<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET & STATEMENT OF INCOME 12-31-96 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 76,013
<SECURITIES> 0
<RECEIVABLES> 1,691,323
<ALLOWANCES> 79,504
<INVENTORY> 1,630,218
<CURRENT-ASSETS> 3,555,412
<PP&E> 3,466,380
<DEPRECIATION> 833,023
<TOTAL-ASSETS> 8,157,255
<CURRENT-LIABILITIES> 799,722
<BONDS> 2,419,433
<COMMON> 1,981,205
0
0
<OTHER-SE> 2,549,957
<TOTAL-LIABILITY-AND-EQUITY> 8,157,255
<SALES> 2,222,630
<TOTAL-REVENUES> 2,222,630
<CGS> 1,267,917
<TOTAL-COSTS> 1,267,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,200
<INTEREST-EXPENSE> 49,027
<INCOME-PRETAX> 95,798
<INCOME-TAX> 37,289
<INCOME-CONTINUING> 58,509
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,509
<EPS-PRIMARY> .007
<EPS-DILUTED> .007
</TABLE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
December 31, 1996.
[ ] Transition Report Under Section 13 or 15(d) of the
Exchange Act for the transition period from _________ to
_________
Commission File Number: 0-12697
Dynatronics Corporation
-----------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0398434
- ------------------------------- --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization)
Identification No.)
7030 Park Centre Drive, Salt Lake City, UT 84121
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 568-7000
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
X Yes No
----- -----
The number of shares outstanding of the issuer's common stock,
no par value, as of February 5, 1997 is 8,424,747 shares.
Transitional Small Business Disclosure Format.
Yes X No
- ------ -------
<PAGE>
DYNATRONICS CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page Number
Condensed Balance Sheet
December 31, 1996 1
Condensed Statements of Income
Three Months and Six Months Ended December 31, 1996,
and December 31, 1995 2
Condensed Statements of Cash Flows
Three Months and Six Months Ended December 31, 1996,
and December 31, 1995 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 6
Part II. OTHER INFORMATION 10
<PAGE>
DYNATRONICS CORPORATION
Condensed Balance Sheet
<TABLE>
<CAPTION>
December 31
ASSETS 1996
-----------------
<S> <C>
Current assets:
Cash and cash equivalents $ 76,013
Trade accounts receivable, less allowance for doubtful
accounts of $79,504 1,611,821
Income tax refund receivable 0
Related party and other receivables 94,858
Inventories 1,630,218
Prepaid expenses 70,528
Deferred tax asset-current 71,974
-----------------
Total current assets 3,555,412
Net property and equipment 2,633,356
Excess of cost over book value, net of accumulated amortization
of $170,579 1,264,196
Deferred tax asset-noncurrent 234,836
Other assets 469,455
-----------------
$ 8,157,255
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 132,756
Current installments of capital lease obligations 9,186
Line of credit 156,743
Accounts payable 253,847
Accrued expenses 247,190
-----------------
Total current liabilities 799,722
Long-term debt, excluding current installments 2,419,433
Capital lease obligations, excluding current installments 0
Deferred compensation 406,938
-----------------
Total long-term liabilities, excluding current installments 2,826,371
-----------------
Total liabilities 3,626,093
Stockholders' equity:
Common stock, no par value. Authorized 50,000,000
shares; issued and outstanding 8,424,747 shares 1,981,205
Retained earnings 2,549,957
-----------------
Total stockholders' equity 4,531,162
-----------------
$ 8,157,255
=================
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
DYNATRONICS CORPORATION
Condensed Statements Of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
1996 1995 1996 1995
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 2,222,630 1,995,379 4,605,301 3,325,318
Cost of sales 1,267,917 1,050,094 2,633,366 1,766,102
------------ ------------ ------------- ------------
Gross profit 954,713 945,285 1,971,935 1,559,216
Selling, general, and administrative expenses 683,438 500,638 1,420,938 965,942
Research and development expenses 151,245 136,199 289,472 293,011
------------ ------------ ------------- ------------
Operating income (loss) 120,030 308,448 261,525 300,263
Other income (expense):
Interest income 4,229 8,485 7,215 17,803
Interest expense (49,027) (38,985) (99,637) (78,659)
Other income, net 20,566 44,517 49,611 87,269
Write-off of ITEC note receivable (228,824) 0 (228,824)
------------ ------------ ------------- ------------
Total other income (expense) (24,232) (214,807) (42,811) (202,411)
Income before income taxes 95,798 93,641 218,714 97,852
Income tax expense (benefit) 37,289 (33,710) 84,753 (32,396)
------------ ------------ ------------- ------------
