FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(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, 1999
[ ] 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: 0-18344
SOONER HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1275261
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2680 W. I-40, Oklahoma City, OK 73108
(Address of principal executive offices)
Issuer's telephone number, including area code:
(405) 236-8332
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 [ ] NO [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 8,471,350 shares of
common stock as of March 30, 2000.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOONER HOLDINGS, INC.
Consolidated Balance Sheet
(unaudited)
` Sept. 30,
1999
-----------
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 243,248
Accounts receivable ........................................ 185,819
Other current assets ....................................... 15,657
-----------
Total current assets ..................................... 444,724
Property and equipment, net .................................... 2,997,211
Intangible assets, net of amortization of $259,675 ............. 1,493,118
Other assets, net .............................................. 263,250
-----------
$ 5,198,303
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ............................................ $ 112,580
Accrued liabilities to related parties ...................... 224,968
Accrued liabilities ......................................... 143,882
Current portion of notes payable and royalty payable ........ 9,045
Deferred revenue ............................................ 35,482
-----------
Total current liabilities ................................ 525,957
-----------
Notes payable, less current portion and net
of discount of $320,667 ..................................... 5,049,819
Royalty payable, less current portion and net
of discount of $837,777 ..................................... 429,268
Commitments and contingencies .................................. --
Stockholders' deficit:
Preferred stock; undesignated, authorized 10,000,000
shares, no shares issued and outstanding .................... --
Common stock; $.001 par value, authorized 100,000,000
shares, 8,471,350 shares issued and outstanding ............. 8,471
Additional paid-in-capital ..................................... 5,532,907
Accumulated deficit ............................................ (6,348,119)
-----------
Total stockholders' deficit .............................. (806,741)
-----------
$ 5,198,303
===========
The accompanying notes are an integral part of this consolidated balance sheet.
<TABLE>
<CAPTION>
SOONER HOLDINGS, INC.
Consolidated Statements of Operations
(unaudited)
For the quarter ended For the nine months ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Rental revenues ................ $ 93,379 $ 73,795 $ 253,582 $ 219,871
Service revenues ............... 397,004 287,192 1,203,931 376,030
----------- ----------- ----------- -----------
Total revenues ............... 490,383 360,987 1,457,513 595,901
----------- ----------- ----------- -----------
Operating expenses:
General and administrative ..... 360,947 327,476 1,054,082 456,137
Depreciation and amortization .. 75,949 39,559 219,423 79,130
----------- ----------- ----------- -----------
Total operating expenses ..... 436,896 367,035 1,273,505 535,267
----------- ----------- ----------- -----------
Income (loss) from operations ..... 53,487 (6,048) 184,008 60,634
Interest expense .................. (143,800) (132,593) (429,481) (274,320)
Other income ...................... -- 1,684 15,000 1,899
----------- ----------- ----------- -----------
Net loss from continuing operations (90,313) (136,957) (230,473) (211,787)
Loss from discontinued operations . -- -- (17,301) --
----------- ----------- ----------- -----------
Net loss .......................... $ (90,313) $ (136,957) $ (247,774) $ (211,787)
=========== =========== =========== ===========
Net loss per common share ......... $ (.01) $ (.02) $ (.03) $ (.03)
=========== =========== =========== ===========
Weighted average common shares
outstanding ....................... 8,471,350 7,819,236 8,471,350 7,819,236
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
SOONER HOLDINGS, INC.
