste to third-party facilities for disposal. In addition to regulated medical waste collection and transportation, the Company provides programs to assist customers to promote the safe handling of medical waste and to comply with federal and state requirements applicable to their operations.

        The Company currently owns or leases seven facilities, five of which are transfer stations or temporary storage facilities used in connection with the transport of regulated medical waste, and all of which are sales and transportation facilities used to house regional sales personnel and to maintain and service waste transportation vehicles. The Company contracts with Stericycle, Inc. ("Stericycle"), the Company's majority stockholder, to provide treatment and disposal services for the regulated medical waste it collects and transports from its customers.

        To remain competitive in the medical waste industry, the Company believes it is critical to provide customers with a total program for their regulated medical waste compliance problems. In addition to collection and transportation, the Company also provides a variety of waste management services, including training of customer employees on the handling of regulated medical waste, educating customers on the latest governmental regulations, providing containers for disposal and documenting and tracking medical waste from pickup to ultimate disposal. In addition, the Company offers training and consulting services to its health care customers to assist them in reducing the amount of regulated medical waste they generate and to improve safety and OSHA regulatory compliance in their workplace.

        Collection.    For customers that generate regulated medical waste, the Company collects their regulated medical waste pursuant to a negotiated fee structure. Pickup schedules can vary from several times per week to once a month, depending on the volume of waste produced by a customer. Each customer is responsible for packing its waste in containers provided by the Company. The containers are placed at designated collection areas on the customer's premises, and the Company's truck picks up the waste on a route. If a waste generator has sufficient volume, the Company places a trailer or bulk reusable storage container(s) on the generator's premises, which the Company will pick up as needed, and then transport for ultimate disposal at a waste treatment facility.

        The Company's policy is to accept regulated medical waste from customers only if packaged in containers provided by or approved by the Company. The Company furnishes its customers with multiple containers, including reusable plastic carts, plastic reusable containers and rigid cardboard containers for disposal of medical waste. In order to comply with state and federal regulations, these containers contain the universal biohazard symbol to draw attention to their contents and are lined with special plastic bags and are designed to minimize potential contact with health care workers and medical waste handlers.

        The Company believes its emphasis on proper containerization results in safer regulated medical waste disposal and minimizes potential hazards or liabilities to the Company and its customers. Each container is specifically designed for the type of waste it will hold and meets or exceeds governmental specifications as to construction and strength. The rigid reusable plastic containers furnished by the Company are designed to contain certain types of regulated medical waste, such as hypodermic needles, scalpels and other sharp items. The use of these plastic containers has the potential to lower costs to the Company, since they can be reused and are generally larger than disposable boxes and can therefore hold greater volumes of waste. They are also designed to maximize the loads that will fit within the cargo compartments of the trucks and trailers used by the Company.

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        Transportation.    An important element of the Company's business strategy is to maximize the efficiency with which it collects and transports regulated medical waste. The Company operates a fleet of specially equipped trucks, tractors and trailers to provide strict control of transportation services for the acceptance and transportation of containerized regulated medical waste. These vehicles collect reusable containers or corrugated boxes of regulated medical waste from customers at intervals depending upon customer requirements, terms of service and volume of regulated medical waste produced. The waste is then transported directly to a treatment facility or to one of the Company's transfer stations, where the shipment is consolidated with other medical waste containers and then transported to a treatment facility. To increase efficiency, the Company uses routing and tracking systems to direct its collection vehicles to optimize the number of stops by such vehicles on each route.

        The Company contracts with Stericycle to provide long-haul transportation services. Long-haul transportation is transportation of medical waste from the Company's transfer stations to treatment facilities for processing and disposal. This contract can be cancelled upon notice at any time by either party. Although the Company believes that it could obtain long-haul transportation from other third-party sources or provide such transportation through its own resources, termination of this contract with Stericycle could have a material adverse effect on the Company's operations and financial results. There can be no assurance that if its current long-haul contract terminated, the Company could contract with another party to provide these services or provide such services through internal resources, or that it could negotiate terms with a new vendor that are as favorable as those it has under its contract with Stericycle. See Part III, Item 13—Certain Relationships and Related Transactions.

        Drivers are trained in DOT procedures for the transportation of regulated medical waste and the Company has contingency plans in place to respond immediately to any type of spill, leakage or other emergency that may occur during transportation and provides emergency services to customers upon request.

