U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
FOR THE QUARTERLY PERIOD ENDED MAY 31, 2000.
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from _______________ to _______________
Commission file number 001-15563
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IPI, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
MINNESOTA 41-1449312
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
15155 TECHNOLOGY DRIVE
EDEN PRAIRIE, MN 55344
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(Address of Principal Executive Offices)
(952) 975-6200
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(Issuer's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name, Former Address and Former Fiscal Year, If Changed Since
Last Report)
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 _____
As of July 12, 2000, there were 4,859,087 Common Shares outstanding.
Page 1 of 12
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IPI, INC.
Table of Contents
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of May 31,
2000 and November 30, 1999. 3
Condensed Consolidated Statements of Operations and
Comprehensive Income for the Three and Six Months Ended
May 31, 2000 and May 31, 1999. 4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended May 31, 2000 and May 31, 1999. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to Vote of Security Holders 10
Item 5. Other Information 11
Item 6. Exhibits and Reports of Form 8-K 11
Signatures 11
2
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PART I. FINANCIAL INFORMATION
ITEM 1.
IPI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, 2000 November 30,
(Unaudited) 1999
------------ ------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 1,584,000 $ 2,022,000
Short-term investments 4,550,000 2,590,000
Marketable equity securities 6,190,000 6,504,000
Trade accounts receivable, net 1,383,000 1,371,000
Current maturities of notes receivable, net of allowance of
$153,000 and $145,000 963,000 964,000
Inventories 256,000 271,000
Prepaid expenses and other 130,000 107,000
Deferred income taxes 690,000 930,000
------------ ------------
Total current assets 15,746,000 14,759,000
------------ ------------
PROPERTY AND EQUIPMENT:
Property and equipment 2,378,000 2,226,000
Less - Accumulated depreciation (1,161,000) (980,000)
------------ ------------
Property and equipment, net 1,217,000 1,246,000
NOTES RECEIVABLE, net of current maturities and allowance of
$724,000 and $656,000 749,000 860,000
GOODWILL AND OTHER INTANGIBLES, net 3,730,000 3,151,000
------------ ------------
$ 21,442,000 $ 20,016,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 688,000 $ 485,000
Accrued compensation 169,000 296,000
Accrued financing liabilities 150,000 150,000
Deferred revenues 214,000 264,000
Income taxes payable 343,000 126,000
Other accrued liabilities 410,000 432,000
------------ ------------
Total current liabilities 1,974,000 1,753,000
------------ ------------
LONG-TERM CAPITAL LEASE OBLIGATIONS 255,000 319,000
SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value, 15,000,000 shares authorized:
4,859,000 and 4,734,000 shares issued and outstanding 49,000 47,000
Additional paid-in capital 15,769,000 15,584,000
Retained earnings 3,403,000 2,682,000
Unrealized loss on marketable securities available for sale, net
of income tax effects (8,000) (369,000)
------------ ------------
Total shareholders' equity 19,213,000 17,944,000
------------ ------------
$ 21,442,000 $ 20,016,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
3
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IPI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
---------------------------- -----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Royalty fees $ 1,215,000 $ 1,241,000 $ 2,174,000 $ 2,195,000
Sales of printing equipment, supplies
and services 678,000 974,000 1,359,000 1,851,000
Sales by company-owned Insty-Prints
locations 464,000 394,000 883,000 804,000
Dreamcatcher royalties and fees 17,000 -- 37,000 --
Finance and other income 197,000 468,000 512,000 730,000
------------ ------------ ------------ ------------
Total revenues 2,571,000 3,077,000 4,965,000 5,580,000
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales--printing equipment, supplies
and services 489,000 752,000 1,009,000 1,409,000
Cost of sales--company-owned Insty-Prints
locations 121,000 122,000 259,000 245,000
Selling, general & administrative expenses 1,427,000 1,256,000 2,821,000 2,298,000
Amortization of goodwill 75,000 59,000 144,000 117,000
------------ ------------ ------------ ------------
Total costs and expenses 2,112,000 2,189,000 4,233,000 4,069,000
------------ ------------ ------------ ------------
OPERATING INCOME 459,000 888,000 732,000 1,511,000
Net gain on sale of securities 461,000 -- 461,000 --
Net gain on disposal of assets 5,000 20,000 9,000 20,000
------------ ------------ ------------ ------------
Income before income taxes 925,000 908,000 1,202,000 1,531,000
Income tax expense 370,000 363,000 481,000 612,000
NET INCOME $ 555,000 $ 545,000 $ 721,000 $ 919,000
============ ============ ============ ============