Consolidated Statements of Cash Flows
(unaudited)
For the nine months ended
September 30,
1999 1998
----------- -----------
Cash flows from operating activities:
Net loss ...................................... $ (247,774) $ (211,887)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Net assets of discontinued operations ... 17,301 --
Amortization of discount ................ 155,353 --
Depreciation and amortization ........... 219,423 79,130
Changes in assets and liabilities:
Accounts receivable .................... (48,802) (31,169)
Other current assets ................... 20,985 (1,556)
Accounts payable ....................... (26,124) 14,215
Accrued liabilities to related parties . 42,244 115,524
Accrued liabilities .................... (37,657) 74,178
Deferred revenue ....................... 1,600 2,130
----------- -----------
Net cash provided by operating activities 96,549 40,565
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment ........... (257,845) (183,830)
----------- -----------
Net cash used in investing activities ......... (257,845) (183,830)
----------- -----------
Cash flows from financing activities:
Repayments of notes payable ................... (2,004,260) (50,229)
Royalty payments .............................. (54,000) (24,000)
Borrowings on notes payable ................... 2,510,000 155,287
Borrowings (repayments) of notes payable to
related parties ............................. (123,988) 159,319
----------- -----------
Net cash provided by financing activities ........ 327,752 240,377
----------- -----------
Net increase in cash ............................. 166,456 97,112
Cash at beginning of year ........................ 76,792 4,482
----------- -----------
Cash at end of period ............................ $ 243,248 $ 101,594
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest ...... $ 235,026 $ 191,964
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
SOONER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1999
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and operations
- ---------------------------
Sooner Holdings, Inc., an Oklahoma corporation (Company), operates primarily
through two of its subsidiaries. New Directions Acquisitions Corp. (NDAC) owns
and operates a community correction business in Oklahoma City, Oklahoma and
Charlie O Business Park Incorporated (Business Park) is engaged in the ownership
and rental of a business park in Oklahoma City, Oklahoma. The Company also owns
100% of SD Properties, Inc. (SDPI) which acts as a marketing representative for
construction contractors to develop business opportunities for those contractors
for a fee. Effective January 15, 1999, the Company completed the spin-off of
Charlie O Beverages, Inc. (Beverages), the subsidiary which operated the
original in-home soda fountain business.
Basis of presentation
- ---------------------
The unaudited consolidated financial statements presented herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
for interim financial information and the instructions to Form 10-QSB and
Regulation S-B. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These unaudited consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998 (1998 Form 10-KSB). In the opinion of
management, the unaudited consolidated financial statements reflect all
adjustments (consisting of normal recurring accruals only) which are necessary
to present fairly the consolidated financial position, results of operations,
and changes in cash flow of the Company. Operating results for interim periods
are not necessarily indicative of the results which may be expected for the
entire year.
Management Plans
- ----------------
The unaudited consolidated financial statements have been prepared contemplating
continuation of the Company as a going concern. The Company has sustained
recurring operating losses in recent years and is expected to need additional
amounts of working capital for its operations. At September 30, 1999, the
Company has a shareholders' deficit of $806,741 and has a working capital
deficiency of $81,233. In view of these matters, realization of a major portion
of the assets is dependent upon continued operations of the Company, which in
turn is dependent upon the Company's ability to meet its financing requirements
and the success of its future operations. Management believes that its plans to
revise the Company's operating and financial requirements, as described more
fully in the 1998 Form 10-KSB, provide the Company the opportunity to continue
as a going concern. However, there can be no assurance that these plans will be
successful.
Principles of consolidation
- ---------------------------
The unaudited consolidated financial statements have been prepared on
the basis of generally accepted accounting principles and include the accounts
of Sooner Holdings, Inc. and its subsidiaries. All significant intercompany
transactions have been eliminated.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1999 is comprised of the
following:
Land ..................................................... $1,311,400
Buildings and improvements ............................... 2,140,432
Machinery and equipment .................................. 51,013
Vehicles ................................................. 51,281
----------
3,554,126
Less accumulated depreciation ............................ 556,915
----------
Property and equipment, net .............................. $2,997,211
==========
NOTE 3 - OTHER ASSETS
Other assets at September 30, 1999 is comprised of the following:
Loan commitment fee, less amortization of $1,250 ............... $ 36,250
Certificates of deposit ........................................ 227,000
--------
Other assets, net .............................................. $263,250
========
NOTE 4 - NOTES PAYABLE
Notes payable as of September 30, 1999 consists of the following:
Installment note payable to bank, interest at 8.8% per
annum, due June 1, 2009. Secured by real estate. $ 2,496,568
Notes payable to related parties, interest ranging from 10%
to 15% per annum, due January 1, 2000. 983,244
Note payable to individual, no stated interest rate, due on
demand. 4,090
Balloon promissory note payable to related party (see Note
8), 10% stated interest per annum, 15% effective interest
rate, principal and interest due June 1, 2001;
collateralized by a second mortgage on land and facility
owned by the Company, net of discount of $320,667. 1,010,333
Note payable to bank, interest at New York prime plus 2%,
due April 20, 2000, collateralized by a first mortgage on
land and facility owned by the Company. 559,674
-----------
5,053,909
Less current portion 4,090
-----------
Notes payable $ 5,049,819
===========
In June 1999, the Company refinanced several notes payable that were due
to mature during 1999. A single note payable to a bank bearing an 8.8% interest
rate and maturing in June 2009 replaced these notes.
