FORM 10-QSB/A-Quarterly
Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[x] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the period ended September 30, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to ______________________.
Commission file number 0-29098
NAVIDEC, INC.
(Exact name of registrant as specified in its charter)
COLORADO 33-0502730
(State or other (Employer
jurisdiction of Identification No.)
incorporation)
14 INVERNESS DRIVE, SUITE F-116, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-790-7565
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK NO PAR VALUE
Title of Class
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 31, 1997, Registrant had 3,010,000 shares of common stock
outstanding
NAVIDEC, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 1997 and December 31, 1996
Statements of Operations, Three Months and Nine months ended
September 30, 1997 and 1996
Statements of Cash Flows,
Nine months ended September 30, 1997 and 1996
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The sole purpose of this amendment is to add disclosure under
Part II, Item 2 -- "Changes in Securities."
PART II. OTHER INFORMATION
Item 1. Not Applicable
Item 2. Changes in Securities
Item 3-4. Not Applicable
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART III. SIGNATURES
Item 1. Signatures
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NAVIDEC, INC.
BALANCE SHEETS
September 30, December 31,
1997 1996
______________ ______________
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $513,000 $231,000
Accounts Receivable:
Trade net of $50,000
allowance for
doubtful accounts 970,000 100,000
Retainage 25,000 45,000
Work In Process 153,000
Inventory 339,000 196,000
Prepaid expenses and
other current assets 64,000 28,000
-------------- ---------------
Total current assets $2,064,000 $600,000
PROPERTY AND EQUIPMENT, net $776,000 $465,000
OTHER ASSETS
Notes Receivable $30,000 $ 0
Intangibles, net 1,560,000 1,193,000
Deposits 33,000
------------- --------------
Total Assets $4,463,000 $2,258,000
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of
capital lease obligations $31,000 $31,000
Current portion of
long term debt 60,000 0
Accounts Payable
401K/Cafeteria 38,000 0
Notes payable
related parties 9,000 160,000
Line of Credit 35,000 0
Accounts payable 320,000 760,000
Other accrued
liabilities 191,000 360,000
------------- --------------
Total current liabilities $684,000 $1,311,000
CAPITAL LEASE OBLIGATIONS,
net current portion $109,000 $132,000
RELATED PARTY NOTES
PAYABLE, net current portion $ 0 $87,000
LONG TERM DEBT $230,000 $ 0
UNSECURED SUBORDINATED
CONVERTIBLE NOTES $ 0 $1,438,000
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value;
20,000,000 shares
authorized 2,701,000 and
1,701,000 shares issued
and outstanding $5,887,000 $401,000
Accumulated deficit (2,447,000) (1,111,000)
------------- -------------
Total stockholders'
equity (deficit) $3,440,000 $(710,000)
------------- -------------
TOTAL LIABILITIES and
STOCKHOLDERS' EQUITY $4,463,000 $2,258,000
============= =============
</TABLE>
See accompanying notes to these financial statements
<TABLE>
<CAPTION>
NAVIDEC, INC.
STATEMENTS OF OPERATIONS
For the Nine Months For the Three Months
Ended September 30 Ended September 30
------------------------------- --------------------------
1997 1996 1997 1996
------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
NET SALES $4,877,000 $4,222,000 $1,926,000 $1,750,000
Cost of Sales 3,234,000 3,417,000 1,308,000 1,354,000
------------- ------------- ------------- -------------
GROSS MARGIN $1,643,000 $805,000 $618,000 $396,000
Operating
Expenses $2,959,000 $1,391,000 $968,000 $758,000
-------------- -------------- -------------- -------------
OPERATING
(LOSS) $(1,316,000) $(585,000) $(350,000) $(362,000)
OTHER INCOME (EXPENSES)
Interest,
net $(21,000) $(128,000) $(9,000) $(105,000)
Other 1,000 (1,000) 0 2,000
-------------- -------------- ------------- ------------
Other, net $(19,000) $(129,000) $(9,000) $(103,000)
-------------- -------------- ------------- ------------
NET INCOME
(LOSS) $(1,336,000) $(714,000) $(359,000) $(465,000)
============== ============== ============= ============
NET LOSS
PER SHARE $ (.51) $ (.59) $ (.12) $ (.39)
COMMON SHARES
AND
EQUIVALENTS 2,610,000 1,202,000 2,943,000 1,202,000
</TABLE>
See accompanying notes to these financial statements
<TABLE>
<CAPTION>
NAVIDEC, INC.