BASIC AND DILUTED EARNINGS PER
COMMON SHARE $ 0.11 $ 0.12 $ 0.15 $ 0.19
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON & COMMON SHARE
EQUIVALENTS OUTSTANDING
- BASIC 4,859,000 4,734,000 4,835,000 4,734,000
============ ============ ============ ============
- DILUTED 4,859,000 4,734,000 4,835,000 4,734,000
============ ============ ============ ============
OTHER COMPREHENSIVE INCOME, NET OF TAX (NOTE 1):
Net Income $ 555,000 $ 545,000 $ 721,000 $ 919,000
Unrealized gain (loss) on marketable securities
available for sale, net of income tax effects 424,000 422,000 (8,000) (148,000)
------------ ------------ ------------ ------------
Total Comprehensive Income $ 979,000 $ 967,000 $ 713,000 $ 771,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
IPI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
May 31,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 721,000 $ 919,000
Adjustments to reconcile net income to net cash provided by
operating activities--
Depreciation and amortization 261,000 210,000
Net change in other operating items:
Trade accounts receivable (1,000) (15,000)
Inventories 29,000 76,000
Prepaid expenses and other (79,000) 52,000
Accounts payable, accrued liabilities and other accrued
liabilities 221,000 335,000
------------ ------------
Net cash provided by operating activities 1,152,000 1,577,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of property and equipment, net (96,000) 116,000
Purchase of short-term investments, net (1,960,000) (1,305,000)
Sale (purchase) of marketable equity securities 914,000 (2,029,000)
Change in notes receivable, net 112,000 (60,000)
Purchase of business assets of Regency Printing -- (431,000)
Purchase of Dreamcatcher (560,000) --
------------ ------------
Net cash used for investing activities (1,590,000) (3,709,000)
------------ ------------
Decrease in cash and cash equivalents (438,000) (2,132,000)
------------ ------------
CASH AND CASH EQUIVALENTS, beginning of period 2,022,000 3,828,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 1,584,000 $ 1,696,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 252,000 $ 641,000
============ ============
Equipment acquired under a capital lease $ -- $ 255,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE>
IPI, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying interim condensed consolidated financial statements of
IPI, Inc. ("IPI" or the "Company") and its wholly owned subsidiaries,
Insty-Prints, Inc. ("Insty-Prints"), IPI Holdings, LLC, Texas IPI, L.P. and
Dreamcatcher Franchise Corporation, are unaudited; however, in the opinion
of management, all adjustments necessary for a fair presentation of such
financial statements have been reflected in the interim periods presented.
Such adjustments consisted only of normal recurring items and all
inter-company transactions have been eliminated in consolidation. The
significant accounting policies, certain financial information and footnote
disclosures that are normally included in financial statements prepared in
accordance with generally accepted accounting principles, but which are not
required for interim reporting purposes, have been condensed or omitted.
The operating results for the interim periods presented are not necessarily
indications of the operating results to be expected for the full fiscal
year. The accompanying financial statements of the Company should be read
in conjunction with the Company's audited financial statements for the
years ended November 30, 1999 and 1998 and the notes thereto included in
the Company's Form 10-KSB.
In 1999 and 2000, marketable equity securities were purchased to enhance
returns on cash funds. In accordance with Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities, these securities are shown on the balance sheet at market value
and unrealized gains (losses) are reflected as a separate component of
shareholders equity, net of income tax effects.
Through fiscal 1999, the Company has principally been engaged in one
business segment-the franchising and servicing of business printing centers
under the trade name of Insty-Prints(R). As discussed in footnote 2, in
January 2000, the Company acquired assets of a supplemental educational
services business and formed a new subsidiary, Dreamcatcher Franchise
Corporation. Through Dreamcatcher the Company is franchising and servicing
learning centers under the trade name Dreamcatcher(R) Direct Instruction
Center and has nine operating franchised locations and two corporate
locations, all of which were acquired in the asset purchase.
2. ACQUISITIONS
In April 1999, Texas IPI, L.P. purchased the printing related assets and
assumed the facility and printing equipment leases of Regency Plaza
Printing and Office Supplies, Inc. (Regency), located in Dallas, Texas. The
consideration paid of $431,000 exceeded the fair value of assets received
by $234,000 of goodwill that is being amortized on a straight line basis
over fifteen (15) years. The assets purchased include furniture, computers,
leasehold improvements, customer list and various printing equipment items.