NOTE 5 - ROYALTY PAYABLE
As part of a business acquisition (see Note 8), the Company assumed a
royalty payable to an individual. The agreement calls for monthly payments of
the greater of $6,000 or 6% of the total gross monthly income of NDAC. The
agreement expires on April 30, 2017. Future minimum payments under this
agreement total $1,272,000. A discount of $837,777 was imputed by management
using a 15% interest rate.
NOTE 6 - RELATED PARTY OBLIGATIONS
The Company's related parties are more fully discussed in the 1998 Form 10-KSB.
The following table reflects the related party obligations as of September 30,
1999:
Notes Accrued
Payable Liabilities
---------- ----------
President and chairman ........... $ 620,149 $ 80,307
Aztor and affiliates ............. 363,095 63,418
NDLLC ............................ 1,010,333 79,371
CRI .............................. -- 1,872
---------- ----------
Total related party liabilities $1,993,577 $ 224,968
========== ==========
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In February 1998, a lawsuit was filed by one of the owners of NDLLC
against the Company relating to the purchase of New Directions (see Note 8). On
January 18, 2000 a settlement was reached which includes a payment of $76,000 by
NDAC. This amount is included in accrued liabilities at September 30, 1999.
The Company is involved in certain other administrative proceedings
arising in the normal course of business. In the opinion of management, such
matters, including the lawsuit described above, will be resolved without
material effect on the Company's results of operations or financial condition.
NOTE 8 - ACQUISITION
Effective June 1, 1998, The Company completed the acquisition of all the
assets and certain liabilities of New Direction Centers of America, L.L.C. (New
Directions) and Horizon Lodges of America, Inc. (HLA) (together the "Sellers").
The Sellers' assets relate to the operation of a community correction business
in Oklahoma City, Oklahoma. The purchase price for the assets acquired was
$1,000,000 (the Note), the assumption of a "royalty" fee for the next 20 years
of at least $6,000 per month due to the original permitting owner, 1,000,000
shares of common stock of the Company, and approximately $1,000,000 in
liabilities.
The acquisition of these assets was accounted as a purchase in
accordance with Accounting Principles Board Opinion No. 16, with the cost
allocated to the net assets acquired based on their estimated fair values. The
operations of the New Directions business have been included in the financial
statements of the Company from the date of acquisition.
The assets acquired included a $227,000 Certificate of Deposit and the
facility and equipment which the business operates from which is zoned for use
as a community correction center valued at $450,000. Approximately $1,753,000 of
the purchase price was allocated to contract rights acquired. The contract
rights relate to an annually renewable contract with the Oklahoma Department of
Corrections. This asset is being amortized over a nine-year period, which is
management's estimate of the expected life of the contract.
The promissory note issued to New Directions bears interest of 10% per
annum with principal and interest due in three years. The face value of the Note
of $1,331,000 has been discounted at September 30, 1999 by management by
$320,667 using a 15% effective rate of interest.
NOTE 9 - DISCONTINUED OPERATION
Effective January 15, 1999, the Company spun-off its wholly-owned
subsidiary, Charlie O Beverages to all the Company's shareholders. Beverages
operated the original in-home soda fountain business. Beverages has been for
sale since December 1996 at which time the Company wrote-down the assets of
Beverages to their net realizable value. The Company issued 2,600,000 shares of
common stock of Beverages, which was distributed to the Company's shareholders
at one share of Beverages for each 3.2582 shares of the Company. The Company
recorded a loss of $17,301 at September 30, 1999 with regard to this
transaction.
Item 2. Management's Discussion and Analysis or Plan of Operation
Introduction
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto included elsewhere in this Form
10-QSB report. In addition, the discussion of the Company's expected Plan of
Operation, included in the 1998 Form 10-KSB, is incorporated herein in its
entirety as the discussion of the Plan of Operation as required by Item 303(a)
of Regulation S-B.
Plan of Operation
Effective June 1, 1998, NDAC completed the acquisition of the assets and
certain liabilities of New Directions related to the operation of a community
correction business. NDAC runs a community correction center, commonly known as
a halfway house, which currently has approximately 140 beds available but is
licensed to provide up to 300 beds. NDAC operates under a contract with the
Oklahoma Department of Corrections, which provides clients to NDAC. With the
NDAC acquisition, the Company intends to shift its growth focus to the community
corrections business and either liquidate or totally de-emphasize its other
operating subsidiaries.