STATEMENTS OF CASH FLOWS
For The Nine Months Ended
September 30
1997 1996
------------------------------------------
<S> <C> <C>
Cash flows from operating
activities
Net Loss $(1,336,000) $(714,000)
Adjustments to
reconcile net loss to
net cash used by
operating activities:
Depreciation and amortization 233,000 89,000
Stock based compensation 0 83,000
Provision for bad debt 23,000
Changes in operating assets
and liabilities
Decrease (increase) in
accounts receivable (770,000) (395,000)
Decrease (increase) in
work in process (153,000) 0
Decrease (increase) in
inventory (105,000) (78,000)
Decrease (increase) in
other assets ( 66,000) (26,000)
Increase (decrease) in
accounts payable and
accrued liabilities (536,000) 304,000
Increase(decrease) in
other liabilities (227,000) 109,000
--------------- ---------------
Net cash (used in)
operating activities $(2,960,000) $(605,000)
Cash flows from investing activities
Purchases of fixed assets $(403,000) $(377,000)
Cash acquired in merger with IPI 5,000
Cash acquired in merger with
TouchSource 7,000 0
-------------- --------------
Net cash used in
investing activities $ (396,000) $(372,000)
Cash flows from financing activities:
Proceeds from sale of
accounts receivable $240,000 $773,000
Payments on notes payable (1,949,000) (2,520,000)
Proceeds from issuance of
notes/capital leases 300,000 3,207,000
Decrease (increase) in
notes receivable (30,000) 0
Issuance of common stock 5,115,000 2,000
Payment for deferred financing
and offering cost (38,000) (208,000)
--------------- ---------------
Net cash provided by
financing activities $3,638,000 $1,254,000
--------------- ---------------
Net increase in cash $282,000 $277,000
=============== ===============
Supplemental schedule of cash flow information:
Debentures converted to
common stock $1,438,000 $ -
=============== ==============
</TABLE>
See accompanying notes to these financial statements
NOTES TO FINANCIAL STATEMENTS
Unaudited Financial Statements
The unaudited financial statements and related notes to the financial
statements presented herein have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations. The accompanying financial statements were prepared in
accordance with the accounting policies used in the preparation of the
Company's audited financial statements included in its Annual Report on Form
10-KSB for the fiscal year ended December 31, 1996, and should be read in
conjunction with such financial statements and notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair presentation of
operating results for the interim period presented have been made.
Stockholders' Equity
Public Stock Offering - On February 14, 1997, the Company completed an
initial public stock offering of 1,000,000 Units (comprised of
1,000,000 shares of common stock and warrants for the purchase of
1,000,000 shares of common stock) which provided gross proceeds to the
Company of approximately $4,555,000. Simultaneous with the offering
convertible debenture holders converted $1,438,000 in convertible notes into
common stock and warrants. Included in the 1,000,000 Units are
245,000 shares of common stock offered by the holders of the unsecured
subordinated convertible promissory notes. Each warrant allows the holder to
purchase one share of common stock at an exercise price of $7.20 for a period
of five years after the date of the offering. The warrants are redeemable by
the Company at $.05 per warrant upon 30 days notice if the market price of
the common stock for 20 consecutive trading days within the 30-day period
preceding the date the notice is given equals or exceeds $8.40. The Company
also sold to the underwriter at the close of the public offering underwriters
warrants, at a price of $0.001 per warrant, to purchase 100,000 shares of
common stock exclusive of the over-allotment. The underwriters warrants are
exercisable for 4 years beginning in February 1998 at $7.38 per share.
Stock Split - During 1996, the Company declared a 1 for 2 reverse stock split
and 510.2041 to 1 stock split. The Company also declared a .85 for 1 reverse
stock split which became effective upon the initial public offering in
February 1997. All common stock reflected in the financial statements and
accompanying notes reflect the effect of the split and reverse split.
Notes Payable
Notes payable at September 30, 1997, consists of the following:
Note payable to a bank, interest at prime
plus 1/2% (8.75% as of September 30, 1997)
and principal payments of $5,000 payable monthly
with remaining principal paid upon maturity
in June 2002, collateralized by a CD
owned by the company. $280,000
Note payable to officer/director /shareholder,
principal along with interest at 10% per annum
due on December 31, 1997. $ 4,000
Note payable to shareholder, non-interest
bearing, subordinated to all other
indebtedness of the Company,
due in monthly installments of
$4,583 through Oct 1, 1997. $ 5,000
Subsequent Events
Merger with TouchSource - Effective July 30, 1997, the Company acquired
TouchSource, Inc. in a purchase transaction where the Company acquired 100%
of the stock of TouchSource for 207,000 shares of common stock of the
Company. The acquisition was valued at $1,024,000 and resulted in goodwill
of $877,000 being recorded. The goodwill is being amortized over five years.
