<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
---- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000.
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: 0-21145
COVALENT GROUP, INC.
(Name of small business issuer in its charter)
Nevada 56-1668867
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Glenhardie Corporate Center, 1275 Drummers Lane
Wayne, Pennsylvania 19087
(address of principal executive offices)
Issuer's telephone number: 610-975-9533
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. Yes X No
-- --
State the number of shares outstanding of each of the issuer's classes of common
equity as of November 1, 2000.
Common Stock, Par Value $.001 12,190,577
----------------------------- ----------
(Class) Outstanding
Transitional Small Business Disclosure Format (check one): Yes No X
-- --
1
<PAGE>
FORM 10-QSB
COVALENT GROUP, INC.
INDEX
Page
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - September 30, 2000
and December 31, 1999 (Unaudited) 3
Statements of Operations - Three Months and Nine Months
Ended September 30, 2000 and 1999 (Unaudited) 5
Statements of Cash Flows - Nine Months
Ended September 30, 2000 and 1999 (Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information 14
Signature Page 15
2
<PAGE>
Part I. Financial Information
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
COVALENT GROUP, INC.
BALANCE SHEETS
(Unaudited)
September 30, December 31,
2000 1999
-------------------- ------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 1,511,170 $ 558,528
Restricted cash 1,081,148 697,050
Accounts receivable 1,812,135 2,826,319
Prepaid expenses and other 254,907 131,711
Costs and estimated earnings in excess of
related billings on uncompleted contracts 6,456,750 3,414,930
-------------------- ------------------
Total Current Assets 11,116,110 7,628,538
-------------------- ------------------
Property and Equipment
Equipment 1,678,825 1,642,578
Furniture and fixtures 281,463 270,589
Leasehold improvements 120,863 120,863
-------------------- ------------------
2,081,151 2,034,030
Less - Accumulated depreciation (1,246,052) (960,903)
-------------------- ------------------
Net Property and Equipment 835,099 1,073,127
-------------------- ------------------
Other Assets 54,394 40,507
-------------------- ------------------
Total Assets $12,005,603 $8,742,172
==================== ==================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
COVALENT GROUP, INC.
BALANCE SHEETS
(Unaudited)
Liabilities and Stockholders' Equity
September 30, December 31,
2000 1999
-------------------- -----------------
<S> <C> <C>
Current Liabilities
Accounts payable $ 1,656,066 $ 2,042,419
Accrued expenses 1,003,306 373,885
Billings in excess of related costs and
estimated earnings on uncompleted contracts 441,442 322,571
Customer advances 2,034,321 1,245,696
-------------------- -----------------
Total Current Liabilities 5,135,135 3,984,571
-------------------- -----------------
Stockholders' Equity
Common stock, $.001 par value,
25,000,000 shares authorized, 12,203,077
and 12,081,193 shares issued at September 30,
2000 and December 31, 1999 respectively 12,203 12,081
Additional paid-in-capital 9,894,172 9,432,631
Accumulated deficit (2,985,591) (4,636,795)
-------------------- -----------------
Less: 6,920,784 4,807,917
Treasury stock at cost, 12,500 shares at
September 30, 2000 and December 31, 1999
respectively (50,316) (50,316)
Total Stockholders' Equity 6,870,468 4,757,601
-------------------- -----------------
Total Liabilities and Stockholders' Equity $12,005,603 $ 8,742,172
==================== =================
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
COVALENT GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ---------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 3,500,902 $ 4,047,764 $10,640,405 $11,510,210
Operating Expenses
Direct 1,581,156 2,462,189 5,361,393 6,950,924
Selling, general and administrative 882,477 867,238 2,392,974 2,520,287
Depreciation and amortization 88,725 111,653 285,149 251,933
----------- ----------- ----------- -----------
Total Operating Expenses 2,552,358 3,441,080 8,039,516 9,723,144
----------- ----------- ----------- -----------
Income From Operations 948,544 606,684 2,600,889 1,787,066
Interest Income, Net 1,290 42,847 20,015 90,806
----------- ----------- ----------- -----------
Income Before Income Taxes 949,834 649,531 2,620,904 1,877,872
Income Tax Provision 351,670 240,316 969,700 694,803
----------- ----------- ----------- -----------
Net Income $ 598,164 $ 409,215 $ 1,651,204 $ 1,183,069
=========== =========== =========== ===========
Net Income Per Common Share
Net Income - Basic $.05 $.03 $.14 $.10
Net Income - Diluted $.05 $.03 $.13 $.10
Weighted Average Common and Common
Equivalent Shares Outstanding
