UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1998
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-15245
ELECTRONIC CLEARING HOUSE, INC.
(Exact name of registrant as specified in its charter)
Nevada 93-0946274
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
28001 Dorothy Drive,
Agoura Hills, California 91301
(Address of principal executive offices)
Telephone Number (818) 706-8999
www.echo-inc.com
(Registrant's telephone number, including area code; web site address)
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 requirements for the past
90 days:
Yes X No
As of July 31, 1998, there were 15,100,541 shares of the Registrant's
Common Stock outstanding.
ELECTRONIC CLEARING HOUSE, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet 3
June 30, 1998 and September 30, 1997
Consolidated Statement of Operations 4
Three months and nine months ended
June 30, 1998 and 1997
Consolidated Statement of Cash Flows 5
Nine months ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
June 30September 30
1998 1997
(Unaudited)
Current assets:
Cash and cash equivalents . . . . . . . .$ 1,917,000 $ 772,000
Restricted cash . . . . . . . . . . . . . 531,000 323,000
Accounts receivable less allowance of
$1,804,000 and $1,025,000 933,000 1,129,000
Inventory less allowance of $162,000
and $70,000 682,000 749,000
Prepaid expenses and other assets . . . . 19,000 23,000
Notes receivable from stockholders and
related parties less allowance of $148,000 87,000 51,000
Total current assets . . . . . . . . . 4,169,000 3,047,000
Noncurrent assets:
Long term receivables. . . . . . . . . . 318,000 373,000
Property and equipment, net .. . . . . . 1,600,000 1,570,000
Real estate held for investment, net . . 252,000 252,000
Other assets, net. . . . . . . . . . . . 836,000 842,000
$7,175,000 $6,084,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of
long-term debt $ 111,000 $ 150,000
Accounts payable . . . . . . . . . . 41,000 112,000
Accrued expenses. . . . . . . . . . . . . 999,000 731,000
Total current liabilities. . . . . . .1,151,000 993,000
Long-term debt . . . . . . . . . . . . . . 655,000 681,000
Total liabilities. . . . . . . . . . .1,806,000 1,674,000
Stockholders' equity:
Convertible preferred stock, $.01 par value, 5,000,000 shares authorized:
Series "H", 23,511 shares issued and outstanding
Series "K", 325,000 and 375,000 shares issued and outstanding3,0004,000
Series "L", 168,000 and 172,000 shares issued and outstanding2,0002,000
Common stock, $.01 par value, 26,000,000 authorized:
15,090,541 and 14,600,541 shares issued; 15,084,300 and
14,594,300 shares outstanding. . . . . . 151,000 146,000
Additional paid-in capital. . . . . . . .14,124,00013,865,000
Accumulated deficit . . . . . . . . . . . (8,911,000) (9,607,000)
Total stockholders' equity . . . . . . 5,369,000 4,410,000
$7,175,000$6,084,000
See accompanying notes to consolidated financial statements.
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Nine Months
Ended June 30Ended June 30
1998 19971998 1997
(Unaudited) (Unaudited)
Revenues:
Bankcard processing revenue . . . . $3,344,000$2,881,000$8,634,000$8,752,000
Bankcard transactions fees. . . . . .1,790,000 1,288,000 4,802,000 3,358,000
Terminal sales and lease revenue. . . .927,000 1,426,000 1,919,000 2,213,000
Check guarantee fees . . . . . . . . . 14,000 19,000 47,000 65,000
Research and development. . . . . . . . 31,000 38,000 104,000 153,000
6,106,000 5,652,00015,506,00014,541,000
Costs and expenses:
Bankcard processing and transactions
expense 4,050,000 3,223,000 10,230,000 9,154,000
Cost of terminals sold and leased . . .582,000 1,002,000 1,270,000 1,601,000
Check guarantee . . . . . . . . . . . 5,000 7,000 17,000 30,000
Customer service . . . . . . . . . . . 96,000 104,000 285,000 308,000
Selling, general and administrative . .873,000 928,000 2,674,000 2,492,000
Research and development . . . . . . . 85,000 98,000 289,000 293,000
5,691,000 5,362,000 14,765,00013,878,000
Income from operations . . . . . .415,000 290,000 741,000 663,000
Interest income. . . . . . . . . . . . . 33,000 19,000 76,000 48,000
Interest expense . . . . . . . . . . . .(26,000) (52,000) (80,000)(193,000)
Forfeited deposit. . . . . . . . . . . .(35,000) (35,000)
Loss reserve for notes receivable. . . . (23,000) (46,000)
Income before provision for
income taxes 387,000 234,000 702,000 472,000
Provision for income taxes . . . . . (4,000) (1,000) (6,000) (3,000)
Net income . . . . . . . . .$ 383,000 $ 233,000 $ 696,000 $ 469,000
Earnings per share - Basic $ 0.026 $ 0.016 $ 0.047 $ 0.036
Earnings per share - Diluted$ 0.018 $ 0.011 $ 0.032 $ 0.024
See accompanying notes to Consolidated Financial Statements.