TouchSource designs and markets touch screen computer kiosks.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The company was organized as ACI Systems, Inc. in July 1993 and changed its
name to NAVIDEC, Inc. in July 1996. The Company's principal sources of
revenue are from sales of (i) computers, peripherals and electronic
components ("Distribution"), (ii) computer network infrastructure
("Infrastructure"), and (iii) Internet/Intranet solutions ("Internet/Intranet
Solutions"). Effective July 11, 1996, the Company acquired all of the
outstanding common shares of Interactive Planet, Inc. ("IPI") in exchange for
678,877 shares of the Company's common stock and a promissory note of $75,000
payable to a shareholder of IPI and merged IPI in the Company. In addition,
as of July 30, 1997, the Company acquired all of the outstanding common
shares of TouchSource, Inc. ("TouchSource") in exchange for 207,000 shares
of the Company's common stock and merged TouchSource in the Company.
Management believes that the merger with IPI has accelerated and the
acquisition of TouchSource will accelerate implementation of the Company's
Internet/Intranet Solutions operating plan while contributing to continued
growth in systems integration and sales of networking and computer
peripherals and supplies. The historic operations of IPI prior to the merger
were minimal and comparable financial data is not available.
The Company's strategy is to increase revenue generated by its two core
competencies: (1) Internet/Intranet and Kiosk Solutions, which are focused in
four major market areas, including computer and network infrastructure
equipment, software and services, electronic commerce and order fulfillment,
and (2) Product Distribution. The Company has built and intends to continue
to build an infrastructure that assumes this strategy will succeed. The
failure of the Company to achieve this strategy could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company recognizes revenue upon delivery of its Internet/Intranet and
Kiosk Solutions and Product Distribution goods. Internet/Intranet and Kiosk
Solutions generally begin with consulting arrangements that are billed on an
hourly basis and then progress to a bid for a proposed project. Deposits
are then taken upon acceptance of the bid. Most of the Company's customers
elect to update and expand their Web sites frequently, and clients are billed
monthly on a time and materials basis for these services. Additional sources
of ongoing revenue include revenue from advertising sold by the Company on
clients' Web sites, revenue from sales of merchandise and services over
clients' Web sites and revenue from maintenance and hosting of client Web
sites. The Company receives a percentage of gross revenue from advertising
and merchandise sales immediately upon completion of these sales.
Results of Operations
The following tables set forth for the periods indicated the percentage of
net sales represented by certain line items included in the Company's
statement of operations.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
____ _____ ____ _____
<S> <C> <C> <C> <C>
Net Sales 100% 100% 100% 100%
Cost of Sales 68 77 66 81
Gross Margin 32 23 34 19
Operating Expense 50 43 61 33
Other Income (Expense) 0 (6) (1) (3)
Net Income (Loss) (19) (27) (27) (17)
</TABLE>
Net sales for the nine months ended September 30, 1997 were $4,877,000, which
represents an increase of 16% over net sales of $4,222,000 for the nine
months ended September 30, 1996. Net sales were $1,926,000 for the three
months ended September 30, 1997, which represents an increase of 10% compared
to $1,750,000 for the three months ended September 30, 1997. The increase
was primarily attributed to the companies introduction of its new automotive
on-line solutions.
Sales of Internet/Intranet Solutions during the nine months ended September
30, 1997 increased by $724,000, or 190%, to $1,106,000, compared to sales of
$382,000 for the nine months ended September 30, 1996. Sales of
Internet/Intranet Solutions were $472,000 for the three months ended
September 30, 1997, an increase of $276,000, or 141%, compared to sales of
$196,000 during the three months ended September 30, 1996. Infrastructure
sales increased by $1,055,000, or 150%, to $1,759,000, compared to $704,000
for the nine months ended September 30, 1996. Infrastructure sales were
$900,000 for the three months ended September 30, 1997, an increase of
$675,000, or 300%, compared to $225,000 for the three months ended September
30, 1997. Management believes the increase in sales in both divisions was
attributable to the systems approach the Company implemented in the third
quarter of 1996.
Sales for Distribution during the nine months ended September 30, 1997
decreased by $1,124,000, or 36%, to $2,012,000 compared to $3,136,000 for the
nine months ended September 30, 1996. Sales for Distribution were $553,000
for the three months ended September 30, 1997, a decrease of $590,000, or
52%, compared to $1,143,000 for the three months ended September 30, 1996.
The decrease in Distribution sales is the result of the Company's
discontinuation of Laser and Repro-graphics products, which accounted for
$1,052,000 in sales for the nine months ended September 30, 1996 and $503,000
for the three months ended September 30, 1996.