        Transfer Stations.    The use of transfer stations is an important component of the Company's collection and transportation operations. The transfer of regulated medical waste, generally from a small local pickup vehicle to a large transport trailer, is necessary to consolidate and transport waste in an economical fashion to regional medical waste processing centers. Smaller loads of waste containers are consolidated at transfer stations until they amount to a full truckload, which is then transported to a treatment facility.

        The Company currently operates five transfer stations in Fresno, Texas, Jackson, Mississippi, Bismark, Arkansas, Springhill, Louisiana and Birmingham, Alabama. Each transfer station is licensed, as appropriate, by state, county and municipal governmental authorities. After receiving local approvals, such as necessary zoning or special use permits, application may be made to the appropriate state solid waste authority for an operating license. Most states permit such transfer operations under their solid waste regulatory authority or their department of health.

        Documentation and Reporting.    The Company provides complete documentation to its customers for all regulated medical waste it collects. A bar code label is affixed to each of the Company's medical waste containers used in conjunction with computers, laser scanners and digital scales to document the handling, weighing, treatment and disposal of the customer's regulated medical waste. Bar coded containers allow proper documentation and tracking of waste and comply with applicable regulations concerning packaging and labeling of regulated medical waste.

        The Company provides its customers on a regular basis with medical waste destruction reports documenting the acceptance, transportation, treatment and third-party verification of disposal of its medical waste. The Company maintains detailed documentation including information on all the waste it accepts, including the individual container bar code number, point of origin, date and time of pickup, date and time of treatment, weight at the time of treatment and a certificate of destruction. The Company believes this level of documentation meets all applicable local, state and federal regulations

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regarding packaging, labeling and proof of disposal of medical waste. Customers, as the medical waste generator, sometimes use such documentation to show compliance with medical waste regulations.

        Disposal.    The two most common methods of treating regulated medical waste are steam sterilization (autoclaving) and incineration. Alternate methods include chemical disinfection, microwave and numerous other specialized and experimental techniques. Autoclaving treats regulated medical waste with steam at high temperature and pressure to kill pathogens. Since autoclaving alone does not change the appearance of waste, autoclaving is often combined with shredding or grinding to render medical waste unrecognizable when disposed of at landfills. Incineration burns medical waste at high temperatures and reduces the waste to ash and metal. Incineration also significantly reduces the volume of waste, though it has come under increasing scrutiny by environmentalists and regulators due to emissions generated during processing. As a result, costs to develop new facilities or maintain compliance of existing incineration facilities is increasing. This combined with increased energy costs makes incineration more costly compared to other methods.

        Upon arrival at a treatment facility, containers or boxes of regulated medical waste are inspected to verify they do not contain any unacceptable substances. Any container or box discovered to contain unacceptable waste is returned to the customer. After inspection, the regulated medical waste is treated through autoclaving, incineration or some other accepted treatment method. Once treated, the resulting waste or incinerator ash is transported for resource recovery or disposal in a landfill operated by parties unaffiliated with the Company. If plastic containers have been used to hold the waste, such containers are washed, sanitized and returned to customers for reuse.

        The Company utilizes permitted treatment facilities owned and operated by Stericycle to treat and dispose of medical waste throughout its operating territory. The Company holds treatment permits at two locations, one in Springhill, Louisiana and one in Birmingham, Alabama, where the Company formerly operated treatment facilities. The Company intends to maintain the treatment permits at these locations, including (i) air quality permits relating to emissions; (ii) solid waste permits relating to storage, receipt and treatment of medical waste, the storage and disposal of residues from the treatment facilities and ancillary air pollution control equipment relative to incinerators; (iii) waste-water discharge permits; (iv) storm water discharge permits; (v) site permits, such as zoning or special use permits; (vi) building permits; and (vii) occupancy permits. The Company believes these permits are transferable in the event the Company were to sell these facilities to a third party in the future. Air quality permits and site permits, and in some cases solid waste permits, can be difficult to obtain, and may take a year or longer to be issued and, as such, the Company believes that these permits may have value.