Basic 12,179,954 12,059,302 12,157,742 12,058,898
Diluted 12,633,207 12,379,938 12,851,947 12,412,845
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
<TABLE>
<CAPTION>
COVALENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
Nine Months
Ended
September 30,
----------------
2000 1999
----------- -----------
Operating Activities:
Net income $ 1,651,204 $ 1,183,069
Adjustments to reconcile net income to
net cash (used in) provided by operating activities
Amortization and depreciation 285,149 251,932
Decrease deferred income taxes - 494,109
Changes in assets and liabilities
(Increase) decrease in -
Accounts receivable 1,014,184 193,208
Restricted cash (384,098) 465,374
Prepaid expenses and other (123,196) 120,921
Costs and estimated earnings in excess (3,041,820) (1,808,879)
of related billings on uncompleted contracts
Other assets (13,887) (9,500)
Increase (decrease) in -
Accounts payable 475,192 447,281
Accrued expenses (232,124) (184,601)
Billings in excess of related costs and
estimated earnings on uncompleted contracts 118,871 (1,194,401)
Customer advances 788,625 1,496,507
------------------ -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 538,100 1,455,020
------------------ -----------------
INVESTING ACTIVITIES:
Purchases of property and equipment (47,121) (688,733)
------------------ -----------------
NET CASH USED IN INVESTING ACTIVITIES (47,121) (688,733)
------------------ -----------------
Financing Activities:
Proceeds from issuance of stock, net 461,663 688
------------------ -----------------
Net Cash Provided By Financing Activities 461,663 688
------------------ -----------------
Net Increase IN CASH AND CASH EQUIVALENTS 952,642 766,975
Cash and Cash Equivalents, Beginning of Period 558,528 1,208,956
------------------ -----------------
Cash and Cash Equivalents, End of Period $ 1,511,170 $ 1,975,931
================== =================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
FORM 10-QSB
Covalent Group, Inc.
Notes To Financial Statements
(Unaudited)
1. DESCRIPTION OF BUSINESS
-----------------------
Covalent Group, Inc. (the "Company"), is a contractual research
organization, providing clinical research and development services to
pharmaceutical, biotechnology, medical services and managed care
organizations. The Company initiates, designs and monitors clinical trials,
manages and analyzes clinical data and offers other related services and
products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates.
Basis of Presentation
---------------------
The financial statements for the three and nine months ended September 30,
2000 and 1999 have been prepared without audit and, in the opinion of
management, reflect all adjustments necessary (consisting only of normal
recurring adjustments) to present fairly the Company's financial position at
September 30, 2000 and the results of its operations and its cash flows for
the interim periods presented. Such financial statements do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-KSB, for the year ended December 31, 1999.
Operating results for the nine months ended September 30, 2000 may not
necessarily be indicative of the results for the year ending December 31,
2000.
Revenue Recognition
-------------------
Fixed price contract revenue is recognized based on the status of the work
completed under the contract as of a given time using the percentage of
completion method. Revenue from other contracts is recognized as services
are provided. Revenue related to contract modifications is recognized when
realization is assured and the amounts are reasonably determinable.
Adjustments to contract cost estimates are made in the periods in which the
7
<PAGE>
facts which require the revisions become known. When the revised estimate
indicates a loss, such loss is provided for currently in its entirety. Costs
and estimated earnings in excess of related billings on uncompleted
contracts represent revenue recognized in excess of amounts billed. Billings
in excess of related costs and estimated earnings on uncompleted contracts
represent amounts billed in excess of revenue recognized.
Restricted Cash
---------------
The Company received an advance payment from one of its customers as part of
a long term contract, which includes a separate restricted cash account to
be utilized for payment of investigator fees. As of September 30, 2000, this
restricted cash amount was $1,081,148 and is included in customer advances.
Net Income Per Common and Common Equivalent Share
-------------------------------------------------
Basic net income per common share was computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
period. Diluted net income per common share reflects the potential dilution
from the exercise of outstanding stock options and warrants into common
stock.