Net income $ 58,509 127,351 133,961 130,248
------------ ------------ ------------- ------------
Net income per common share and common
share equivalents (note 2): $ 0.01 0.02 0.02 0.02
============ ============ ============= ============
Weighted average number of common shares
and common share equivalents outstanding 8,424,747 7,964,394 8,424,747 7,954,704
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
DYNATRONICS CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 133,962 130,248
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization of property and equipment 91,036 85,575
Other amortization 43,435 4,389
Provision for doubtful accounts 6,000 6,000
Provision for inventory obsolescence 48,000 48,000
Provision for warranty reserve 54,944 50,653
Decrease (increase) in operating assets:
Receivables (215,865) (360,021)
Inventories (60,383) 158,892
Prepaid expenses and other assets (59,109) (44,906)
Deferred tax assets 14,447 (99,398)
Increase (decrease) in operating liabilities:
Trade accounts payable and accrued expenses (219,868) (1,772)
Deferred compensation 40,092 38,292
Income taxes payable 94,763 (20,298)
------------ ------------
Net cash provided by (used in) operating activities (28,546) (4,346)
------------ ------------
Cash flows from investing activities:
Capital expenditures (88,571) (18,816)
------------ ------------
Net cash provided by (used in) investing activities (88,571) (18,816)
------------ ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (13,485) (24,681)
Principal payments on long-term debt (81,071) (49,732)
Net change in line of credit (129,168) 0
Proceeds from sale of common stock 0 17,938
------------ ------------
Net cash provided by (used in) financing activities (223,724) (56,475)
------------ ------------
Net increase (decrease) in cash and cash equivalents (340,841) (79,637)
Cash and cash equivalents at beginning of period 416,854 779,054
------------ ------------
Cash and cash equivalents at end of period $ 76,013 699,417
============ ============
Supplemental cash flow information
Cash paid for interest (net of amounts capitalized) 99,636 78,659
Cash paid for income taxes 52,100 87,300
Supplemental disclosure of non-cash investing and financing activities
Long-term debt incurred for fixed assets 0 0
Capital lease obligations incurred for property and equipment 0 0
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
DYNATRONICS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
NOTE 1. PRESENTATION
The financial statements as of December 31, 1996 and for
the six months then ended were prepared by the Company
without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of
management, all necessary adjustments to the financial
statements have been made to present fairly the financial
position and results of operations and cash flows. All
adjustments were of a normal recurring nature. The results
of operations for the respective periods presented are not
necessarily indicative of the results for the respective
complete years. The Company has previously filed with the
SEC Annual Reports on Form 10-K under the name of
Dynatronics Corporation and/or Dynatronics Laser
Corporation which included audited financial statements for
the three years ending June 30, 1996, 1995, and 1994. It
is suggested that the financial statements contained in
this filing be read in conjunction with the statements and
notes thereto contained in the Company's 10-K filing.
NOTE 2. EARNINGS PER SHARE
Earnings per common share and common share equivalents are
computed by dividing net income by the weighted average
number of shares of common stock and common stock
equivalents outstanding during the period. Common stock
equivalents include shares issuable upon exercise of the
Company's stock options.
<PAGE>
NOTE 3. INVENTORIES
Inventories consisted of the following:
December 31
1996
-----------
Raw Materials $ 1,153,027
Finished Goods 565,395
Inventory Reserve (88,204)
-----------
$ 1,630,218
===========
<PAGE>
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment were as follows:
December 31
1996
-------------
Land $ 589,920
Building 1,935,297
Machinery and equipment, and
equipment under capital lease 941,163
-------------
3,466,380
Less Accumulated depreciation
and amortization. $ 833,024
-------------
$ 2,633,356
=============
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Sales for the six-month period ended December 31, 1996
increased 38 percent to $4,605,301 as compared to $3,325,318
in the same period of the prior year. Sales for the three-
month period ended December 31, 1996 increased 11 percent to
$2,222,630 as compared to $1,995,379 in the prior year period.