        Although in accordance with governmental regulations, the Company independently tracks and records the movement of its customers' regulated medical waste through all phases of handling and treatment, the Company contracts with Stericycle to provide treatment and disposal services. This contract with Stericycle can be cancelled upon notice given by either party at any time. Although Stericycle currently treats and disposes of all of the regulated medical waste the Company collects, the Company believes there is treatment and disposal capacity with other third-party entities in the areas in which the Company does business. Further, the Company believes if for any reason the Company or Stericycle chose not to continue to have Stericycle perform the Company's treatment and disposal services, the Company could contract with other vendors for these services on substantially the same terms and conditions it now has with Stericycle. However, there can be no assurance agreements for these services with other third-party providers could be entered into quickly or at as low a cost as the Company currently has, and any substantial delay or cost increase with new third-party providers could have a material adverse effect on the Company's operations and financial condition. The Company continually monitors the costs and benefits of (i) its contractual relationship with Stericycle for treatment and disposal services, as well as long-haul transportation and (ii) outsourcing its customers'

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treatment and disposal services versus internally performing those services. See Part III, Item 13—Certain Relationships and Related Transactions.

        Safety Training and Consultation.    Health care personnel have become increasingly sensitive to the risk of contracting diseases such as AIDS and hepatitis through accidental contact with infected patient blood. In addition, patients are increasingly demanding practitioners demonstrate continual vigilance against such risks. OSHA regulations require annual training of all personnel who potentially come in contact with blood-borne pathogens and documentation of procedures, clean-up plans and training of such personnel. The Company has developed programs to train customer employees in the proper methods of handling, segregating and containerizing regulated medical waste to reduce potential exposure of employees. The Company instructs health care workers in the proper methods of handling, recording and documenting their regulated medical waste stream to comply with local, state and federal regulations. It also trains the customer's staff in the handling of disposable and/or reusable sharps containers. The Company will, on request, review a customer's internal waste collection and control system or assist the customer in developing an internal system to provide for the efficient management of regulated medical waste within the customer's facility from its creation to the point of its acceptance by the Company. Safety training and related services are not presently a significant portion of the Company's revenues.

        Employees.    As of December 1, 2004, the Company had 93 full-time and 2 part-time employees. Three of the Company's employees are employed in executive and administrative capacities, and the remainder are in transportation operations, sales, administrative and clerical capacities. None of the Company's employees are subject to collective bargaining agreements. The Company considers its employee relations to be good.

Customers

        The Company's customer base is diverse, with about 8,500 accounts in Texas, Louisiana, Mississippi, Alabama, Arkansas, Florida, Georgia, Oklahoma and Tennessee, including approximately 135 large medical waste generators, such as hospitals, regional medical centers, pharmaceutical facilities, medical testing laboratories and blood banks, and approximately 8,365 small medical waste generators, such as outpatient clinics, surgery centers, physician and dental offices, veterinarians, mortuaries and retirement homes.

        The Company has entered into long-term contracts with substantially all of its customers. Although the Company has a standard form of agreement, the terms of service agreements may vary depending upon the customer's service requirements, the volume of regulated medical waste generated and, in some jurisdictions, requirements imposed by statute or regulation. Service agreements typically include provisions concerning the frequency of collection, pricing, documentation for tracking purposes and the types of waste that will be accepted by the Company. Each agreement also specifies the customer's obligation to pack its medical waste in approved containers. Service agreements are generally for a period of five years, with automatic term renewals at the end of the initial term. The Company may set the prices charged to customers based on the number of containers collected, the weight of the medical waste collected, the number of collection stops made on the customer's route, the products and compliance services provided and other factors. Many payment options are available, including flat monthly, quarterly or annual charges.

        The Company is not dependent upon a single customer or a few customers, and no single customer accounted for over 1% of the Company's revenues during the years ended September 30, 2002, 2003 and 2004. The Company's management does not believe the loss of any single customer would have a material adverse effect on the Company's business, financial condition or results of operations.

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Sales and Marketing

        The Company divides its market into two categories within each geographic region it serves: the hospital market and the professional market. The hospital market consists principally of medical centers, major hospitals, major teaching institutions involved in medicine and research and surgery centers, outpatient clinics and blood banks. The professional market consists primarily of physician and dental offices, laboratories, nursing and convalescent homes, veterinarians and mortuaries. The Company's management believes more stringent federal regulations affecting medical waste will enable the Company to improve its marketing efforts to medical waste generators because this increases the attractiveness of outsourcing medical waste disposal. In addition, the trend toward consolidation of hospitals, medical clinics and physicians' offices into managed health care networks may provide the opportunity for the Company to expand its business with existing medical facilities as they secure contracts with newly affiliated network members.