The net income and weighted average common and common equivalent shares
outstanding for purposes of calculating net income per common share are
computed as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- ------------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income used for basic
and diluted net income
per common share $ 598,164 $ 409,215 $ 1,651,204 $ 1,183,069
================== ================== ================ =================
Weighted average common shares
outstanding used for basic net
income per common share 12,179,954 12,059,302 12,157,742 12,058,898
Dilutive effect of common stock
options and warrants outstanding 453,253 320,636 694,205 353,947
------------------ ------------------ ---------------- -----------------
Weighted average common and
common equivalent shares
outstanding used for diluted net
income per common share 12,633,207 12,379,938 12,851,947 12,412,845
================== ================== ================ =================
</TABLE>
8
<PAGE>
Comprehensive Income
---------------------
A reconciliation of comprehensive income in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive
Income" is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------- -------------------------------------
2000 1999 2000 1999
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net Income $598,184 $409,215 $1,651,204 $1,183,069
Unrealized Loss on Investment - - - (9,375)
------------------- ----------------- ---------------- -----------------
Comprehensive Income $598,164 $409,215 $1,651,204 $1,173,694
=================== ================= ================ =================
</TABLE>
Segment Reporting - SFAS No. 131
--------------------------------
Revenues from two customers represent approximately 59% and 19%
respectively of the Company's revenues for the nine month period ending
September 30, 2000.
Recent Accounting Pronouncements
--------------------------------
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial
Statements. SAB 101 provides guidance for revenue recognition under certain
circumstances. The accounting and disclosures prescribed by SAB 101 will
be effective for the fourth quarter of fiscal year 2000. The Company is
currently evaluating the impact the application of SAB 101 will have on its
financial position and results of operations.
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This statement establishes the accounting and reporting
standards for derivatives and hedging activity. Upon the adoption of SFAS
No. 133, all derivatives are required to be recognized in the statement of
financial position as either assets or liabilities and measured at fair
value. In July 1999 and June 2000, the FASB issued SFAS No. 137 and SFAS
No. 138 which deferred the effective date for implementation of SFAS No.
133 to fiscal years beginning after June 15, 2000 and which addressed a
limited number of issues causing implementation difficulties for entities
that apply SFAS No. 133, respectively. The Company does not believe that
the adoption of SFAS 133, as amended, will have a material effect on its
financial statements.
Reclassifications
-----------------
Certain reclassifications have been made to conform with the current
period's classifications.
9
<PAGE>
3. RELATED PARTY TRANSACTION
-------------------------
The Company recorded revenues of $325,000 and $680,000 for the three months
and nine months ended September 30, 2000, respectively, under the terms of
a consulting agreement with SpeedTrials.com, Inc. A significant
shareholder of the Company's common stock is a principal shareholder in
SpeedTrials.com, Inc. The total contract for consulting services is in the
amount of $1,000,000 and the revenues are being recognized over the
consulting period as services are performed through December 2000.
4. LINE OF CREDIT
--------------
The Company has a line of credit with a commercial bank providing a maximum
credit facility of $1 million which bears interest at a rate not to exceed
1% above the bank's prime rate. Borrowings outstanding under the credit
line are secured by substantially all of the assets of the Company. No
borrowings were outstanding under the credit line at September 30, 2000.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
When used in this Report on Form 10-QSB and in other public statements, both
oral and written, by Covalent Group, Inc. (the "Company") and Company officers,
the words "estimate," "project," "intend," "believe," "anticipate" and similar
expressions are intended to identify forward-looking statements regarding events
and financial trends that may affect the Company's future operating results and
financial position. Such statements are subject to risks and uncertainties that
could cause the Company's actual results and financial position to differ
materially. Such factors include, among others: (i) the Company's success in
attracting new business; (ii) the size, duration and timing of clinical trials;
(iii) the termination, delay or cancellation of clinical trials; (iv) the
intense competition in the industry in which the Company competes; (v) the
Company's ability to obtain financing on satisfactory terms; (vi) the
sensitivity of the Company's business to general economic conditions; and (vii)
other economic, competitive, governmental and technological factors affecting
the Company's operations, markets, products, services and prices. The Company
undertakes no obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after the date
they are made or to reflect the occurrence of unanticipated events.
