<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2000 OR
[_] 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 0-22907
WHITNEY AMERICAN CORPORATION
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C>
DELAWARE 54-1956957
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
8150 Leesburg Pike, Suite 1200, Vienna, Virginia 22182
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(703) 893-0582
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such report), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No __________
-----------
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, was not
determinable.
At August 31, 2000, a total of 4,417,830 shares of common stock were
outstanding.
<PAGE>
Whitney American Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS OF THE COMPANY
<TABLE>
<CAPTION>
August 31, May 31,
2000 2000
---- ----
(unaudited) (audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,000 $ 1,000
Accounts receivable, net of allowance 4,850,163 3,600,834
Prepaid expenses and other assets 127,722 88,688
Deferred tax asset, current 42,416 42,416
--------- ---------
Total Current Assets 5,021,301 3,732,938
PROPERTY AND EQUIPMENT, cost
Leasehold improvements 308,209 270,137
Equipment 3,276,731 3,176,169
Automobiles 429,403 360,309
Furniture and fixtures 129,044 50,803
--------- ---------
4,143,387 3,857,418
Accumulated depreciation (2,586,348) (2,425,397)
--------- ---------
Net Property and Equipment 1,557,039 1,432,021
OTHER ASSETS
Accounts receivable, long term portion 122,720 143,804
Deferred tax asset 44,882 44,882
Deposits 86,336 67,975
Note receivable 10,000 -
--------- ----------
Total Other Assets 263,938 256,661
--------- ----------
Total Assets $ 6,842,278 $ 5,421,620
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 1,236,764 $ 703,848
Note payable, current maturities 4,336 4,225
Notes payable - equipment, current maturities 126,267 101,600
Capital lease liability, current maturities 434,154 316,584
Accounts payable and accrued expenses 1,173,502 1,048,361
Accrued payroll and related liabilities 399,637 409,774
Due to related party 175,431 105,745
Income taxes payable, current 290,894 33,336
--------- ----------
Total Current Liabilities 3,840,985 2,723,473
LONG-TERM DEBT
Notes payable, net of current maturities 13,525 14,747
Notes payable - equipment, net of current maturities 64,588 70,553
Capital lease liability, net of current maturities 482,183 541,319
Deferred income taxes payable 24,647 24,647
--------- ---------
Total Long-term Liabilities 584,943 651,266
--------- ---------
Total Liabilities 4,425,928 3,374,739
STOCKHOLDERS' EQUITY
Preferred stock, $.00001 par value, 5,000,000 shares
authorized, none issued - -
Common Stock, net of subscriptions receivable, at August 31,
2000, $.00001 par value, 50,000,000 shares authorized,
4,417,830 shares issued and outstanding 44 42
Additional paid-in capital 1,683,250 1,658,684
Accumulated earnings 733,056 388,155
--------- ---------
Total Stockholders' Equity 2,416,350 2,046,881
--------- ----------
Total Liabilities and Stockholders' Equity $ 6,842,278 $ 5,421,620
========= =========
</TABLE>
See notes to financial statements
<PAGE>
Whitney American Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATION OF THE COMPANY
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
August 31, August 31,
2000 1999
---- ----
<S> <C> <C>
REVENUE FROM SERVICES $ 4,068,523 $ 3,311,892
COST OF SERVICES 2,503,865 2,218,858
----------------- -----------------
GROSS PROFIT 1,564,658 1,093,034
----------------- -----------------
OPERATING EXPENSES
Overhead 506,039 370,734
General and administrative 375,750 331,191
Bad debt expense 19,850 19,405
----------------- -----------------
Total Operating Expenses 901,639 721,330
----------------- -----------------
INCOME FROM OPERATIONS 663,019 371,704
OTHER INCOME
Other - 27,827
OTHER EXPENSES
Interest (60,560) (31,574)
----------------- -----------------
INCOME BEFORE INCOME TAXES 602,459 367,957
INCOME TAXES 257,558 -
----------------- -----------------
NET INCOME $ 344,901 $ 367,957
================= =================
Basic net income per common share $ 0.08 $ 0.09
================= =================
Weighted average common share outstanding 4,354,531 4,229,020
================= =================
Diluted net income per common share $ 0.07 $ 0.08
================= =================
Weighted average common share outstanding 4,754,531 4,714,020
================= =================
</TABLE>
See notes to financial statements.