ELECTRONIC CLEARING HOUSE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months
Ended June 30,
1998 1997
(unaudited)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . .$696,000$469,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . .169,000142,000
Amortization. . . . . . . . . . . . . . . . .69,000 -
Provisions for losses on accounts and notes receivable779,000488,000
Provision for obsolete inventory. . . . . . .92,000 34,000
Fair value of stock issued in connection with legal settlement-12,000
Changes in assets and liabilities:
Restricted cash . . . . . . . . . . . . . . .(208,000)28,000
Accounts receivable . . . . . . . . . . . . .(528,000)(898,000)
Inventory . . . . . . . . . . . . . . . . . .(25,000)(367,000)
Prepaid expenses and other assets . . . . . . 4,000 5,000
Other assets, net . . . . . . . . . . . . . .(63,000)(146,000)
Accounts payable . . . . . . . . . . . . . .(71,000)181,000
Accrued expenses. . . . . . . . . . . . . . . 268,000 163,000
Net cash provided by operating activities. . .1,182,000 111,000
Cash flows from investing activities:
Purchase of equipment.. . . . . . . . . . . . (142,000) (100,000)
Net cash used in investing activities. . . . . (142,000) (100,000)
Cash flows from financing activities:
Increase in notes receivable from stockholders
and related parties . . . . . . . . . . . . .(36,000) -
Proceeds from issuance of notes payable. . . . - 150,000
Repayment of notes payable . . . . . . . . . .(122,000)(139,000)
Proceeds from issuance of preferred stock . .200,000 -
Proceeds from common stock warrants exercised50,000129,000
Proceeds from exercise of stock options. . . . 13,000 59,000
Net cash provided by financing activities. . . 105,000 199,000
Net increase in cash. . . . . . . . . . . . . .1,145,000210,000
Cash and cash equivalents at beginning of period 772,000 172,000
Cash and cash equivalents at end of period. . .$1,917,000$ 382,000
See accompanying notes to consolidated financial statements.
ELECTRONIC CLEARING HOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Basis of presentation:
The accompanying consolidated financial statements as of June 30, 1998,
and for the three and nine month periods then ended are unaudited and reflect
all adjustments (consisting only of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of the
financial position and the results of operations for the interim periods. The
consolidated financial statements herein should be read in conjunction with
the consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report to Stockholders
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997. The result of operations for the three
and nine months ended June 30, 1998 are not necessarily indicative of the likely
results for the entire fiscal year ending September 30, 1998.
NOTE 2 - Earnings per share:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 - Earnings per Share
(SFAS 128). SFAS 128 requires companies with complex capital structures that
have publicly held common stock or common stock equivalents to present both
basic and diluted earnings per share (EPS) on the face of the income
statement. The presentation of basic EPS replaces the presentation of
primary EPS previously required by Accounting Principles Board Opinion No. 15
(APB 15). Basic EPS is calculated as income available to common shareholders
divided by the weightedaverage number of shares outstanding during the
period. Diluted EPS (previously referred to as fully diluted EPS) is
calculated using the "if converted" method of convertible securities
and the treasury stock method for options and warrants as prescribed by APB
15. The Company has adopted the provisions of this statement in the quarter
ended March 31, 1998. Adoption of this statement did not have a material
effect on earnings per share.
