<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ending March 31, 2000
Commission File Number 0-16423
SAN Holdings, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0907969
(State of incorporation ) (I.R.S. Employer ID Number)
900 W. Castleton Road, Suite 100, Castle Rock, CO 80104
(Address of principal executive offices) (zip code)
(303) 660-3880
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of Securities Exchange Act of 1934
during the preceding 12 months (or for such a 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 May 25, 2000, 8,194,004 common shares, no par value per share,
were outstanding.
<PAGE>
SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
INDEX
Part I FINANCIAL INFORMATION Page
Item 1. Consolidated Balance Sheets, December 31, 1999 and
March 31, 2000 (Unaudited) 3-4
Consolidated Income Statement for the One Month Ended
December 31, 1999 and the Three Months Ended March 31,
1999 and 2000 (Unaudited) 5
Consolidated Statement of Stockholders' Equity for
the One Month Ended December 31, 1999 and the Three
Months Ended March 31, 2000 6
Consolidated Statement of Cash Flows for the One Month
Ended December 31, 1999 and the Three Months Ended
March 31, 1999 and 2000 (Unaudited) 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Default on Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Part III SIGNATURES 15
Exhibit 27
2
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SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
CONSOLIDATED BALANCE SHEET
December 31, 1999 and March 31, 2000
(Unaudited)
ASSETS
1999 2000
---- ----
Current assets:
Cash and cash equivalents $ 2,789,170 $ 2,444,291
Certificate of deposit (Note 3) - 1,000,000
Accounts receivable, less allowance for doubtful
accounts of $326,987 (1999) and $20,000 (2000) 4,156,227 7,035,772
Inventory - 102,179
Prepaid expenses 32,271 79,793
Investment securities available for sale (Note 5) - 1,995,070
Deferred income taxes (Note 4) 66,000 66,000
----------- -----------
Total current assets 7,043,668 12,723,105
Property and equipment:
Furniture and fixtures 15,311 106,875
Office equipment 6,108 171,433
Leasehold improvements 2,491 2,491
----------- -----------
23,910 280,799
Less accumulated depreciation and amortization 1,770 171,225
----------- -----------
Net property and equipment 22,140 109,574
Other assets:
Goodwill, net of accumulated amortization of
$26,778 (Note 2) - 2,038,970
Cost of purchased contracts, less accumulated
amortization of $120,000 (1999) and $140,000 (2000) 380,000 360,000
Deposits 2,000 2,000
----------- -----------
Total other assets 382,000 2,400,970
----------- -----------
$ 7,447,808 $15,233,649
=========== ===========
See accompanying notes.
3
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SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
CONSOLIDATED BALANCE SHEET
December 31, 1999 and March 31, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 2000
---- ----
Current liabilities:
Accounts payable $ 3,837,162 $ 6,124,363
Income taxes payable (Note 4) 85,253 50,119
Accrued expenses 452,125 365,640
Accrued expenses - related parties 195,000 202,917
Deferred revenue (Note 7) - 468,935
Short-term notes payable - related party 50,000 -
Short-term notes payable (Notes 2 and 3) - 1,751,000
----------- -----------
Total current liabilities 4,619,540 8,962,974
Long-term debt:
Long-term debt (Note 2) - 215,000
Deferred income taxes payable (Note 4) 6,000 6,000
---------- -----------
Total long-term debt 6,000 221,000
Stockholders' equity (Note 2):
Preferred stock; no par value, 10,000,000 shares
authorized:
Preferred AA stock; 1,550,800 shares (1999) and
2,456,891 shares (2000) issued and outstanding 2,042,985 3,264,888
Preferred AAA stock; 133,600 shares (1999) and
493,334 (2000) shares issued and outstanding 352,000 1,239,550
Common stock; no par value, 25,000,000 shares
authorized, issued and outstanding: 3,800,000 shares
(1999) and 4,960,677 shares (2000) 364,505 913,500
Common stock warrant proceeds received - 426,971
Retained earnings 62,778 204,766
----------- -----------
Total stockholders' equity 2,822,268 6,049,675
----------- -----------
$ 7,447,808 $15,233,649
=========== ===========
See accompanying notes.