<PAGE>
WHITNEY AMERICAN CORPORATION
AND SUBSIDIARY
STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31, August 31,
CASH FLOWS FROM OPERATIONS: 2000 1999
---- ----
<S> <C> <C>
Net Income $ 344,901 $ 367,957
Adjustments to reconcile net income to net cash:
Depreciation and amortization 160,951 124,726
Gain on sale of assets - (29,705)
Allowance for doubtful accounts 20,082 19,405
Changes in operating assets and liabilities net of effects
from purchase of Kiber Environmental Services, Inc.:
Increase in accounts receivable (888,169) (303,091)
(Increase) decrease in prepaid expenses and other assets (22,110) 1,446
Increase in deposits (8,302) (2,729)
Increase (decrease) in accounts payable and accrued expenses 102,082 (440,007)
Decrease in accrued payroll and related liabilities (32,727) (83,910)
Increase in income taxes payable 257,559 -
-------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (65,735) (345,908)
============== ==============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (59,076) (207,384)
Purchase of Kiber Environmental Services (300,000) -
Proceeds received from sale of fixed assets - 35,635
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (359,076) (171,749)
============== ==============
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase on line of credit 532,916 550,000
Payment of note payable (1,111) (1,015)
Payment of notes payable - equipment (30,378) (11,125)
Proceeds of note payable - equipment - 19,314
Principal payments under capital lease obligations (76,616) (39,517)
-------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 424,811 517,657
============== ==============
NET INCREASE (DECREASE) IN CASH - -
CASH, BEGINNING 1,000 1,000
-------------- --------------
CASH, END $ 1,000 $ 1,000
============== ==============
Supplemental disclosure of cash flows information:
Cash paid during the year for interest $ 60,560 $ 31,574
============== =============
Liabilities for equipment under capital leases $ 135,049 $ 122,543
============== =============
Supplemental disclosure of noncash transactions:
Acquisition of Kiber Environmental Services, Inc.
Note payable issued for purchase of Kiber Environmental
Fair Value of assets acquired 488,984
Liabilities assumed 164,416
Common stock issued $ 24,568
--------------
$ 677,968
==============
</TABLE>
See notes to financial statements.
<PAGE>
Whitney American Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock Additional Retained
----------------------
Shares Amount paid-in capital earnings Total
------------ ------ --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance, May 31, 1999 (audited) 4,266,020 $ 42 $ 1,658,684 $ 160,424 $ 1,819,150
Stock cancellation (49,000) - - - -
Net income - - - 227,731 227,731
------------ ------ --------------- ------------- -----------
Balance, May 31, 2000 (audited) 4,217,020 42 1,658,684 388,155 2,046,881
Stock issuance - Kiber purchase 200,810 2 24,566 - 24,568
Net income - - - 344,901 344,901
------------ ------ --------------- ------------- -----------
Balance, August 31, 2000 (unaudited) 4,417,830 $ 44 $ 1,683,250 $ 733,056 $ 2,416,350
============ ====== =============== ============= ===========
</TABLE>
<PAGE>
WHITNEY AMERICAN CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 31, 2000
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation and Consolidation
---------------------------------------
The accompanying unaudited condensed consolidated financial statements of
Whitney American Corporation (the "Company") and its wholly owned
subsidiary, Kemron Environmental Services, Inc. ("Kemron") have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q. In
the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items. The company acquired
Kemron during fiscal year 1998 (see NOTE 2) and began presenting results on
a consolidated basis. All significant intercompany balances and
transactions have been eliminated in consolidation. Operating results for
the three months ended August 31, 2000 are not necessarily indicative of
the results that may be expected for the fiscal year ending May 31, 2001 or
for any other future period. Additional information is contained in the
Annual Report on Form 10-KSB for the year ended May 31, 2000, which should
be read in conjunction with this quarterly report.
Use of Estimates
----------------
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that were assumed in preparing the financial statements.
Federal Income Taxes
--------------------
Federal income tax has been provided for the three months ended August 31,
2000 based on estimates that include the timing difference attributed to
the provision for bad debt and difference in depreciation of property and
equipment for book versus tax methods.
Property and Equipment
----------------------
Property and equipment is stated at cost. Depreciation is computed using
the straight-line method based on the estimated useful lives of the asset.
Amortization of leasehold improvements is computed on the term of the lease
or its useful life, whichever is less.