Earnings per share for the three month and nine month periods ended June
30, 1998 and 1997 are calculated based on the following number of weighted
average shares:
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
Basic 15,026,78314,399,223 14,931,48612,927,935
Diluted 21,933,80420,729,224 21,818,83019,480,881
NOTE 3 - Non-cash transactions
Significant non-cash transaction for the nine months ended June 30, 1998 was
as follows:
- Capital equipment of $57,000 was acquired under capital leases
Significant non-cash transactions for the nine months ended June 30, 1997
were as follows:
- $900,000 of convertible notes were converted into 2,200,000 shares of the
Company's common stock
- 82,345 shares of common stock were issued in settlement of $69,000 of the
Company's obligations<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
When used in the Management's Discussion and Analysis of Financial Condition
and Results of Operations or elsewhere in this document, the word "believes",
"anticipates", "contemplates", and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those projected. Those risks and uncertainties include changes in
laws and regulations affecting the Company's primary lines of business. The
Company undertakes no obligation to publicly release the results of any
revisions to those forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Result of Operations
Three Months Ended June 30, 1998 and 1997
Revenues. Electronic Clearing House, Inc. recorded a net income of $383,000
for the third quarter of fiscal year 1998 as compared to a net income of
$233,000 in the same fiscal quarter last year, a 64.4% increase. Overall
revenue increased 8.0% over the same period in the prior year. The increase
reflected revenue growth of 23.1% in bankcard processing and transactions
revenue which is partially offset by a 35.0% decrease in terminal sales and
lease revenue over the same period in the prior fiscal year.
The increase in processing and transaction revenue can be attributable to three
areas. First, the increase in processing volume from its growing merchant
base along with an overall rate increase assessed against the entire merchant
base as a result of the interchange rate increases announced by Visa and
MasterCard in April 1998. Secondly, the increase in inventory transaction
volume with U-Haul International due to additional systems deployed during the
current year. Lastly, the implementation of certain industry specific fees
in the current fiscal year.
In 1997, ECHO developed the ECHODETECT program, the automated risk/fraud
detection systems which is now fully operational. ECHODETECT has proven to
be very effective in identifying and limiting fraudulent activity for the
Company. This capability has also resulted in several decisions to terminate
or limit a merchant's processing volume in order to maintain an appropriate
risk/reward relationship.
A new feature, the ECHOLINK service, has been added to the Company's Internet
suite of products and is in final beta phase with approximately thirty
merchants. The ECHOLINK service allows a merchant to securely review all of
his historic processing data over the Internet. A capability of the ECHOLINK
program that appears to have significant value to the merchant is next-day
knowledge of chargeback activity. A chargeback is a reversal of a sales
transaction initiated by the cardholder through the card issuing bank.
Normally, banks advise merchants of chargebacks by mail and, since both Visa
and MasterCard allow a limited number of days for a merchant to refute a
chargeback, next-day access to such activity is a significant advantage to a
merchant. The ECHOLINK program also provides a merchant with a full and
immediate history of all debit and credit transactions for any credit card
holder that submits a chargeback. This allows the merchant to quickly
determine if they have already credited a particular customer and, if they
have, reverse the chargeback. The Company's ECHOLINK service thereby
1) eliminates a merchant's need to spend excessive time investigating a
chargeback and looking for source documents; 2) stops inadvertent double
credits from occurring; (3) reduces the amount of mail and paperwork normally
associated with chargebacks; and 4) saves considerable time in responding to
chargeback activity.
The Company intends to charge a monthly access fee for its ECHOLINK service and
a small transaction fee for each transaction stored in the ECHOLINK database.
Access and retrieval by merchants of their specific data will be unlimited.
Based upon the growing functionality of the Company's Internet suite of
products with features such as the ECHOLINK service, the Company anticipates
additional growth in merchant volume when the ECHOLINK service is officially
released to all merchants in the fourth quarter of fiscal 1998.
In February 1998, the Company announced its release of the ECHOTEL system, a
low-cost processing solution for small volume merchants and/or home-based
businesses who wish to accept credit cards. The ECHOTEL system allows a
common touchtone telephone to be used as an entry device, eliminating the
merchant's need to purchase higher cost point-of-sale processing equipment.
The ECHOTEL program is presently being marketed in four methods: 1) through
home business seminars; 2) in a telemarketing campaign; 3) as an in-box flyer
with several retail software products; and 4) through direct mail to
franchises and multi-level marketing organizations.
The market segment of home-based merchants is one of the fastest growing market
segments in today's merchant marketplace. The Company intends to continue to
market to this niche merchant base and in so doing: 1) secure significant
application fee income at the initiation of each new ECHOTEL relationship;
2) establish a positive relationship with potentially thousands of small
merchants that may, in a percentage of cases, turn into future point-of-sale
equipment sales and higher processing revenues; 3) establish an annual
renewal fee income (previously not a norm in this industry); and 4) promote
ECHO as a credit card processor who has designed and enabled several
cost-effective data entry methods for merchants to utilize as they grow.
Revenue related to terminal sales is recognized when the equipment is shipped.