Gross margin was 32% of net sales for the nine months ended September 30,
1997, nine percentage points higher than the gross margin for the same period
of 1996. This represented an absolute increase of $838,000 in gross margin
for the nine months ended September 30, 1997 compared to the nine months
ended September 30, 1996. The increase in gross margin is attributed to the
strong gross margin of Internet/Intranet Solutions and management's decision
to eliminate certain low margin Distribution products. For the three months
ended September 30, 1997, gross margin increased to 34% of net sales, fifteen
percentage points higher than the gross margin for the 1996 period. This
represented an absolute increase of $222,000 in gross margin for the three
months ended September 30, 1997 compared to the three months ended September
30, 1996.
Operating expenses for the nine months ended September 30, 1997 were
$2,959,000 compared with $1,391,000 for the nine months ended September 30,
1996, and were $968,000 compared with $758,000 for the three months ended
September 30, 1997 and 1996, respectively. The increases in operating
expenses were primarily the result of an increase in staff needed to develop
the Company's nationwide and regional automotive project and its Intranet
initiatives, increased marketing activity and goodwill and depreciation
expense resulting from expansion and the merger with IPI and TouchSource.
Net interest expense for the nine months ended September 30, 1997 was $19,000
compared with $129,000 for the nine months ended September 30, 1996. For the
three months ended September 30, 1997, the Company had net interest expense
of $9,000 compared with a net interest expense of $105,000 during the three
months ended September 30, 1996. The higher interest expense in 1996 was a
result of bridge financing promissory notes, credit facilities with the
Company's banks and expenses related to loans from shareholders.
Liquidity and Capital Resources
Through February 14, 1997, the Company funded its operations primarily
through revenues generated from operations, a bridge financing private
placement, loans from principal shareholders and employees, and lines of
credit and factoring arrangements made available to it by banks. On February
14, 1997, the Company completed its Initial Public Offering, which generated
net proceeds of approximately $3,504,000. On September 30, 1997, the Company
had cash and cash equivalents of $513,000 and net working capital of
$1,380,000. This compares with cash and cash equivalents of $231,000 and a
working capital deficit of $711,000 on December 31, 1996.
Cash used in operating activities for the Company totaled $2,960,000 and
$605,000 for the nine months ended September 30, 1997 and 1996, respectively.
Cash used in investing activities totaled $396,000 and $372,000 for the nine
months ended September 30, 1997 and 1996, respectively. Cash used in
investing activities consisted of expenditures for property and equipment net
of cash acquired in the merger with TouchSource. Capital expenditures
increased to $403,000 during the nine months ended September 30, 1997,
compared to $377,000 for the nine months ended September 30, 1996. During
the nine months ended September 30, 1997 and 1996, cash provided by financing
activities (including advances under the Company's line of credit and
factoring arrangement and proceeds from the bridge financing private
placement) was $3,668,000 and $1,254,000, respectively, net of note and line
of credit payments of $240,000 and $2,520,000, respectively.
The Company has not recorded a deferred tax asset as it cannot conclude to
date that it is more likely than not that the deferred tax asset will be
realized.
Forward Looking Information
Information contained in this report, other than historical information,
should be considered forward looking and reflects management's current views
of future events and financial performance that involve a number of risks and
uncertainties. The factors that could cause actual results to differ
materially include, but are not limited to, the following: general economic
conditions and developments within the Internet and Intranet industries;
length of sales cycle; variability of sales order flow; and management of
growth.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
On February 10, 1997, the Securities and Exchange Commission declared
effective the Company's registration statement ("Registration Statement") on
Form SB-2 (file no. 333-14497) for a public offering of the Company's
securities. The offering commenced on February 11, 1997 and closed on
February 14, 1997. The managing underwriter for the offering was Joseph
Charles & Associates, Inc. (the "Representative").
The Registration Statement registered units ("Units") consisting of one share
of the Company's no par value common stock ("Common Stock") and one warrant
for the purchase of one share of Common Stock at $7.20 per share exercisable
for five years from February 10, 1997 ("Warrant"). A portion of the shares
of Common Stock included in the offering were sold by certain selling
stockholders ("Selling Stockholders"). The Registration Statement further
registered Common Stock and Warrants issued to the Selling Stockholders which
were not included in the offering. Finally, the Registration Statement
registered Representative's Options for the purchase of up to 100,000 shares
of Common Stock at $7.38 per share exercisable beginning February 10, 1998
until February 10, 2001.
The following table sets forth the amount and aggregate offering price of
securities registered and sold to date for the account of the issuer and for
the account of the Selling Stockholders.