4
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SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
CONSOLIDATED INCOME STATEMENT
For the one month ended December 31, 1999
and the three months ended March 31, 1999 and 2000
(Unaudited)
December 31, March 31, March 31,
1999 1999 2000
Revenues $ 815,378 $ 4,095,089 $ 3,748,899
Cost of revenues:
Cost of revenues 775,373 3,685,817 3,112,698
Settlement of disputed payable - - (477,572)
--------- ----------- -----------
Total cost of revenues 775,373 3,685,817 2,635,126
--------- ----------- -----------
Gross profit 40,005 409,272 1,113,773
General and administrative expenses 63,076 276,552 898,044
Amortization of goodwill - - 26,778
--------- ----------- -----------
Income (loss) from operations (23,071) 132,720 188,951
Other income (expense):
Interest expense (992) (7,500) (26,325)
Interest income 26,094 950 63,830
--------- ----------- -----------
Total other income (expenses) 25,102 (6,550) 37,505
--------- ----------- -----------
Income before income taxes 2,031 126,170 226,456
Income taxes (Note 4) - 47,314 84,468
--------- ----------- -----------
Net income $ 2,031 $ 78,856 $ 141,988
========= =========== ===========
Basic earnings per common share $ * $ 0.03 $ 0.03
========= =========== ===========
Diluted earnings per common share $ * $ 0.02 $ 0.02
========= =========== ===========
* Less than $.01 per share
See accompanying notes.
5
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<TABLE>
SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the one month ended December 31, 1999
and the three months ended March 31, 1999 and 2000
(Unaudited)
<CAPTION>
Stock and Retained
AA Preferred stock AAA Preferred stock Common stock warrant earnings
Shares Amount Shares Amount Shares Amount proceeds (deficit)
------ ------ ------ ------ ------ ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, November 30, 1999 - $ - - $ - 3,040,000 $ 64,505 $ - $ 60,747
Exercise of warrants - - - - 760,000 300,000 - -
Issuance of Series AA preferred
stock (Note 2) 1,550,800 2,042,985 - - - - - -
Issuance of Series AAA preferred
stock (Note 2) - - 133,600 352,000 - - - -
Net income for the month ended
December 31, 1999 - - - - - - - 2,031
--------- --------- ------- --------- --------- ------- -------- --------
Balance, December 31, 1999 1,550,800 2,042,985 133,600 352,000 3,800,000 364,505 - 62,778
Stock issued in reorganization
with Citadel (Note 2) - - - - 951,789 (18,337) - -
Issuance of stock to CoComp
(Note 2) - - - - 88,888 153,332 - -
Issuance of Series AA preferred
stock (Note 2) 906,091 1,221,903 - - - - - -
Issuance of Series AAA preferred
stock (Note 2) - - 359,734 887,550 - - - -
Sale of common stock in a private
placement - - - - 120,000 414,000 - -
Receipt of stock and warrant
proceeds - - - - - - 426,971 -
Net income for the three months
ended March 31, 2000 - - - - - - - 141,988
--------- --------- ------- --------- --------- --------- -------- --------
Balance, March 31, 2000 2,456,891 $3,264,888 493,334 $1,239,550 4,960,677 $ 913,500 $426,971 $204,766
========= ========== ======= ========== ========= ========= ======== ========
</TABLE>
See accompanying notes.
6
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SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the one month ended December 31, 1999
and the three months ended March 31, 1999 and 2000
(Unaudited)
December 31, March 31, March 31,
1999 1999 2000
Cash flows from operating activities:
Net income $ 2,031 $ 78,856 $ 141,988
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 10,288 500 140,661
Changes in assets and liabilities:
Accounts receivable (588,336) (2,739,068) (3,218,192)
Inventory - (1,459) 52,803
Prepaid expenses 6,455 - (5,482)
Accounts payable 636,872 2,716,869 1,302,655
Income taxes payable - 69,926 (35,134)
Accrued expenses 58,186 (34,384) (225,068)
Deferred revenue - - 468,935
---------- ---------- ----------
Total adjustments 123,465 12,384 (1,518,822)
---------- ---------- ----------
Net cash provided by (used in) operating
activities 125,496 91,240 (1,376,834)
Cash flows from investing activities:
Purchase of property and equipment - (3,284) (75,959)
Purchase of certificate of deposit - - (1,000,000)
Purchase of contract - (500,000) -
Notes receivable - (264,636) -
Acquisition of CoComp - - (1,817,510)
---------- ---------- ----------
Net cash used in investing activities - (767,920) (2,893,469)
Cash flows from financing activities:
Proceeds from issuance of preferred
stock 2,394,985 - 2,109,453
Stock and warrant proceeds 300,000 - 840,971
Proceeds from short-term borrowings - 500,000 1,025,000
Payments on notes payable (275,000) - (50,000)
---------- ---------- ----------
Net cash provided by financing
activities 2,419,985 500,000 3,925,424
---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents 2,545,481 (176,680) (344,879)
Cash and cash equivalents at beginning of
period 243,689 224,963 2,789,170
---------- ---------- ----------
Cash and cash equivalents at end of
period $2,789,170 $ 48,283 $2,444,291
========== ========== ==========
See accompanying notes.