The information set forth and discussed below for the nine months ended
September 30, 2000 and 1999 is derived from the Financial Statements included
elsewhere herein. The financial information set forth and discussed below is
unaudited but, in the opinion of management, reflects all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of such information. The results of operations of the Company for a particular
quarter may not be indicative of results expected during the other quarters or
for the year.
General
-------
The Company, is a research management organization that designs, coordinates and
monitors clinical trials in drug development for some of the world's leading
pharmaceutical firms. In
10
<PAGE>
addition, using advanced technologies, the Company works extensively in managed
care, medical outcomes research and health management programs that focus on
compliance and provider/patient behavior modification. Revenue is derived
principally from the identification, placement, monitoring and management of
clinical development studies in the traditional pharmaceutical, as well as
managed care environments.
The Company's quarterly results can fluctuate as a result of a number of
factors, including the Company's success in attracting new business, the size
and duration of the clinical trials, the timing of client decisions to conduct
new clinical trials or possible cancellation or delays of ongoing trials, and
other factors, many of which are beyond the Company's control. Clinical
research service contracts generally have terms ranging from several months to
several years. A portion of the contract fee is generally payable upon
execution of the contract, with the balance payable in installments over the
life of the contract. Revenue and related cost of revenue are recognized as
specific contract terms are fulfilled under the percentage of completion method.
Contracts generally may be terminated by clients with or without cause.
Clinical trials may be terminated or delayed for several reasons, including
unexpected results or adverse patient reactions to the drug, inadequate patient
enrollment or investigator recruitment, manufacturing problems resulting in
shortages of the drug or decisions by the client to de-emphasize or terminate a
particular trial or development efforts on a particular drug. Depending on the
size of the trial in question, a client's decision to terminate or delay a trial
in which the Company participates could have a materially adverse effect on the
Company's backlog, future revenue and profitability. Terminated contracts are
however, subject to reconciliation with the client and the Company is generally
reimbursed for costs expended through the date of cancellation of the contract.
The Company's backlog, which consists of anticipated revenues from signed
contracts and letters of intent, is $29 million at September 30, 2000. The
Company believes that its backlog as of any date is not necessarily a meaningful
predictor of future results.
Three Months Ended September 30, 2000 Compared To Three Months Ended September
------------------------------------------------------------------------------
30, 1999
--------
Revenues for the three months ended September 30, 2000 decreased 14% to
$3,501,000 as compared to $4,048,000 for the three month period ended September
30, 1999. Although there was an additional clinical trial in progress during
the period ended September 30, 2000, revenue decreased by $547,000 as compared
to September 30, 1999 due to a significant short term project that was completed
in 1999.
Direct expenses include compensation and other expenses directly related to
conducting clinical studies. These expenses decreased by $881,000 from
$2,462,000 to $1,581,000 for the three months ended September 30, 1999 and 2000,
respectively. The decrease in expenses resulted principally from decreased
payments to subcontractors. Direct expenses as a percentage of revenues were
45% for the three months ended September 30, 2000 as compared to 61% for the
same period last year. The decrease in relative percent is due to the different
cost structures of the clinical studies being conducted and is based on
different types of services requested by the Company's clients.
11
<PAGE>
Selling, general and administrative expenses include all administrative and
business development personnel expenses, and all other support expenses.
Selling, general and administrative expenses for the three months ended
September 30, 2000 were $882,000 or 25% of revenues, as compared to $867,000 or
21% of revenues for the same period last year. The net increase of $15,000
reflects increased costs primarily for salaries.
Depreciation and amortization expense decreased $13,000 from $112,000 for the
three months ended September 30, 1999 to $89,000 for the three months ended
September 30, 2000. The decrease was due primarily to less depreciation expense
resulting from certain assets becoming fully depreciated in 2000.
Interest income, net decreased $42,000 from $43,000 for the three months ended
September 30, 1999, to $1,000 for the three months ended September 30, 2000.
The decrease is primarily due to a lesser amount of cash available for
investment in 2000.
The effective income tax rate for the three months ended September 30, 2000 and
1999 was consistent at 37%.
Nine Months Ended September 30, 2000 Compared To Nine Months Ended June 30, 1999
--------------------------------------------------------------------------------
Revenues for the nine months ended September 30, 2000 decreased 8% to
$10,640,000 as compared to $11,510,000 for the nine month period ended September
30, 1999. Although an additional clinical trial was in progress during the nine
months ended September 30, 2000, revenue decreased by $870,000 as compared to
the same period last year due to a significant short term project that as
completed in 1999.