Terminal sales and lease revenue for the three months ended June 30, 1998
were $926,000 which represented a 35.0% decrease over the same fiscal quarter
last year. The decrease reflected the delivery of approximately 1,600
systems to U-Haul International in the current fiscal quarter versus 1,700
U-Haul systems and 175 systems to the United States Postal Service ("USPS")
under a pilot program awarded to the Company in the same fiscal quarter last
year. The systems are actively being installed in dealer locations by the
national rental organization and a majority of the new systems are expected
to be operational by July 31, 1998, when the high volume summer rental
season arrives. The Company has reviewed and, as necessary, upgraded its
data center processing systems to assure that the added transaction
volume from the new systems can be handled with confidence.
Research and development revenue decreased $7,000 for the current fiscal
quarter over the same fiscal quarter last year. The Company provided software
and hardware to the USPS for the development and deployment of automated
money order dispensing systems under a pilot program awarded to Computer
Based Controls Inc.("CBC"), a wholly owned subsidiary of the Company. The
USPS extended the pilot program in January 1998 to incorporate additional
features into the overall systems. CBC designed and implemented the requested
features and a successful First Article Test of the new features was
completed by the USPS in late June of 1998. Completion of this phase of the
pilot program was deemed successful by the USPS on July 7, 1998. Additional
features are being incorporated to further reduce paperwork and increase the
speed of service, two primary goals of the USPS. To meet this need, the USPS
has now authorized a follow-on project to the original pilot program.
Additionally, the USPS has requested the integration of the terminal provided
by the Company to operate with specific printers the USPS uses in its higher
volume locations.
Check guarantee fees decreased by $5,000 for the current fiscal quarter when
compared with the same fiscal quarter last year. The reduction is the result
of the absence of active marketing or development of the Company's check
guarantee services. The Company has determined that it should continue its
check guarantee service and anticipates adding check verification and check
truncation on a national basis. Check verification is a service that, for a
small transaction fee, allows a merchant to interrogate a negative file of
bad check writers to see if a current check writer is in the file. No
guarantee is given and the merchant must make the decision themselves on
taking a check if the writer is found to be in the negative file. Check
truncation includes check verification and immediately converts a paper check
into an electronic settlement transaction at the merchant's location.
Several national databases of negative check writers are available to the
Company and evaluation of these sources is presently underway to determine
which database would best meet the Company's and merchants' needs.
Cost and Expenses. Bankcard processing expenses have generally remained
constant as a percentage of processing revenue. A majority of the Company's
bankcard processing expenses are fixed as a percentage of each transaction
amount, with the remaining costs being based on a fixed rate applied to the
transactions processed. Processing-related expenses, consisting of bankcard
processing expense, transaction expense and customer service expense,
increased 24.6% in the current fiscal quarter over the same fiscal period last
year. This was in direct relation to the 23.1% increase in processing and
transaction revenues. Furthermore, management has decided to provide
additional reserve against certain chargeback receivables from several former
merchants during the current quarter due to the uncertainty of a full
recovery. The Company is aggressively pursuing to recover these chargeback
receivables through legal means.
Cost of terminals sold and leased decreased 41.9% in the second quarter of
fiscal year 1998 as compared to the same fiscal quarter last year. This
relates directly to the 35.0% decrease in terminal and lease sales for the
current fiscal quarter.
Research and development expense for the current fiscal quarter remained
relatively constant when compared with the same fiscal quarter last year.
This is reflective of the on-going investments made by the Company both in
programming personnel and specialized developmental equipment.
Check guarantee expense decreased $2,000 for the current fiscal quarter when
compared with the same fiscal quarter in the prior year. This is consistent
with the $5,000 decrease in check guarantee revenue.
Selling, general and administrative expenses decreased 5.9% in the current
fiscal quarter as compared to the same fiscal quarter last year. This was
mainly attributable to the lower legal fees which was partially offset by
higher employee-related costs associated with the 8.0% overall revenue
increase and the incremental increase in operating costs to support the
Company's infrastructure.
Nine Months Ended June 30, 1998 and 1997
Revenues. Electronic Clearing House, Inc. recorded a net income of
$696,000 for the nine months ended June 30, 1998 as compared to a net income
of $469,000 for the same period last fiscal year, an increase of 48.4%.
This is indicative of the 10.9% increase in processing and transaction
revenue and a 6.2% improvement in gross margin related to terminal sales as
compared to the same nine month period last fiscal year.
As a percentage of total revenue, processing and transaction revenue
accounted for 86.6% of the total revenue for the nine month period ended June
30, 1998 as compared to 83.3% for the same period in the prior fiscal year.