7
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SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
1. Basis of presentation
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions to Form 10-QSB and does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of Management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of
operations for any interim period are not necessarily indicative of results
for the year. These statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual
Report to shareholders on Form 10-KSB/A for the year ended December 31, 1999
and Forms 8-K relating to the acquisition of Storage Area Networks, Inc. and
Co Comp, Inc.
Upon completion of the reverse acquisition between SAN and Citadel, SAN
previously had a year end of November 30 and has changed its year end to
December 31 effective December 31, 1999.
2. Changes in securities
In December 1999, 760,000 shares of common stock were issued upon the
exercise of warrants resulting in proceeds of $300,000. During December 1999,
the Company issued 1,550,800 and 133,600 shares of Series AA and Series AAA
convertible preferred stock for $1.50 and $3.00 per share, respectively,
generating net proceeds of $2,394,985 (net of offering costs of $331,987).
On January 7, 2000, the Company acquired 100% of the outstanding stock of
Storage Area Networks, Inc. (SAN), a data storage solutions and services
business, by issuing 3,800,000 shares of the Company's Series BB convertible
preferred stock to the shareholders of Storage Area Networks. The shares of
Series BB preferred stock were converted into 3,800,000 shares of common
stock on March 10, 2000. The share exchange with SAN has been treated as
a reverse acquisition for accounting purposes with SAN as the acquirer of
Citadel Environmental Group, Inc. for 631,789 shares of common stock. A
finders fee equal to 320,000 shares of the Company's common stock was issued
on March 10, 2000. Following the closing of this acquisition the Company
issued 906,091 and 359,734 shares of Series AA and Series AAA convertible
preferred stock for $1.50 and $3.00 per share, respectively, generating net
proceeds of $2,109,453 (net of offering costs of $328,883).
On January 21, 2000, in exchange for $1,079,000 in cash, $951,000 in
promissory notes and 88,888 shares of Citadel common stock valued at
$153,332, Citadel acquired all the outstanding stock of Co Comp, Inc., a
provider of data storage systems and services based in Colorado. The notes
are payable $251,000 on June 30, 2000, $500,000 on January 21, 2001 and
$200,000 on January 21, 2002, including interest at 12% per annum. The
Citadel common shares were to be issued within 15 days from the effective
date of the proposed 1 for 36 reverse stock split. The Company also paid
$408,000 in dividends to the prior owners of Co Comp in January 2000, prior
to the acquisition and $408,729 under an earn-out provision to the former
shareholders of Co Comp. As of March 31, 2000, the Company in contingently
liable for an additional $56,271 under the earn-out provision.
8
<PAGE>
SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
2. Changes in securities (continued)
In connection with this transaction, the Company recorded goodwill of
$2,065,748 which is being amortized over 15 years, the period estimated by
management to be benefited.
On March 1, 2000, the shareholders of the Company approved a 1 for 36 common
stock reverse split. All numbers of shares have been adjusted to reflect the
reverse split.
On March 22, 2000, the Company completed a private placement of 120,000
shares of common stock with a third party for net proceeds of $414,000 (net
of offering costs of $46,000). The agreement provides common stock warrants
with an exercise price of $9.00 per share and expiring in three periods:
200,000 in December, 2000, 400,000 in June, 2001, and 400,000 in December,
2001.
During the quarter ended March 31, 2000, the Company received proceeds of
$316,970 from the exercise of warrants to purchase 70,067 shares of common
stock, $90,000 from the sale of 44,000 shares of common stock and $20,001
from the sale of 6,667 shares of Class AAA preferred stock. The stock
certificates were not issued as of March 31, 2000.
Stock option plan:
On March 1, 2000, shareholders of the Company approved the 2000 Incentive
Stock Option Plan. The total number of shares of common stock subject to
options under the 2000 Plan may not exceed 1,500,000.