The Community Correction Business
The facility operated by NDAC is a non-secure residential facility for
adult male and female offenders transitioning from institutional to independent
living. Offenders are eligible for these programs based upon the type of offense
committed and behavior while incarcerated in prison. Offenders generally spend
the last six months of their sentence in a community corrections program. The
goal and mission of NDAC's community corrections business is to reduce the
likelihood of an inmate committing an offense after release by assisting in the
reunification process with family and the community. Offenders must be employed,
participate in substance abuse programs, submit to frequent random drug testing,
and pay a predetermined percentage of their earnings to the government to offset
the cost of the program. The Company supervises these activities and also
provides life skills training, case management, home confinement supervision and
family reunification programs at its facilities.
NDAC's facility has received accreditation from the American
Correctional Association (the ACA), the governing body for accreditation. The
ACA has 25 mandatory standards and 263 non-mandatory standards regarding staff
working conditions and correctional facility living conditions. A community
correction facility that is ACA accredited can take private clients as well as
Federal clients.
Business Strategy
The Company's business strategy is to become a leading developer and a
manager of a quality privatized community correction facilities, initially in
Oklahoma and then expanding interstate. Management intends on seeking a larger
community corrections business by expanding into other zoned facilities, either
internally and through acquisitions. The Company intends on obtaining and
maintaining ACA accreditation for all of its facilities.
The Company will operate each facility under its management. The Company
will also either directly or through subcontractors, provide health care and
food service. In the future, the facilities may offer special rehabilitation and
educational programs, such as academic or vocational education, job and life
skills training, counseling and work and recreational programs.
Liquidity and Capital Resources - September 30, 1999 (unaudited) compared to
September 30, 1998 (unaudited).
The Company has had severe liquidity problems for the last several
years. The Company's liquidity is reflected in the table below, which shows
comparative deficiencies in working capital. Current working capital has been
primarily supplied by the Company's chairman and president, by Aztor Holdings,
Inc. (Aztor), a Phoenix, Arizona investment company or by Aztor's other
affiliated companies.
September 30, Dec. 31, 1998
1999 1998 (audited)
Deficiency in working capital $ (81,233) $ (243,642) $ (344,852)
========== ========== ==========
Exclusive of funds required for debt repayment, the Company believes
that it can borrow any additional funds from its related parties to maintain its
operations, although there can be no assurance that such funds will be available
when needed. In the event that the Company cannot refinance, or obtain
forbearance on its current liabilities or on its long-term liabilities as they
come due, the Company will undoubtedly face further severe liquidity problems
which may lead to litigation, the inability to transact business, and/or
foreclosure actions being initiated against a majority of the Company's assets.
In June 1999, the Company refinanced the debt on Business Park. The debt
was replaced by a single note in the amount of $2,500,000 payable to a bank with
interest at 8.8% that matures in June 2009.
As discussed above, the Company acquired certain assets related to the
operation of a community correction business. The purchase price for the assets
acquired was the issuance of 1,000,000 shares of common stock of the Company,
$1,000,000 in a note payable and the assumption of approximately $1,464,000 of
liabilities. The note issued to New Directions bears interest of 10% per annum
and is due in three years.
The Company believes the operations of the community corrections
business will be cash flow positive and be profitable and that the cash flow
from the new business will be sufficient to service the debt payments under the
note and the mortgage payment on the facility. The Company also intends to
continue the rehabilitation of the facility in order to bring the inmate
occupancy up to 300 beds. In the event that cash flow is insufficient to satisfy
the Company's needs, management believes that it can borrow any additional funds
from its related parties to maintain its operations.
Results of Operations - The quarter and nine months ended September 30, 1999
(unaudited) compared to the quarter and nine months ended September 30, 1998
(unaudited)
The following table illustrates the Company's revenue mix.