Terminal sales accounted for 12.4% of the total revenue for the nine months
ended June 30, 1998 as compared to 15.2% for the same period in the prior
fiscal year.
Research and development revenue decreased 32.0% for the nine months ended
June 30, 1998 as compared with the same nine month period last year. This
was primarily a result of less software engineering development work
requested by existing customers.
Check guarantee fees decreased $18,000, a 27.7% decrease for the nine months
ended June 30, 1998 over the same period last year.
Overall, the Company's total revenue increased 6.6% for the nine months ended
June 30, 1998 as compared to the same nine month period last year.
Cost and Expenses. Processing-related expenses increased 11.8% for the nine
months ended June 30, 1998 as compared to the same nine month period last
year. This is consistent with the 10.9% increase in processing and
transaction revenue. Gross margin on bankcard processing decreased to 23.9%
for the nine months ended June 30, 1998 as compared to 24.4% for the same
nine months ended June 30, 1997. The decrease in gross margin is the
results of management's decision to provide additional reserve against
certain chargeback receivables on several former merchants during the quarter
ended June 30, 1998 which is partially offset by the implementation of
certain industry specific fees.
Cost of terminals sold and leased decreased 20.7% for the nine month period
ended June 30, 1998 as compared to the same nine month period last year. This
was in direct relation to the 13.3% decrease in terminal sales and lease
revenue. Gross margin improved from 27.7% for the nine month period ended
June 30, 1997 to 33.8% for the nine month period ended June 30, 1998.
Research and development expense remained relatively constant for the nine
month period ended June 30, 1998 as compared to the same nine month period
last year. This reflects the on-going strategic investments made by the
Company in order to be competitive in the electronic commerce industry.
Selling, general and administrative expenses increased 7.3% for the nine
months ended June 30, 1998 over the same nine months period last year. As a
percentage of total revenue, selling, general and administrative expenses
remained constant, from 17.1% for the nine months ended June 30, 1997 to
17.2% for the nine months ended June 30, 1998. This is mainly due to the
higher employee-related costs in order to support the growth of the
Company.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had available cash of $1,917,000, restricted
cash of $531,0000 in reserve with its primary processing banks and a working
capital of $3,018,000. Accounts receivable, net of allowance for doubtful
accounts, decreased $196,000 during the nine month period ended June 30,
1998. This was mainly the result of the additional reserve provided against
certain chargeback receivables.
At the present, the Company's cash flows from operations is sufficient to
support the required research and development costs and marketing costs.
The Company's current ratio improved from 2.14 to 1 at June 30, 1997 to 3.62
to 1 at June 30, 1998. The Company's debt to equity ratio also improved from
.58 to 1 at June 30, 1997 to .34 to 1 at June 30, 1998.
OTHER - YEAR 2000 ISSUE
Many existing computer systems and related software applications, and other
control devices, use only two digits to identify a year in a date field,
without considering the impact of the upcoming change in the century. Such
systems, applications and/or devices could fail or create erroneous results
unless corrected so that they can process data related to the Year
2000. The Company relies on such computer systems, applications and devices
in operating and monitoring all major aspects of its business, including, but
not limited to, its financial systems, customer services, internal networks
and telecommunication equipment, and end products. The Company also relies,
directly and indirectly, on the external systems or various independent
business enterprises, such as its customers, sponsoring banks, suppliers,
creditors, financial organizations, and of governments for the accurate
exchange of data and related information.
The Company has a plan under way to evaluate the potential impact of the Year
2000 issues on its business and the related expenses that would foreseeably
be incurred in attempting to remedy such impact (including testing and
implementation of remedial action). Key management has been reassigned to
implement the plan and, other than the cost of such management and the
resultant loss of their contribution to other revenue generating activities
of the Company, substantial new costs are not anticipated to be incurred.
Therefore, management's current estimate is that the costs associated with
the Year 2000 issue will not have a material adverse affect on the results of
operations or financial position of the Company. However, despite
management's plan to address the Year 2000 impact on the Company's internal
systems, no assurance can be given that management has fully identified
such impact or that management can resolve it without disruption of the
business and without incurring significant expenses. In addition, even if
the internal systems of the Company are not materially affected by the Year
2000 issue, the Company could be affected adversely as a result of any
disruption in the operation of the various third-party enterprises with which
the Company interacts.<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELECTRONIC CLEARING HOUSE, INC.
(Registrant)
Date: August 3, 1998 By: \s\Alice Cheung
Alice Cheung, Treasurer and
Chief Financial Officer
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