3. Note payable
On March 16, 2000, the Company borrowed $1,000,000 from a bank payable
$86,500 monthly including interest at 6.9% with the balance due on March 10,
2001, secured by a certificate of deposit.
4. Income taxes
As of December 31, 1999 and March 31, 2000, total deferred tax assets and
valuation allowance are as follows:
1999 2000
---- ----
Deferred tax asset $ 66,000 $ 66,000
Deferred tax liability (6,000) (6,000)
-------- --------
Net deferred tax asset $ 60,000 $ 60,000
======== ========
9
<PAGE>
SAN Holdings, Inc.
(formerly Citadel Environmental Group, Inc.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
5. Settlement of accounts receivable
During the quarter ended March 31, 2000, the Company settled a delinquent
account receivable with a book value of $1,995,070 (net of related bad debt
reserve) for common stock of another company. The current market price of the
stock approximates the amount recorded, therefore no fair value adjustment
was necessary.
6. Subsequent events
During April 2000, all of the outstanding Series AA and Series AAA preferred
stock was converted into common stock at the rate of one share of common
stock for each share of preferred stock.
7. Restatement of results
During the quarter ended March 31, 2000, the Company recorded a sale to an
unrelated entity of $3,261,939. Subsequently the Company determined that this
sale did not qualify for revenue recognition at that time. Therefore the
Company has restated its results of operations for the quarter ended March 31,
2000 by reducing sales by $3,261,939, reducing cost of sales by $2,793,004 and
recording deferred revenue of $468,935. Income taxes have also been reduced
by $174,913 resulting in a decrease in net income of $294,022 from that
originally reported.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
In the fiscal quarter ended March 31, 2000, the Company was primarily
engaged in the development of its data storage solutions business. The
Company is pursuing plans to expand sales together with growth by acquisition
of similar data storage services businesses as detailed in its Form 10-KSB for
the period ended December 31, 1999.
RESULTS OF OPERATIONS
Revenues for the three month period ended March 31, 2000, were $3,748,899
as compared to $4,095,089 for the quarter ended March 31, 1999. The decrease
in revenues was the result of distractions associated with the merging of
Citadel and CoComp.
The cost of revenues for the three months ended March 31, 2000, were
$3,112,698 as compared to $3,685,817 for the three months ended March 31,
1999. As a percentage of revenues, the cost of revenues declined from 90% in
the 1999 period to 83% in the three months ended March 31, 2000. The reason
for the decreasing percentage is that the Company realizes a higher profit
margin on its storage area network products and on its services, and revenues
from these areas is increasing as a percentage of total revenues. This
analysis ignores the one time settlement of a disputed payable in the amount
of $477,572.
General and administrative expenses for the quarter ended March 31, 2000,
were $898,044 as compared to $276,552 for the quarter ended March 31, 1999.
The increase in general and administrative expenses reflects the emphasis
being placed on increasing the number and experience of the engineering
support. The number of qualified engineers grew from two in 1999 to ten as of
March 31, 2000. These increases were the result of revenue growth and the
acquisition of CoComp.
Interest income increased to $63,830 in the three months ended March 31,
2000, as compared to $950 in the prior year period due to the increased cash
balance of the Company.
The Company had a net income before tax of $226,456 in the quarter ended
March 31, 2000, compared to net income of $126,170 in the quarter ended March
31, 1999. The increase is attributable to the settlement of the disputed
payables and the increase in margins created by additional services business
offset by expenditures or required infrastructure.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $3,760,131 at March 31, 2000, as
compared to $2,424,128 at December 31, 1999. The increase in working capital
was primarily due to the proceeds from the sale of preferred stock during the
three months ended March 31, 2000.
11
<PAGE>
During the three months ended March 31, 2000, cash used in operating
activities was $(1,376,834) compared to cash provided of $91,240 for the three
months ended March 31, 1999. The primary reason for the large increase in
cash used in operating activities was the $(3,218,192) increase in accounts
receivable. This was offset in part by an increase in accounts payable of
$1,302,655 and net income of $141,988.
Cash used in investing activities during the three months ended March 31,
2000, was $(2,893,469) as compared to $(767,920) during the three months ended
March 31, 1999. During the three months ended March 31, 2000, the Company
paid $1,817,510 for CoComp, Inc. and purchased a $1,000,000 certificate of
deposit.