<TABLE>
<CAPTION>
For the account of For the account(s) of any
the issuer selling security holder(s)
Title Amount Aggregate Amount Aggregate Amount Aggregate Amount Aggregate
of Regis- price of Sold Offering regis- offering sold Offering
Secur- tered offering Price of tered Price of Price of
ity amount amount Amount Amount
Registered Sold Registered Sold
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common
Stock
905,000 5,339,500 755,000 4,454,500 349,126 2,059,843 245,000 1,445,500
Warrants
1,150,000 115,000 1,000,000 100,000 349,126 34,913 -0- -0-
Common Stock
Issuable Upon
Exercise of
Warrants
1,150,000 8,280,000 -0- -0- 349,126 2,513,707 -0- -0-
Representative's
Options
100,000 100 100,000 100
Common Stock
Issuable Upon
Exercise of
Representative's
Options
100,000 738,000 -0- -0-
TOTAL 14,472,000 4,554,600 4,608,463 1,445,500
</TABLE>
The following table shows the expenses incurred by the Company in the
offering. An (X) after a number indicates that the number is an estimate.
<TABLE>
<CAPTION>
Direct or indirect payments Direct or indirect payments to
to directors, officers, to others
general partners of the issuer
or their associates; to persons
owning ten percent or more of
any class of equity securities
of the issuer; and to affiliates
of the issuer
<S> <C> <C>
Underwriting discounts
and commissions $ 455,450
Finders' Fees 0
Expenses paid to
or for underwriters 210,000 (X)
Other expenses 385,050 (X)
Total Expenses $0 $ 1,050,500 (X)
The net offering proceeds to the Company were $3,504,000.
The following table shows the use of the Company's net offering proceeds
from the closing date of the offering until September 30, 1997. An (X)
after a number indicates that the number is an estimate.
Direct or indirect payments Direct or indirect payments
to directors, officers, to others
general partners of the issuer
or their associates; to persons
owning ten percent or more of any
class of equity securities of the
issuer; and to affiliates of the
issuer
Construction of plant,
building and facilities
Purchase and installation
of machinery and equipment $272,000
Purchase of real estate
Acquisition of other
business(es) 33,000 (X)
Repayment of indebtedness $60,000 (X) 90,000 (X)
Working capital 944,000 (X)
Temporary investment (specify)
Increases in Accounts
Receivable $875,000 (X)
Cash - Short Term
Investments 300,000 (X)
Other purposes (specify)
Advertising $170,000 (X)
Development of Internet/
Intranet Solutions 370,000 (X)
Development of Wheels
Solutions 310,000 (X)
Marketing 80,000 (X)
The offering terminated prior to the exercise by the Representative of its
over-allotment option for 150,000 Units. Accordingly, the shares of Common
Stock and Warrants represented by those Units were not sold.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On July 30, 1997, the Registrant consummated a merger with TouchSource, Inc.,
a Colorado corporation ("TouchSource"), in which the Registrant was the
surviving company (the "Merger"). The merger will be accounted for as a
purchase effective September 30, 1997.
TouchSource is a leading developer of touch screen kiosks for a variety of
markets including tourism and health care. The Registrant issued an
aggregate of 207,000 shares to the former shareholders of TouchSource as
consideration for TouchSource. Prior to the Merger, the Registrant and
TouchSource had worked together to jointly provide Internet/Intranet
Solutions to clients but were not otherwise related. The amount of the
consideration was determined in arms' length negotiations between the
Registrant and TouchSource and took into account TouchSource's technical
expertise, its client base and its current contracts and the anticipated
revenue therefrom. In connection with the Merger, the Registrant entered
into a one-year employment agreement with Michael Franklin, the president of
TouchSource, for the employment of Mr. Franklin as Sales Manager of Kiosk
Products for an annual salary of $50,000 plus commissions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The exhibits included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996
are incorporated herein by reference. In addition, the
following exhibits are included with this report:
10.21 Agreement and Plan of Merger Between NAVIDEC, Inc. and
TouchSource, Inc.
10.22 Employment Agreement between NAVIDEC, Inc. and Michael
Franklin
27 Financial Data Schedule
(b) Reports on Form 8-K
There are no reports on Form 8-K filed during the quarter
for which this report is filed.
PART III. SIGNATURES
Item 1. Signatures
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NAVIDEC, INC.
Date: January 8, 1998
By /S/ RALPH ARMIJO
Ralph Armijo
President and CEO
By /S/ PAT MAWHINNEY
Pat Mawhinney
Chief Financial Officer
</TABLE>