In fiscal 1995, the Company experienced a shift of
approximately $700,000 in sales from the quarter ended
September 30th to the quarter ended December 31st. The reason
for this shift was the delayed introduction of the Dynatron
650 Electrotherapy device and Dynatron 950 Combination
Electrotherapy/Ultrasound device. Therefore, management
believes the most meaningful comparison of the Company's
performance and growth from fiscal 1995 to fiscal 1996 to date
is reflected in the six-month figures.
The increase in sales for the three and six month periods of
fiscal 1996 is attributable to three key factors: 1) The
introduction of the Dynatron 125 Ultrasound Therapy device in
September 1996 and the Dynatron 525 Electrotherapy device in
August 1996 both of which target the low-priced segment of the
market; 2) Increased sales of medical soft goods and supplies
resulting from the Company's acquisition of Superior
Orthopaedic Supplies in May, 1996; and 3) Sales of
iontophoresis products through the Company's exclusive
distribution agreement with Life-Tech, Inc. entered into in
August 1996.
The introduction of the Dynatron 125 and 525 has led
Dynatronics into a segment of the market in which the Company
has not historically competed. This new line continues to
open increased sales opportunities for the Company both
domestically and internationally. By incorporating state-of-
the-art technology to reduce manufacturing costs, profit
margins for these products are among the highest of any
devices manufactured by the Company.
The development of sales obtained through the acquisition of
Superior Orthopaedics accounts for the majority of increased
sales for the reporting period and continues to be a focal
point of the Company's overall strategy. Combining the
Superior product line with Dynatronics distribution network is
expected to create a strategic advantage that will sustain
continued sales growth through the remainder of fiscal year
1996 into future periods. Dynatronics' first full-line
catalogue was published in January, 1997 and is expected to
further support sales growth of these products in future
periods.
<PAGE>
In August 1996, the Company announced the signing of an
agreement with Life-Tech, Inc. which appointed Dynatronics as
the exclusive distributor of Life-Tech iontophoresis products
to the physical medicine market. Iontophoresis is a process
of transdermally delivering certain anti-inflammatory and
anesthetic drugs into a localized area without the use of
needles. Even though the agreement with Life-Tech was only in
the initial stages during the reporting period, sales of
iontophoresis products accounted for over 10% of the increase
in sales over the comparative period ended December 31, 1995.
Gross Margins for the six-month period increased 26 percent
to $1,971,935 as compared to $1,559,216 in the prior year
period. Gross Margins for the three-month period increased
to $954,713 as compared to $945,285 in the prior year
period. These increases are primarily attributable to the
increase in sales volume as mentioned above.
In spite of higher margins on the new Dynatron 125 and 525,
Gross Margins as a percentage of sales declined to 43.0
percent during the reporting quarter as compared to 47.3
percent in the prior year period. This reduction in margin
percentage is due entirely to the addition of medical
supplies and soft goods which carry lower margins than the
Company's electronic medical devices. Management expects
gross margins will remain at current levels in future
periods based on anticipated manufacturing costs, sales
pricing levels and product mix.
Selling, General and Administrative (SG&A) expenses for the
six-month period increased to $1,420,938 as compared to
$965,942 in the same period last year while SG&A for the
three-month period increased to $683,438 as compared to
$500,638 in the prior year period. These increases are
attributable to the assimilation of the new operations in
Tennessee associated with the May 1996 acquisition of
Superior Orthopaedic Supplies. Labor expense also increased
due to staffing needs created by higher sales volume and the
anticipation of and preparation for further sales growth in
the future.
Research and development expenses in the six-month period
totaled $289,472 compared to $293,011 in the prior year
period. R&D for the three month period increased to
$151,245 compared to $136,199 in the previous year. The
increase in R&D for the reporting quarter is related to
development of a newly redesigned line of capital equipment
known as the "50 Series Plus" which will be introduced in
February, 1997.
Operating income decreased to $261,525 in the six-month
period ended December 31, 1996 compared to $300,263 in the
prior year period, while operating income for the reporting
quarter decreased to $120,030 as compared to $308,448 in the
previous year. These decreases are directly related to the
lower profit margins associated with the medical supplies
<PAGE>
and soft goods products and the additional SG&A expenses
associated with the medical soft goods and supplies
operation together with the increased labor expenses created
by higher sales volumes. Management notes that in the
quarter ended December 31, 1995, sales revenues were
increased by approximately $700,000 from backlog orders for
the Dynatron 650 and 950 that were filled during the quarter
ended December 31, 1995. This had the effect of shifting
operating income for essentially the full six-month period
to the three-month period ending December 31, 1995. Sales
figures for the quarter ended December 31, 1996 were not
affected by similar occurrences.