Revenue Recognition
-------------------
The Company recognizes revenue generally at the time services are
performed. On fixed price contracts, revenue is recognized on the basis of
the estimated percentage of completion of services rendered. On cost
reimbursement contracts, revenue is recognized as costs are incurred and
includes applicable fees earned essentially in the proportion that costs
incurred bear to total estimated final costs. Materials and subcontract
costs reimbursed by client are included in gross revenue. Anticipated
losses are recognized in the period in which the losses are reasonably
determinable. Substantially all unbilled receivables are expected to be
collected within the next 12 months and retention balances to be collected
at the close of the respective project.
<PAGE>
A portion of contracts with the United States Government and State
Agencies, are subject to audit and adjustment. Revenue has been recorded in
amounts expected to be realized on final settlement. Included in accounts
receivable are revenues from claims where recovery is probable in the
opinion of management.
NOTE 2 - MERGER AND SUBSEQUENT UNWINDING AGREEMENT
On March 10, 1998, Kemron Environmental Services, Inc. ("Kemron") merged
with and into Whitney American Corporation (the "Company"). Pursuant to
the merger agreement, each outstanding share of Kemron common stock was
converted into shares of the outstanding common stock of the Company. Upon
consummation of the Merger, the stockholders of Kemron became the owners in
the aggregate of approximately 86% of the outstanding common stock of the
Company; and the directors and officers of Kemron became directors and
officers of the Company. Prior to the Merger, the Company had no operating
activities.
The Merger was structured as a tax-free reorganization and was accounted
for using the pooling-of-interest method.
On November 29, 1999, the Company entered into an unwinding and stock
exchange agreement with Kemron, subject to the approval of the
shareholders, that called for the shareholders to surrender the Company
shares acquired in the March 10, 1998 merger agreement. These shares would
then be cancelled in exchange for the returned shares of Kemron stock to
the rescinding shareholders. Ultimately, the Company and Kemron would
substantively return to the ownership position that existed prior to the
original merger agreement. The approval for the unwinding and stock
exchange agreement was scheduled for vote at a special stockholder meeting
on January 20, 2000 in order to finalize the agreement. The stockholder
vote was postponed indefinitely until an acceptable resolution could be
reached on the tax implications identified to the former shareholders of
Kemron. Subsequent to the November 29, 1999 unwinding agreement, it was
determined through tax research that the treatment of this stock exchange
would differ from the original structure of the March 10, 1998 agreement
which was a tax-free exchange. A significant tax liability is believed to
result with the execution of the unwinding agreement such that the
substance of the agreement would be materially altered. The agreement
continues to be evaluated and it is uncertain as to the probability of
achieving a mutually acceptable agreeement.
NOTE 3 - SEGMENT INFORMATION
The Company's reportable segments are strategic business units that offer
different services. The Company has two reportable segments: analytical and
consulting services. Analytical services include lab testing services for
varying analytical programs such as NPDES, RCRA, CERCLA and OSHA. Consulting
services provide investigations and assessment services at non-regulated
contaminated sites and at sites covered by RCRA and CERCLA regulations, which
investigations may include preliminary assessments, site investigations,
groundwater assessments, remedial investigations, feasibility studies, and
remedial action plans. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies (note 1).
<PAGE>
Sales, operating income and identifiable assets by reportable segment for the
three months ended August 31, 2000 and August 31, 1999 are as follows:
(Dollars in thousands)
2000 1999
---------- -------------
Sales to unaffiliated customers:
Analytical services $ 2,497 $ 2,029
Consulting services 1,373 1,283
Treatability Laboratory (see Note 4) 198 N/A
---------- -------------
Total $ 4,068 $ 3,312
========== =============
Operating income:
Analytical services $ 620 $ 282
Consulting services 38 90
Treatability Laboratory (see Note 4) 14 N/A
---------- -------------
Total $ 672 $ 372
========== =============
Identifiable Assets:
Analytical services $ 3,270 $ 2,653
Consulting services 1,761 2,631
Treatability Laboratory (see Note 4) 463 N/A
---------- -------------
Total $ 5,494 $ 5,284
========== =============
NOTE 4 - ACQUISITION OF KIBER ENVIRONMENTAL SERVICES, INC.