Leases assumed were primarily for presses, copiers and related printing
equipment and the business facility. The operations of Texas IPI, L.P. are
included in the IPI Statement of Operations from the date of acquisition.
In January 2000, the Company acquired substantially all the assets of
Dreamcatcher Franchise Corporation and Dreamcatcher Learning Centers, Inc.
The terms of the purchase include the assumption of $395,000 of
obligations, a cash payment of $125,000, the issuance of 125,000 shares of
IPI stock with a valuation of $188,000 and a future maximum earn-out
provision of $375,000, based on the achievement of certain levels of
franchised learning centers that are operating. The acquisition price and
costs exceeded the fair value of assets received by $660,000, which has
been recorded as goodwill that is being amortized on a straight-line basis
over fifteen (15) years. The assets purchased include furniture, computers,
leasehold improvements and receivables. Dreamcatcher
6
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Franchise Corporation franchises the establishment, development and
operation of facilities providing supplemental private education services
to people of all ages using personalized assessments with direct
instruction in reading, writing, spelling, math, algebra, study skills,
G.E.D. preparation and college preparation. The purchase included nine
operating franchise locations; 14 contracted, but unopened franchise
locations; and two corporate-owned operating learning centers. The purchase
was not material to the financial position or results of operations of the
Company.
3. SIGNIFICANT INVESTMENTS
Through a series of purchases during the period from April 24, 2000 to May
1, 2000, IPI, Inc. (the "Company") acquired 1,000,000 shares of common
stock of Conseco, Inc. (NYSE: CNC), an Indiana based insurance and
financial services company. The Company paid approximately $6,200,000 in
total consideration for the 1,000,000 shares, all of which was financed
from the working capital of the Company. The Company's total holdings in
Conseco, Inc. constitute less than 1% of the approximately 325,264,000
outstanding shares of common stock of Conseco, Inc. The shares were
purchased for investment purposes only and the Company has no relationship
to Conseco, Inc. other than that of shareholder. All shares were purchased
in open market transactions.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
As of May 31, 2000, the Company, through its wholly-owned subsidiary,
Insty-Prints, had 228 franchise locations and operated two Company-owned print
businesses and, through Dreamcatcher, had nine franchise locations and two
Company-owned locations.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data as a
percentage of sales for the periods indicated:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
May 31, May 31,
---------------- -----------------
2000 1999 2000 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Royalty fees--Insty-Prints 47.3% 40.3% 43.8% 39.3%
Sales of printing equipment, supplies & services 26.4 31.7 27.4 33.2
Sales by company-owned Insty-Prints locations 18.0 12.8 17.8 14.4
Dreamcatcher--Royalties and fees 0.7 0.0 0.7 0.0
Finance and other income 7.6 15.2 10.3 13.1
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Costs of sales--Printing equipment, supplies &
services 19.0 24.4 20.4 25.2
Cost of sales--Company-owned Insty-Prints 4.7 4.0 5.2 4.4
Selling, general and administrative expenses 55.5 40.8 56.8 41.2
Amortization of goodwill 2.9 1.9 2.9 2.1
----- ----- ----- -----
82.1 71.1 85.3 72.9
Operating Income 17.9 28.9 14.7 27.1
Other income (expense):
Net gain on sale of securities 17.9 0.0 9.3 0.0
Net gain on disposal of assets 0.2 0.6 0.2 0.3
Income before income taxes 36.0 29.5 24.2 27.4
Income tax expense 14.4 11.8 9.7 11.0
----- ----- ----- -----
Net income 21.6% 17.7% 14.5% 16.4%
===== ===== ===== =====
</TABLE>
FOR THE QUARTERS AND SIX MONTHS ENDED MAY 31, 2000 AND 1999
Revenues. Total revenues for the three months ended May 31, 2000,
consisting of royalties, sales of printing equipment, supplies and services,
franchise fees and finance and other income, totaled $2,571,000, a decrease of
$506,000 or 16.4% compared to the three months ended May 31, 1999. Total
revenues for the six months ended May 31, 2000, of $4,965,000 were $615,000 or
11.0% below the six months ended May 31, 1999.
Royalty revenue decreased to $1,215,000 in the second quarter of 2000 from
$1,241,000 in 1999. For the six months ended May 31, 2000, royalty revenue was
$2,174,000, a decrease of $21,000 or 0.1% over the same period a year ago. As
expected, royalty revenues decreased slightly in both periods of 2000 compared
to 1999, due to reduced royalties resulting from the number of franchised
locations decreasing to 228 as of May 31, 2000 from 241 as of May 31, 1999.