        The Company uses a multi-part strategy to increase its presence and customer base in a particular geographical market. Company representatives meet personally with a prospective customer to describe the Company's services and to negotiate a service agreement that reflects the prospective customer's service needs. The Company also utilizes an aggressive customer service program to produce new customer leads as well as to ensure continued customer satisfaction and loyalty. The Company continues to seek endorsements or referral relationships with hospitals and professional associations in its market areas in order to achieve a mix of both hospital and professional accounts.

        The Company also markets its services by producing publications and information related to customer compliance with applicable governmental regulations. The Company produces an OSHA compliance manual to assist customers in complying with OSHA regulations and provides a quarterly newsletter on developments of federal medical waste management regulations and issues that may affect customer facilities.

Competition

        The market for regulated medical waste collection and processing services is highly competitive and requires substantial labor and capital resources. The Company experiences intense competition from national, regional and local waste collection firms and integrated firms providing disposal and treatment. These companies compete directly with the Company for medical waste customers in the Company's regional markets. Many of these competitors are larger and have more labor and capital resources than does the Company. The Company also faces competition from large waste generators, such as hospitals and regional medical centers, who choose to manage their waste internally rather than outsourcing their treatment business. Those generators typically purchase disposable containers from one of several manufacturers, use their own personnel to collect and replace containers when full and dispose of the containers and waste with on-site incinerators or other equipment. In addition, the Company competes with businesses and other organizations attempting to market and sell alternate treatment technologies or products designed to reduce or eliminate the generation of medical waste, such as reusable or degradable medical products. Stericycle, the largest medical waste management company in North America, operates in the Company's regional markets and is the Company's principal competitor for customer business. See Part III, Item 13—Certain Relationships and Related Transactions.

        The Company competes for service agreements primarily based on cost-effectiveness, the range of services provided, the quality of service and geographic location. The Company also competes by demonstrating to potential customers that the Company can effectively reduce potential liability under applicable governmental regulations. The Company's ability to obtain new service agreements may be limited by the fact that a potential customer's current waste services provider may have an excellent

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service history or a long-term service contract or may offer to the potential customer lower prices than those offered by the Company.

Potential Liability and Insurance

        The regulated medical waste disposal industry involves potentially significant risks of statutory, contractual, tort and common law liability. Potential liability claims could involve, for example, cleanup costs, personal injury, environmental damage, employee claims, property damage, alleged negligence or professional errors or omissions in the planning or performance of work.

        The Company carries a range of insurance coverage, including a comprehensive general liability policy with a combined single limit for bodily injury and property damage and an excess umbrella liability policy. See Part III, Item 13—Certain Relationships and Related Transactions. The Company also carries transportation liability insurance coverage, which includes coverage for environmental damage caused by waste spillage or other forms of pollution occurring during waste transport. The Company's management believes the types of insurance the Company carries and the amounts of coverage are sufficient to meet regulatory and customer requirements and to protect the Company's employees, assets and operations. However, there can be no assurance the Company's insurance will be adequate under all circumstances or that the Company will be able to maintain its current insurance at existing levels and prices. The Company could potentially be subject to claims under CERCLA or similar state laws resulting in substantial liability for which the Company is uninsured and which could have a material adverse effect on its business.

Acquisitions

        From time to time in the future, the Company may pursue selected acquisitions of other companies or assets that either expand or complement its business in new or existing markets. There can be no assurance the Company will be able to identify and to acquire acceptable acquisition candidates on terms favorable to the Company and in a timely manner. The failure to complete or successfully integrate prospective acquisitions may have an adverse impact on the Company's business. The Company is not currently a party to any oral or written acquisition agreement or engaged in any negotiations with respect to any material acquisition candidate.

Item 2. Properties.

        The Company's principal executive offices, located in Grand Prairie, Texas, occupy approximately 3,200 square feet of office space under a lease expiring on December 31, 2005, under which the Company paid approximately $39,970 during the year ended September 30, 2004. The Company also leases or owns the following facilities:

        The Company believes its facilities are adequate for its current and foreseeable needs.

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Item 3. Legal Proceedings.