On June 29, 2000, The Company entered into a merger agreement ("Agreement") with
Kiber Environmental Services, Inc. ("Kiber"), effective June 1, 2000. The
Agreement provided for a tax-free merger of Kiber with and into Kemron in a
reorganization described in section 368(a) and 368(a)(i)(D) of the Internal
Revenue Code of 1986, as amended (the "Code"). The shareholders of Kiber receive
a total of 200,810 shares of capital stock in Whitney and $450,000 in exchange
for all of the capital stock of Kiber. The $450,000, paid at closing, consisted
of $300,000 in cash and a promissory note for $150,000, payable in twelve months
and earning interest at ten percent (10%). The promissory note is personally
guaranteed by Juan J. Gutierrez. Additionally, the Company's purchase price of
Kiber may be reduced, if certain Kiber receivables are not realized within a 12
months period following the merger.
The merger was accounted for under the purchase method and the consolidated
financial statements include the earnings of Kiber for the three months ending
August 31, 2000. The assets and liabilities of Kiber have been recorded in the
consolidated financial statements at their fair market value.
Based on the fair market value of assets and liabilities of Kiber and the market
value of Kemron's shares issued as of the effective date June 1, 2000, no
goodwill has been reflected on the balance sheet as of August 31, 2000. The cost
of acquisition was equal to that of the fair market value of Kiber's assets and
liabilities.
A provision was established for a specific customer account that is deemed
unlikely to be collected as of the date of acquisition. Under the terms of the
Agreement, any portion of this customer account that is not collected will
become a reduction of the note payable due to the Kiber shareholders at the end
of twelve months. The balance of this account as of August 31, 2000 equals
$80,309 and the entire receivable has been adjusted for as a reduction to the
balance due to related party.
The following unaudited pro forma financial information for the period June 1,
1999 through August 31, 1999, assumes the acquisition had occurred on June 1,
1999.
Net Sales $3,736,280
==========
Net Income 397,197
==========
Net Income per Share .09
==========
<PAGE>
Item 2. Management's Discussion and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL CONDITION
As of August 31, 2000, the Company's working capital balance increased from
$1,009,465 at May 31, 2000 to $1,180,316. This increase was the result of
profits generated during the three month period. The current liabilities
increased by $1,117,512 while the current accounts receivables increased by
$1,249,329. The increase in accounts receivable is due to a high volume of
billing activity that took place during the first quarter ending August 31,
2000, primarily for analytical services. The increase of current liabilities is
the result of the additional advances from the line of credit amounting to
approximately $533,000 and the income tax liabilities that have resulted from
strong operating results in this past quarter. The current income tax liability
increased by approximately $257,000, the Company had a much lower tax liability
as of May 31, 2000 mostly because a net operating loss carryforward was still
available to reduce much of the tax liability for the tax reporting period ended
May 31, 2000.
The Company maintains a line of credit of $1.8 million with a bank, secured by
the Company's accounts receivable and the personal guaranty of the majority
shareholder, Juan J. Gutierrez. The line of credit has provided a significant
source of the Company's cash requirements. The actual balance on the line of
credit will fluctuate during the period based on financing activities. There
are no significant working capital requirements pending at August 31, 2000. The
Company's available line of credit is expected to be sufficient to meet the
Company's needs for the foreseeable future.
RESULTS OF OPERATIONS
Revenues for the three months ended August 31, 2000 were $4,068,523, which
represents an increase of 22.8% from the last year's three month revenues of
$3,311,892. The revenue increase is the result of a substantial increase in
analytical services for our Ohio laboratory during the first quarter, much of
which was attributed several large projects. The laboratory's revenues increased
by approximately $468,000 for the current fiscal quarter as compared to the
prior year. The first quarter of the fiscal year is typically one of the
strongest for analytical services, as many clients have a high concentration of
project work from the Spring time through early Autumn.
The consulting services reported modest increase in revenues for the first three
months of fiscal year 2000, a $90,000 increase when compared to the same period
ended August 31, 1999. Much of the increased service revenue for the consulting
services can be attributed to the projects brought to the Company through the
Kiber acquisition, specifically one remediation project that was substantially
completed during the first quarter ended August 31, 2000 and generated $135,000
of new business revenue.