Income before tax for the six-month period increased
significantly to $218,714 compared to $97,852 during the
similar period of the prior year. Income before tax for the
three-month period increased to $95,798 compared to $93,641
in the prior year period. While increased sales together
with the higher margins associated with the new Dynatron 125
and 525 products contributed to these increases, it should
be noted that during the first six months of fiscal 1995,
the Company was required to recognize a charge in the amount
of $228,824 representing a write-off of a note receivable
due from ITEC Attractions, which at the time was an
affiliate of the Company. ITEC filed a voluntary petition
for protection under Chapter 11 of the U.S. bankruptcy laws
on January 25, 1996.
Income tax expense for the six-month period equaled $84,753
as compared to a benefit of $32,396 in the 1995 period. For
the three-month period, income tax expense equaled $37,289
compared to a benefit of $33,710 in the prior year period.
The income tax benefit was related to the write-offs
associated with the ITEC Attractions bankruptcy filing.
Net income for the six-month period increased to $133,961
compared to $130,248 for the same period in the prior year.
Net income for the three-month period decreased to $58,509
compared to $127,351 in the 1995 quarter. This decrease is
a result of the factors discussed above. Management expects
profits will improve as sales volumes continue to increase.
Liquidity and Capital Resources
- -------------------------------
The Company expects that revenues from operations, together
with available sources of borrowing, will be adequate to
meet its working capital needs related to its business and
its planned capital expenditures for the upcoming operating
year.
The Company continues to maintain a liquid position. The
Company's current ratio at December 31, 1996 was 4.4 to 1.
Current assets represent 44 percent of total assets.
Trade accounts receivable are from the Company's dealer
network and are generally considered to be within term. All
<PAGE>
accounts payable are within term with the Company continuing
its policy of taking advantage of any and all payment
discounts available.
The Company maintains a revolving line of credit in the
amount of $1,500,000 with a commercial bank. The
outstanding balance on this line of credit at December 31,
1996 was $156,743, with $1,343,257 available to the Company.
Inventory levels at December 31, 1996 equaled $1,630,218.
Accounts receivable at December 31, 1996 totaled $1,611,821.
Management anticipates inventory and accounts receivable
levels may increase in future quarters as new products are
introduced and sales volumes improve.
Long-term debt excluding current installments at December
31, 1996 totaled $2,419,433, comprised primarily of the
mortgage loan on the Company's office and manufacturing
facility and the note payable associated with the
acquisition of Superior Orthopaedic Supplies. The balance
on the mortgage loan is approximately $2 million with
monthly principal and interest payments of $19,700.
<PAGE>
Business Plan
- -------------
In January, the Company announced it had acquired assets to
begin manufacturing physical therapy treatment tables,
parallel bars, and other specialty rehabilitation treatment
tables at a facility in Columbia, South Carolina. Agreements
were signed effective January 1, 1997 with Mr. Charlton
"Stoney" Floyd to purchase certain inventory and lease
equipment and real property owned by Mr. Floyd who in turn
agreed to act as general manager of the facility. These
products will be manufactured under the direction of a
seasoned management team with 30 years of experience in this
industry. This acquisition is the second such transaction in
the past nine months.
During the reporting quarter, the Company also announced it
has received government approval to begin marketing two of its
most popular products in Japan--the Dynatron 650
Electrotherapy device and Dynatron 950 Combination
Electrotherapy and Ultrasound device. Management views this
as a major step in the Company's international expansion
efforts and expects sales in Japan will ultimately boost
overall Company sales by 10-20 percent over current levels.
The Company plans to introduce the new, improved "50 Series
Plus" product line in February, 1997 which management
anticipates will provide additional support to the Company's
revenue growth trends and further solidify the Company's
position as a technological leader in the development of
electrotherapy and ultrasound equipment.
With the acquisition of Superior Orthopaedic Supplies in May
1996, the Company has been able to expand distribution of
Superior's product line of soft goods and supply products
through Dynatronics' dealer network. The recent acquisition
of the treatment table manufacturing operation in South
Carolina will further broaden the Company's product line.
Offering a broad product line is of strategic importance as
clinics continue to consolidate and develop centralized
purchasing which favors single source suppliers for their
medical device and supplies needs.