Dispute with WSI and Stericycle as to the Conversion Rate for the Preferred Stock

        Pursuant to the terms and conditions of the respective certificates of designations governing the Company's Series B Preferred Stock, par value $0.01 per share ("Series B Preferred Stock"), and the Company's Series C Preferred Stock, par value $0.01 per share ("Series C Preferred Stock," and together with the Series B Preferred Stock, the "Preferred Stock"), all issued and outstanding shares of Preferred Stock automatically converted into shares of the Company's Common Stock, par value $0.01 per share ("Common Stock"), on April 6, 2003. Prior to April 6, 2003, Waste Systems, Inc. ("WSI") and Stericycle asserted that the conversion rate of the Preferred Stock is such that each share of Preferred Stock is convertible into that number of shares of Common Stock determined by dividing $7,000,000 (with respect to the Series B Preferred Stock) or $750,000 (with respect to the Series C Preferred Stock) by the market value of the Common Stock on the date of conversion. On April 6, 2003, the per share closing price of the Common Stock was $0.21. Accordingly, the Company would have issued 36,904,761 shares of Common Stock upon conversion of the Preferred Stock under this interpretation, which would have increased WSI's ownership percentage to 91.2% of the outstanding shares of Common Stock and the combined WSI and Stericycle ownership percentage to 93.2%.

        WSI and Stericycle's interpretation of the conversion rate is contrary to the Company's interpretation of the conversion rate. Based on the certificates of designations governing the Preferred Stock, certain documents executed contemporaneously with the issuance of the Preferred Stock and the intent of the parties at the time of issuance of the Preferred Stock and the execution of these documents, the Company believes the appropriate conversion rate is the per share market value of the Common Stock on the conversion notice date, less $1.00 per share, but the conversion rate shall not be less than $1.00 per share (the "Agreed Maximum Conversion Rate"). Under this interpretation, since the per share market value of the Common Stock was less than $1.00 on April 6, 2003, the Company would have issued 7,750,000 shares of Common Stock upon conversion of the Preferred Stock, which would have increased WSI's ownership percentage to 76.6% of the outstanding shares of Common Stock and the combined WSI and Stericycle ownership percentage to 81.9%.

        The Company has not issued any shares of Common Stock and has not recorded any increase in the outstanding Common Stock relating to the conversion of the Preferred Stock. On April 2, 2003, the Company, WSI and Stericycle entered into an Agreement to Defer Conversion of Preferred Stocks (the "Agreement to Defer Conversion"), pursuant to which all parties agreed the Company will not issue any Common Stock upon conversion of the Preferred Stock until a judicial judgment as to the appropriate conversion rate has become final and non-appealable.

Judicial Filings Regarding the Conversion Rate of the Preferred Stock

        On May 9, 2003, the Company filed a declaratory judgment action in the 269th District Court in Harris County, Texas (the "Court") seeking a judicial determination of the appropriate conversion rate of the Preferred Stock. The Company filed the declaratory judgment action in connection with James T. Rash, et. al. v. Waste Systems, Inc., the Company and certain of the Company's former directors and officers (the "1995 Action"), which was the original proceeding pursuant to which the Preferred Stock was issued by the Company.

        Following a hearing in the 1995 Action and for jurisdictional reasons, the Company elected to initiate a new action (the "2003 Action"), and on August 22, 2003, filed an original petition for declaratory judgment and to enforce the Settlement Agreement, dated July 17, 1997, pursuant to which the Preferred Stock was issued. In this petition, the Company requests the Court establish the conversion rate of the Preferred Stock to be the Agreed Maximum Conversion Rate and confirm the issuance of no more than 7,750,000 shares of Common Stock to WSI as of April 6, 2003.

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        On October 3, 2003, WSI filed a motion to enforce judgment in the 1995 Action and to have the Court declare the Preferred Stock is convertible into 36,904,761 shares of Common Stock. The Company opposed WSI's motion to enforce the judgment. Following a hearing, the Court abated WSI's motion on November 10, 2003.

        On October 24, 2003, Don Smith, Ghere-Smith Interests, Inc., Tidel Technologies, Inc. f/k/a American Medical Technologies, Inc., Jim Rash, individually and in his capacity as representative of the certified class of minority shareholders of 3CI, and Larry Robb, individually and as proposed co-representative of the same certified class (collectively, the "Minority Stockholders"), answered and/or intervened in the 2003 Action, cross-claimed against WSI and filed a third-party petition against Stericycle.