Gross profit was 38.5% and 33.0% of revenues for the three months ending August
31, 2000 and 1999, respectively. The Company considers gross margin of 38.5% to
be within the range for normal operations. Net income before income taxes
increased for the three months ended August 31, 2000 with a 14.8% profit as
compared to 11.1% for the same period in the prior year. The improvement of
gross profit is attributed to the increased sales volume generated by the
laboratory operation. The laboratory experiences significant increases in profit
margins from increased sales due to the ability to better optimize the
utilization of the lab's automated instruments. Much of the increase in gross
margin for the current year's first quarter was the reason for the increase in
net income before taxes.
SG&A expense was $375,750 for the three months ended August 31, 2000, up 13.4%
from the first three months of fiscal year 2000. The increase is attributed to
the additional marketing staff brought into the Company as well as the
recognition of the profit sharing plan that was implemented during fiscal year
1999.
<PAGE>
Interest expense was $60,560 for the three months ended August 31, 2000, an
increase of 91.8% as compared to the same period for prior year. The Company
experienced unusually low borrowing requirements during the first quarter of
fiscal year 2000 which had stemmed primarily from very positive collection on
customer accounts. This same level of success on receivable turnover has not
occurred during the quarter ended August 31, 2000. Further, the majority of
capital expenditures over the past fiscal year were acquired under capital lease
obligations and represent a portion of the increase in interest expense.
YEAR 2000
The company experienced a near flawless Year 2000 transition with the various
computer applications and hardware. The necessary courses of action were put
forth over the past 18 months under the company's Year 2000 readiness program.
As of the filing date, there were no other compliance issues identified with the
company's third party suppliers.
The most substantial risk areas have been assessed with the entry to Year 2000
and there is no indication that there has been any impairment to the company's
operation that resulted from computer applications inability to process date-
sensitive information. Any undetected errors that may still exist are not
believed to be a significant risk to the company's operation.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and information relating to the
Company that are based on the beliefs of its management as well as assumptions
made by and information currently available to its management. When used in
this report, the words "anticipate", "believe", "estimate", "expect", "intend",
plan and similar expressions, as they relate to the Company or its management,
are intended to identify forward-looking statements. These statements reflect
management's current view of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions. Should any of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results my vary materially from those described in this report
as anticipated, estimated or expected. The Company's realization of its
business aims will depend in the near future principally on the successful
completion of its acquisition of operations as discussed below.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended August 31, 2000, the Company's line of credit
increased by $532,916 to $1,236,764. This was the result of a slowdown in
customer payment, as a result, accounts receivables have increased by
approximately $1,250,000 during the first quarter of the current year. Some of
this increase in receivables can be attributed to the tremendous sales achieved
during the quarter, the Company generated approximately $4,068,000 in billings
for the quarter. The average billings per three month quarter during the fiscal
year ended May 31, 2000 was only $3,380,000. These figures indicate that
approximately one half of the increase in receivables was simply attributed to
higher billing activity. The other half correlates to the slow customer payments
and ultimately, the need for additional borrowings from our line of credit to
support the working capital requirements.
Cash flows used in operating activities totaled $56,798 for the three months
ended August 31, 2000. Cash outflows consist primarily of the significant
increases in accounts receivable for the three months as described in the
section above on financial condition.
Cash used in investing activities totaled $392,577 for the current year's first
three months. The significant cash outflow relates to the acquisition of Kiber
Environmental Services, Inc.
PART II - OTHER INFORMATION
<PAGE>
Item 6 - Exhibits and 8-K Filings
(a) The Company filed the following Current Reports on Form 8-K during the
three months ended August 31, 2000.
Filing of Form 8-K on July 14, 2000 for the acquisition of Kiber
Environmental Services, Inc.
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.
WHITNEY AMERICAN CORPORATION
By /s/ JUAN J. GUTIERREZ
----------------------
JUAN J. GUTIERREZ
PRESIDENT AND CEO
DATED: OCTOBER 13, 2000
In accordance with the Exchange Act, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Juan J. Gutierrez Chief Executive Officer, President October 13, 2000
----------------------
Juan J. Gutierrez and Chairman of the Board
/s/ John M. Dwyer Vice President October 13, 2000
----------------------
John M. Dwyer and Director
/s/ Dave Vandenberg Vice President October 13, 2000
----------------------
Dave Vandenberg and Director
/s/ John S. Heishman Secretary, Treasurer October 13, 2000
----------------------
John S. Heishman and Director
/s/ Tracy Bergquist Vice President October 13, 2000
----------------------
Tracy Bergquist and Director
</TABLE>