Quarter ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Business Park revenue ...... $ 93,379 $ 73,047 $ 253,582 $ 215,943
NDAC revenue ............... 397,004 287,192 1,203,931 376,030
Other revenue .............. -- 748 -- 3,928
---------- ---------- ---------- ----------
Total revenue ........... $ 490,383 $ 360,987 $1,457,513 $ 595,901
========== ========== ========== ==========
Total revenues increased $129,396 (36%) and $861,612 (145%) for the
quarter and nine months ended September 30, 1999 compared to the same quarter
and nine-month periods in 1998. This increase was related to the Company's NDAC
subsidiary. In June 1998 the Company acquired through NDAC a community
correctional facility. For the quarter ended September 30, 1999 NDAC generated
$397,004 of revenues or 81% of the total revenues for the current period.
Business Park's revenues increased $20,332 (28%) and $37,639 (17%) for
the quarter and nine months ended September 30, 1999, compared to the same
quarter and nine-month periods in 1998. This increase is attributable to the
occupancy by one tenant in May 1999 of 19,000 square feet or 15% of the total
square footage of the Business Park. At September 30, 1999 the Business Park was
100% occupied. Losses of tenants in the future could affect future operations
and financial position due to the cost of new leasehold improvements to attract
new tenants, increased leasing fees or lower rent revenue due to vacancy. There
is no assurance the Company will return to its historically high occupancy rate.
NDAC's revenues increased $109,812 (38%) and $827,901 (220%) for the
quarter and nine months ended September 30, 1999, compared to the same quarter
and nine-month periods in 1998. The increase for the current period is due to
increased occupancy at the correctional facility. There is no assurance the
Company will maintain this occupancy rate.
Total operating expenses for the quarter and nine months ended September
30, 1999 were $436,896 and $1,273,505, respectively, as compared to total
expenses for the comparable 1998 periods of $367,035 and $535,267, respectively.
This increase is related to the acquisition of the community correctional
business in June 1998. The NDAC subsidiary accounted for $355,528 or 81% of the
total operating expenses for the current period. The amortization of the NDAC
intangible asset resulted in an increase in depreciation and amortization
expense in the 1999 periods over the comparable 1998 periods. In addition
general and administrative expense for the quarter and nine-month periods
increased due to the acquisition of the community correctional business in June
1998.
Interest expense increased $155,161 (57%) for the nine months ended
September 30, 1999 over the 1998 period. The amortization of the royalty payable
and the purchase note in connection with the acquisition of New Directions
accounted for $155,353 of the increase for the nine months. In addition, the
Company assumed approximately $1,000,000 in liabilities with the acquisition of
the Correctional Business.
Loss from discontinued operations related to the spin-off of the
Company's subsidiary, Beverages.
The Company recorded a net loss for the nine-month period of 1999 of
$247,774 as compared to a net loss of $211,787 for the comparable 1998 period.
The increase in net loss in 1999 was due primarily to the spin-off of the
Company's Beverages subsidiary.
Capital Expenditures and Commitments
During the nine months ending September 30, 1999, the Company spent
approximately $258,000 on capital expenditures primarily for leasehold
improvements at the Business Park. The Company expects to spend nominal amounts
for the remainder of the year for leasehold improvements on its Business Park
and correctional facility.
Factors that may affect future results
A number of uncertainties exist that may affect the Company's future
operating results. These include the uncertain general economic conditions, the
ongoing support of the related parties, the ability of the Company to refinance
its notes payable on satisfactory terms, and the Company's ability to acquire
sufficient funding to sustain its operations and develop new businesses. A
majority of these issues directly or indirectly relate to the Company's ability
to sell additional equity or debt. The Company and all its subsidiaries have had
unsuccessful operating histories and have been consistently unprofitable and if
this trend continues the Company, or any subsidiary, may have to seek formal
court protection from creditors.
Forward-looking statements
This Form 10-QSB, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Form 10-QSB (and in documents
incorporated by reference), including without limitation, statements under
"Management's Discussion and Analysis or Plan of Operation" regarding the
Company's financial position, business strategy and plans and objectives of
management of the Company for future operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In February 1998, a lawsuit was filed by one of the owners of New
Direction Centers of America, L.L.C. against the Company relating to the
purchase of the community correctional business. On January 18, 2000, a
settlement was reached which includes a payment of $76,000.
The Company's Business Park operation occasionally has disputes with
tenants regarding its lease agreements. In the opinion of management, such
matters will be resolved without material effect on the Company's results of
operations or financial condition.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOONER HOLDINGS, INC.
--------------------------------
(Registrant)
Dated: March 29, 2000
--------------
By: R. C. Cunningham II
---------------------------------
R. C. Cunningham II, Chairman and
President
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