        The Minority Stockholders have asserted, on behalf of all minority stockholders of 3CI, many of the same claims of fraud, breach of fiduciary duty, unjust enrichment and other acts of minority stockholder oppression, as they have alleged in the Louisiana Suit (as defined and discussed below). In addition, the Minority Stockholders have asked the Court to deny 3CI's request for declaratory relief, find that Stericycle and WSI have abused their duties to the minority stockholders and declare Stericycle and WSI, among other things, (i) forfeit all fees, payments, dividends, warrants, preferred stock, common stock, profit shares and all other forms of value which Stericycle and WSI have extracted from 3CI and its minority owners, (ii) pay actual damages of at least $28 million and reasonable punitive damages, and (iii) buy the capital stock of the minority stockholders of the Company at the relative value of 3CI's shares to Stericycle's shares at the time Stericycle gained control over 3CI, i.e. one share of Stericycle common stock for every five shares of Common Stock.

        On December 3, 2003, Stericycle filed its original answer to the Minority Stockholders' third-party petition, and on December 24, 2003, WSI filed its answer and counter-petition in the 2003 Action. In their respective filings, Stericycle and WSI have denied all material allegations and reasserted their claims that the Preferred Stock is convertible into 36,904,761 shares of Common Stock. The parties are currently conducting discovery in the 2003 Action.

        As of September 4, 2003, the Company's full Board of Directors (the "Board") unanimously appointed a Special Committee to act on behalf of the Company in connection with the Company's dispute with WSI and Stericycle as to the appropriate conversion rate of the Preferred Stock. See Part III, Item 10—Directors and Executive Officers of the Registrant, for a further description of the Special Committee's authority, and Part III, Item 13—Certain Relationships and Related Transactions—Litigation.

Louisiana Litigation

        On June 20, 2002, Larry F. Robb, individually, on behalf of a class comprised of the Company's minority stockholders, and derivatively on behalf of the Company (collectively, the "Louisiana Plaintiffs"), filed cause no. 467704-A, Robb et al. v. Stericycle, Inc. et al. (the "Louisiana Suit"), in the First Judicial District Court, Caddo Parish, Louisiana (the "Louisiana Court"). In the Louisiana Suit, the Louisiana Plaintiffs originally asserted numerous claims of minority stockholder oppression, breach of fiduciary duty and unjust enrichment against WSI, Stericycle, the four affiliates of Stericycle who are or were directors of 3CI (the "Stericycle Affiliates") and Otley L. Smith III, the Company's President and Chief Executive Officer.

        As of January 8, 2004, the Board expanded the authority of the Special Committee to grant the Special Committee the exclusive power and authority on behalf of the Company to (i) make all inquiries, conduct all investigations and gather all information related to the Louisiana Suit, the 1995 Action and the 2003 Action, or any actions or proceedings related to any of the foregoing; (ii) make or approve all decisions of the Company related to the Louisiana Suit, the 1995 Action and the 2003 Action, including the Company's filing, amending, maintaining, prosecuting or settling of any legal

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proceedings related to such suits; and (iii) exercise such other power and authority that may be exercised by the full Board with regard to the foregoing. The Special Committee is composed of Stephen B. Koenigsberg and Kevin J. McManus, who are the independent directors on the Board not affiliated with Stericycle or WSI. Robert M. Waller, previously a member of the Special Committee, for personal reasons, resigned from the Board on March 11, 2004. The Special Committee appointed legal counsel to assist it in its investigation of the Louisiana Plaintiffs' allegations and to gather all information related to the Louisiana Suit. See Part III, Item 10—Directors and Executive Officers of the Registrant, for a further description of the Special Committee's authority.

        After conducting an investigation into the facts, arguments and other matters that in its view are related to the issues raised in the Louisiana Suit, the Special Committee has determined that the claims against Stericycle, WSI and the Stericycle Affiliates (the "Louisiana Defendants") in the Louisiana Suit have merit and warrant prosecution by the Company.