The Company recognizes the need to continually upgrade and
re-engineer existing products as well as introduce new
products. The Company's continuing commitment to Research
and Development enables Dynatronics to be a technological
leader in the market. New products and engineering
improvements are constantly being evaluated and developed.
Another avenue to increase sales and profits being pursued
by management is that of strategic business alliances such
as the exclusive distribution agreement signed with Life-
Tech, Inc. in August 1996. The Company continues to
evaluate additional strategic alliances and acquisition
<PAGE>
opportunities which could enhance and broaden the Company's
product line.
The Company continues to support research into areas of
potential efficacy of its low-power laser device. Should
any such research provide evidence deemed sufficient for
submission to the U.S. Food and Drug Administration, the
Company would give consideration to submitting a Pre-Market
Approval Application for the laser to the FDA.
Forward-looking Statements
- --------------------------
This quarterly report contains forward-looking statements
relating to anticipated financial performance, product
development, and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. With the exception of
historical information, statements in this report are
forward-looking within the meaning of the law, including
statements regarding future products, product development,
research and development spending, and the Company's
business plan, as well as statements regarding the levels of
future international sales. The Company notes that risks
inherent in its business and a variety of factors could
cause or contribute to a difference between actual results
and anticipated results. Those risks include, but are not
limited to, such factors as market acceptance of Company
products (particularly new product lines and re-designed
product lines), the ability to hire and retain the services
of trained personnel at cost-effective labor rates, the
absence of new adverse government regulation of the
Company's products, the actions of foreign regulators that
may adversely affect the expansion of the Company's
marketing activities in foreign markets, political or
economic changes in the United States and abroad which may
adversely affect the market for physical therapy devices or
soft goods in general or the Company's products in
particular, the Company's ability to keep pace with
technological advances which can occur rapidly, the
Company's ability to meet increasing demand, the ability to
introduce new products on a timely basis, changing customer
requirements, delays in new products qualifications, the
timing and extent of research and development expenses, the
Company's access to and ability to finance such changes.
The foregoing and other factors, both within and outside the
Company's control, may cause actual results to differ from
those described in forward-looking statements made in this
Report.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no material legal proceedings pending to
which the Company or any of its subsidiaries is a
party or of which any of their property is the
subject which require disclosure in this
statement.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On November 19, 1996, the Company conducted its
1996 annual meeting of shareholders. At the
annual meeting, the following former members of
the Company's Board of Directors were elected for
another term of service: Kelvyn H. Cullimore,
Kelvyn H. Cullimore, Jr., E. Keith Hansen, M.D.,
Larry K. Beardall, V. LeRoy Hansen, and Joseph H.
Barton. At the annual meeting, the Company's
shareholders also ratified the Board's selection
of KPMG Peat Marwick, as the Company's independent
public accountants. The following table
summarizes the voting at the annual meeting.
Issue/Board Nominee For Against Abstention
------------------- ------- ------- ----------
Ratify selection of 6,508,613 15,500 23,425
accountants
Kelvyn H. Cullimore 6,437,000 38,230 67,200
Kelvyn H. Cullimore, Jr. 6,455,330 19,900 67,200
E. Keith Hansen, M.D. 6,457,730 17,500 67,200
Larry K. Beardall 6,457,730 17,500 67,200
V. LeRoy Hansen 6,455,730 19,500 67,200
Joseph H. Barton 6,472,730 2,500 67,200
Item 5. Other Information
-----------------
On January 19, 1997, the Board of Directors
appointed Howard L. Edwards to fill a vacancy on
the Board of Directors as permitted by the Bylaws
of the Company. Mr. Edwards recently retired from
Atlantic Richfield Company (ARCO) in 1995 after 27
years serving in various executive positions
including vice president, corporate secretary,
treasurer, and general attorney at The Anaconda
Company, a division of ARCO and at ARCO Alaska.
Prior to joining Anaconda, Mr. Edwards was a
partner in the law firm of VanCott, Bagley,
Cornwall & McCarthy, Salt Lake City, Utah.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A) Not applicable.
B) Not applicable.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DYNATRONICS CORPORATION
-----------------------
Registrant
Date February 12, 1997 /s/ Kelvyn H. Cullimore, Jr.
------------------------ ----------------------------
Kelvyn H. Cullimore, Jr.
President
Chief Executive Officer
Date February 12, 1997 /s/ John L. Hales
------------------------- ----------------------------
John L. Hales
Chief Financial Officer and
Principal Accounting Officer
16