Direct expenses include compensation and other expenses directly related to
conducting clinical studies. These expenses decreased by $1,590,000 from
$6,951,000 to $5,361,000 for the nine months ended September 30, 1999 and 2000,
respectively. The decrease in expenses results principally from decreased
payments to subcontractors. Direct expenses as a percentage of revenues were
50% for the nine months ended September 30, 2000 as compared to 60% for the same
period in the prior year. The decrease in relative percent is due to the
different cost structures of the clinical studies being conducted and is based
on different types of services requested by the Company's clients.
Selling, general and administrative expenses include all administrative and
business development personnel expenses, and all other related expenses.
Selling, general and administrative expenses for the nine months ended September
30, 2000 amounted to $2,393,000 or 22% of revenues, as compared to $2,521,000 or
22% of revenues for the same period last year. The decrease of $128,000
reflects increased efficiencies resulting from consolidation within the
Company's operating structure.
Depreciation and amortization expense increased $33,000 from $252,000 for the
nine months ended September 30, 1999 to $285,000 for the nine months ended
September 30, 2000. The increase was due primarily to the depreciation
attributable to an additional data management system acquired in the second
quarter of 1999.
12
<PAGE>
Interest income, net decreased $71,000 from $91,000 for the nine months ended
September 30, 1999 to $20,000 for the nine months ended September 30, 2000. The
decrease is primarily due to a lesser amount of cash available for investment in
2000.
The effective income tax rate for the nine months ended September 30, 2000 and
1999 was consistent at 37%.
Liquidity and Capital Resources
-------------------------------
The Company's contracts usually require a portion of the contract amount to be
paid at the time the contract is initiated. Additional payments are generally
made upon completion of negotiated performance requirements throughout the life
of the contract. Cash receipts do not necessarily correspond to costs incurred
and revenue recognized (revenue recognition is based on the percentage of
completion accounting method). The Company typically receives a low volume of
large-dollar receipts. As a result, the number of days outstanding in accounts
receivable will fluctuate due to the timing and size of cash receipts. Compared
to December 31, 1999, accounts receivable decreased $1,014,000 to $1,812,000 at
September 30, 2000 primarily due to the timing of progress payments for clinical
trials. Costs and estimated earnings in excess of related billings on
uncompleted contracts increased $3,415,000 at December 31, 1999 to $6,457,000 at
September 30, 2000. This increase was attributable to ten clinical trials, for
which revenues have been recognized in excess of progress billings made to date
on those contracts.
The Company's cash and cash equivalents balance at September 30, 2000 was
$1,511,000 as compared to $559,000 at December 31, 1999. The increase in cash
was primarily due to the completion of certain milestones on contracts resulting
in cash receipts from clients and a corresponding decrease in costs and
estimated earning in excess of related billings on uncompleted contracts.
The Company purchased $47,000 of equipment in the nine months ended September
30, 2000. The Company anticipates the need for capital expenditures during the
remainder of 2000 for computer equipment will be $50,000.
The Company has a line of credit with a commercial bank providing a maximum
credit facility of $1 million which bears interest at a rate not to exceed 1 %
above the bank's prime rate. Borrowings outstanding under the credit line are
secured by substantially all of the assets of the Company. There were no
borrowings outstanding under the credit line at September 30, 2000.
The Company's principal cash needs on both a short and long-term basis are for
the funding of its operations, and capital expenditure requirements. The
Company expects to continue expanding its operations through internal growth,
expansion of its existing services, and the development of new service products
for clinical research and the healthcare industry. The Company expects such
activities to be funded from existing cash and cash equivalents and cash flow
from operations.
Management believes that the Company's operations and financial results are not
materially affected by inflation.
13
<PAGE>
COVALENT GROUP, INC.
PART II. Other Information
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (in electronic format only)
(b) Reports on Form 8-K
14
<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.
COVALENT GROUP, INC.
Dated: November 14, 2000 By: /s/Kenneth M. Borow, M.D.
----------------- -------------------------
Kenneth M. Borow, M.D.
Chief Executive Officer
Dated: November 14, 2000 By: /s/Joseph A. Delikat
----------------- --------------------
Joseph A. Delikat
Acting Chief Financial Officer
15