        On December 10, 2004, the Company, at the direction of the Special Committee, and the Louisiana Plaintiffs filed a motion with the Louisiana Court seeking leave to file a joint petition (the "Joint Petition"), which was granted on December 14, 2004. The Joint Petition amends and supersedes the Plaintiffs' First Amended Petition filed with the Court on October 27, 2003. Pursuant to the Joint Petition (i) the Company has realigned itself as a plaintiff in the Louisiana Suit and joins on its own behalf in the prosecution of the claims asserted by the Louisiana Plaintiffs in the Louisiana Suit against Stericycle, WSI and the Stericycle Affiliates, and (ii) Otley L. Smith III, the Company's President and Chief Executive Officer, previously named as a defendant in the Louisiana Suit, has been non-suited.

        The Louisiana Plaintiffs and the Company allege in the Joint Petition that the Louisiana Defendants wrongfully (i) diverted the Company's cash and assets, (ii) manipulated and increased the Company's debt to WSI, (iii) directly and indirectly increased Stericycle's and WSI's percentage ownership of the Company, (iv) forced the Company to declare significant cash dividends on its Preferred Stock payable to WSI, (v) usurped the Company's corporate opportunities, (vi) misappropriated the Company's customers, (vii) unfairly competed with the Company, and (viii) operated the Company with the goal of maximizing Stericycle's profitability and furthering Stericycle's integration plan.

        In the Joint Petition, the Louisiana Plaintiffs and the Company jointly pray for a judgment against the Louisiana Defendants for actual damages and punitive damages; for forfeiture of all fees, payments, warrants, Common Stock, and all other forms of value which Stericycle and WSI have received from the Company and its minority stockholders; unwinding Stericycle's acquisition of the Shepherd Parties' (as hereinafter defined) 3CI-related interests and disgorging all benefits realized by Stericycle from that transaction; returning to the Company all shares of Common Stock acquired by WSI pursuant to warrants; declaring the Preferred Stock Dividends null and void; requiring a buyout of the Company's minority stockholders; establishing a constructive trust on all profits or benefits realized by the Louisiana Defendants as the result of the disputed transactions; disqualification of any Stericycle director, officer or other representative from serving on the Board; attorney's and expert witness fees; and pre- and post-judgment interest. The Louisiana Plaintiffs and the Company also request injunctive relief in order to remove the current Stericycle representatives from the Board, prohibit Stericycle thereafter from electing any of its representatives to the Board and require Stericycle and WSI to vote their Common Stock for nominees to the Board who are nominated by the independent directors on the Board. The Louisiana Court has set a trial date of September 12, 2005 if the suit is tried before a jury, and a trial date of October 4, 2005, if the suit is tried to the judge. The Company intends to vigorously prosecute the claims set forth in the Joint Petition.

        In order to avoid any potential for confusion and conflict that may arise if the Company and the Louisiana Plaintiffs separately prosecuted such claims against Stericycle, WSI and the Stericycle Affiliates, the Company, at the direction of the Special Committee, has entered into an Agreement for

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Joint Prosecution by and among the Company, the Louisiana Plaintiffs and The Wynne Law Firm, legal counsel to the Louisiana Plaintiffs in the Louisiana Suit (the "Joint Prosecution Agreement").

        Pursuant to the Joint Prosecution Agreement, the Company and the Louisiana Plaintiffs have agreed to jointly prosecute the claims asserted in the Louisiana Suit against Stericycle, WSI and the Stericycle Affiliates and to seek monetary damages and equitable remedies on behalf of both the Company and the Louisiana Plaintiffs. The Joint Prosecution Agreement provides that two-thirds of all services and other work performed in jointly prosecuting these claims will be performed by the Louisiana Plaintiffs and/or The Wynne Law Firm and one-third of such services and other work will be performed by the Company. In addition, the Joint Prosecution Agreement provides that two-thirds of any monetary recoveries (as defined in the Joint Prosecution Agreement) received by the Company and/or the Louisiana Plaintiffs that are related to, or arise out of, the claims asserted in the Louisiana Suit will be allocated to the Louisiana Plaintiffs and one-third of any monetary recoveries will be allocated to the Company. Pursuant to the Joint Prosecution Agreement, none of the Company (directly or through its counsel), the Louisiana Plaintiffs or The Wynne Law Firm may propose, accept or authorize a settlement or compromise of any or all of the claims asserted in the Louisiana Suit without the prior written consent of the other parties.