Cash provided by financing activities during the three months ended March
31, 2000, was $3,925,424 as compared to $500,000 for the comparable period in
1999. The Company received $2,950,424 from the sale of preferred and common
stock and the exercise of warrants and $1,025,000 from short-term loans in
the three months ended March 31, 2000.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
During the three months ended March 31, 2000, the Company issued a total
of 92,709 (post-split) shares of its common stock to the holders of the
Company's Series A Preferred Stock pursuant to the conversion rights of such
preferred stock.
On January 7, 2000, the Company issued 3,800,000 shares of its Series BB
Convertible Preferred Stock to the shareholders of Storage Area Networks, a
Nevada corporation ("SAN"), in connection with the acquisition of 100% of the
outstanding shares of SAN. These shares were issued in reliance on the
exemption provided by Section 4(2). Each SAN shareholder was provided with
information on the Company, and each SAN shareholder signed a Letter of
Acceptance in which he represented that he was purchasing the shares for
investment only and not for the purpose of resale or distribution. The
appropriate restrictive legend was placed on the certificates and stop
transfer orders were issued to the transfer agent.
During December 1999 and January and February 2000, the Company sold
2,456,891 shares of Series AA convertible preferred stock at $1.50 per share
to overseas and U.S. accredited investors pursuant to the exemption provided
by Section 4(2) and Rule 506. Each investor signed a subscription agreement
in which he represented that he was purchasing the shares for investment only
and not for the purpose of resale or distribution.
During December 1999 and January and February 2000, the Company sold
493,334 units of Series AAA convertible preferred stock and common stock
warrants at a price of $3.00 per unit to overseas accredited investors and
U.S. accredited investors. Each unit contains one share of Series AAA
convertible preferred stock and two 120-day common stock warrants with an
exercise price of $3.50 per share and $5.00 per share. The units were sold
pursuant to the exemption provided by Section 4(2) and Rule 506. Each
investor signed a subscription agreement in which he represented that he was
purchasing the shares for investment only and not for the purpose of resale or
distribution.
On January 21, 2000, the Company completed the acquisition of 100% of the
outstanding common stock of CoComp, Inc., and in connection therewith the
Company issued a total of 88,888 shares to two principals of CoComp, Inc.
pursuant to the exemption provided by Section 4(2). These two persons became
employees of the Company. Each person signed an agreement in which he
represented that he was acquiring the shares for investment only and not for
the purpose of resale or distribution. The appropriate restrictive legend was
placed on the certificate and stop transfer orders were issued to the transfer
agent.
During April 2000 all shares of Series AA and AAA convertible preferred
stock were converted into shares of the Company's common stock pursuant to the
provisions of Rule 506. The appropriate restrictive legend was placed on the
certificates and stop transfer orders were issued to the transfer agent.
13
<PAGE>
During March 2000 the Company sold 120,000 shares of common stock and
1,000,000 warrants to one accredited overseas investor who was already a
shareholder of the Company pursuant to the exemption provided by Section 4(2).
The appropriate restrictive legend was placed on the common stock and warrant
certificates.
ITEM 3. DEFAULTS OF SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A special meeting of shareholders of the Company was held on March 1,
2000, to approve the following: (1) a proposed reverse split of the
outstanding common shares of the Company's common stock of 1 for 36; (2) an
amendment to the Company's Articles of Incorporation to change the name to SAN
Holdings, Inc.; and (3) the Company's 2000 Stock Option Plan.
The following table sets forth the number of votes cast (pre-reverse
split) for each matter. There were no broker non-votes.
FOR AGAINST ABSTAIN
1. Approval of Reverse Split 130,859,756 2,500 19,201
2. Approval of Name Change 131,881,457 -0- -0-
3. Approval of Stock Option 130,868,332 12,500 625
Plan
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27 Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K.
The Company filed a Report on Form 8-K dated January 7, 2000, related to
the reverse acquisition of Storage Area Networks. The 8-K reported on Items
1, 2, 5 and 7. An amendment to this 8-K was filed on April 20, 2000, which
reported on Item 7.
The Company filed a Report on Form 8-K dated January 21, 2000, related to
the acquisition of CoComp, Inc. which reported on Items 2, 5 and 7. An
amendment to this 8-K was filed on April 20, 2000, which reported on Item 7.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
SAN HOLDINGS, INC.
August 21, 2000 By:/s/ L. W. Buxton
L. W. Buxton, President
15