        The Joint Prosecution Agreement will become effective on the date that all of the following have occurred: (i) the Louisiana Court certifies the Louisiana Plaintiffs' claims as a class action; (ii) the Louisiana Court approves the Joint Prosecution Agreement; and (iii) the Louisiana Court approves The Wynne Law Firm as counsel to the Louisiana Plaintiffs. A hearing on these matters is scheduled for January 25, 2005. The Company or the Louisiana Plaintiffs may terminate the Joint Prosecution Agreement at any time if a material disagreement arises between the Company and the Louisiana Plaintiffs with respect to the claims asserted in the Louisiana Suit, or if either party in good faith believes that its or their best interests would conflict if the parties continued to jointly prosecute all or any of the claims. Notwithstanding the termination of the Joint Prosecution Agreement, the Company's and the Louisiana Plaintiffs' obligation pursuant to the Joint Prosecution Agreement to share in any monetary recoveries received shall continue in full force and effect.

        The Special Committee has been informed that the Stericycle Affiliates strongly disagree with the claims stated in the Joint Petition and that they believe such claims are without factual or legal basis. Further, the Stericycle Affiliates have informed the Special Committee that they believe they have fulfilled all of their duties as directors and will vigorously defend the claims against them. Accordingly, the signature in this Report of any director of the Company who is an affiliate of Stericycle should be viewed merely as his agreement that, so far as the facts are currently known to him, the disclosures regarding the Louisiana Litigation, the actions of the Special Committee and the Joint Prosecution Agreement, are adequate, and should not be viewed as his agreement with or approval of any determination or other action of the Special Committee or the benefit, if any, that may be afforded to the Company by the Joint Prosecution Agreement.

Other

        The Company was a defendant in Medical Waste Services of America LLC v. American 3CI Complete Compliance Corporation, cause no. 02-65105, in the 151st Judicial District Court of Harris County, Texas. In this suit, the plaintiff sought approximately $818,800 in damages, interest and attorney's fees for failure to pay for treatment of medical waste and for breach of contract. The parties have settled this lawsuit. The settlement has been fully provided for in the Company's audited financial statements.

        The Company is subject to certain other litigation and claims arising in the ordinary course of business. Management believes the amounts ultimately payable, if any, as a result of such claims and

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assessments will not have a materially adverse effect on the Company's financial position, results of operations or net cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

        The Company held its Annual Meeting of Stockholders on September 7, 2004 to elect five directors of the Company. Of the 9,739,611 shares of Common Stock issued and outstanding as of August 11, 2004, which was the record date for the meeting, 8,140,219 shares of Common Stock were represented in person or by proxy at the meeting, which constituted a quorum for the transaction of all business to come before the meeting.

        The first proposal submitted to a vote at the meeting was the nomination of Mark C. Miller, Stephen B. Koenigsberg, Kevin J. McManus, Frank J. M. ten Brink and Anthony J. Tomasello to serve as directors of the Company until the next annual meeting of stockholders or until their respective successors have been duly elected and qualified. All of the persons nominated for election as directors of the Company received the favorable vote of the holders of a majority of the shares of Common Stock present at the meeting, whether in person or by proxy, and entitled to vote. The votes received by each of the nominees at the meeting were as follows:

        The second proposal submitted to a vote at the meeting was the approval of the Company's 2004 Stock Incentive Plan (the "2004 Plan"). The 2004 Plan received the favorable vote of the holders of a majority of the shares of Common Stock present at the meeting, whether in person or by proxy, and entitled to vote. The votes received for the 2004 Plan at the meeting were as follows:

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

        The Company's Common Stock is traded over-the-counter on the OTC Bulletin Board under the symbol "TCCC.OB." The following table provides the high and low bid quotations for the Common Stock on the OTC Bulletin Board for each of the quarterly periods indicated for the fiscal years ended September 30, 2003 and 2004. These quotations indicated the inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

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        As of December 1, 2004, there were 236 owners of record of the Company's Common Stock, and the per share closing sale price of the Common Stock on December 20, 2004 was $1.15.

        The Company has not declared or paid any cash dividends on the Common Stock. The declaration of any future cash dividends on the Common Stock will depend upon the earnings, capital requirements and financial position of the Company, general economic conditions and other pertinent factors.

Item 6. Selected Financial Data.

        The following information is derived from the Company's audited financial statements. This data should be read in conjunction with the financial statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Report.