However, this was offset by increased royalties due to increased sales by
existing franchise locations.
8
<PAGE>
Sales of printing equipment, supplies and services for the second quarter
of 2000 decreased to $678,000 from $974,000 for 1999, a decrease of 30.4%. For
the six months ended May 31, 2000, sales of products were $1,359,000 or 26.6%
below the sales of $1,851,000 for the same period a year ago. The decrease in
2000 resulted primarily from reduced sales of copier supplies due to such
products now being packaged with equipment lease agreements and reduced sales of
printing equipment and direct mail services resulting from decreased demand from
franchise owners.
Finance and other income was $197,000 for the quarter ended May 31, 2000,
which is $271,000 or 58% less than the same quarter a year ago. For the six
months ended May 31, 2000, finance and other income was $512,000 or 30% less
than the $730,000 for the same period a year ago. For the three and six month
periods of 2000, the decreased revenues were primarily due to the sale in April
2000 of higher yielding investments of REIT stock and the reinvestments of $6.2
million of liquid funds in a non-dividend paying common stock. Overall,
franchise fee revenues are not significant in 2000 or 1999 due to the Company's
emphasis during such periods on increasing existing franchise location sales and
growth through acquisitions.
Cost of Sales--Printing Equipment, Supplies and Services. Cost of sales
decreased to $489,000 for the second quarter of 2000 from $752,000 for 1999, a
decrease of 35% for the quarter. Six-month cost of sales amounts totaled
$1,009,000 in 2000, compared to $1,409,000 in 1999, a decrease of $400,000 or
28%. The decrease for both periods of 2000 compared to 1999 is directly related
to decreased sales of equipment, copier supplies and direct mail services.
Average margins in products and services increased to 25.7% for the six month
period of 2000 compared to 23.9% for the six month period ended May 31, 1999 due
to the elimination of selling certain low margin products and generally improved
margins on a number of other product lines.
Cost of Sales--Company-owned Insty-Prints Locations. The cost of sales
stayed relatively flat for the two periods of 2000 compared to 1999, however,
measured as a percentage of sales costs, improved fairly well. For the three
month period ended May 31, 2000, the cost of sales were 26.1% of sales compared
to 31% for the same period of 1999 and for the six month period ended May 31,
2000 were 29.3% compared to 30.4% for the same period of 1999. Cost of sales
percentages improved due to controls and efficiencies adopted at the print
locations.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $1,427,000 for the second quarter 2000 compared to
$1,256,000 for 1999, an increase of 13.6%. Total expenses for the six months
ended May 31, 2000 were $2,821,000 compared to $2,298,000 for 1999, representing
a 22.8% increase. Expenses increased due to the investment in new equipment,
facilities and staff in company-owned Insty-Prints locations in latter 1999 and
Dreamcatcher in January 2000.
Amortization of Goodwill. Amortization of goodwill increased to $75,000 for
the three months ended May 31, 2000 compared to $59,000 for the same period a
year ago. For the six months ended May 31, 2000, amortization of goodwill
increased to $144,000 compared to $117,000 for the same period a year ago. The
increases for both periods resulted from the acquisition of a printing business
in April 1999 and Dreamcatcher in January 2000.
Net Gain on Sale of Securities. During the second quarter ended May 31,
2000, securities held for resale that were originally purchased in 1997 and 1999
were sold at a gain of $461,000. In the six months ended May 31, 1999, there
were no security sales.
Provision for Income Tax. The Company's effective combined federal and
state income tax rate is estimated to be 40% for 2000 and was 40% for 1999.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ending May 31, 2000, the Company generated $1,152,000
from operating activities, a decrease of $425,000 from $1,577,000 of funds
provided from operating activities for the six month period of 1999. The
decrease in funds provided from operating activities was primarily attributable
to decreased net income and an increase in prepaids and other.
The Company has no bank debt or credit facility. Operations are funded from
cash generated by the business.
Franchise owners may finance their equipment purchases through a $6,000,000
equipment financing facility established with U. S. Bank (formerly First Bank
Systems) by the Company for the benefit of the franchise owners.
9
<PAGE>
This facility is guaranteed by IPI and Insty-Prints, whose contingent liability
under this agreement is capped at $2,400,000 annually. A loss reserve of
$150,000 is recorded on the balance sheet at May 31, 2000, representing
estimated losses on these guarantees, net of equipment value. The aggregate
balance outstanding under this facility as of May 31, 2000 was approximately
$1,405,000.
The Insty-Prints' franchise business is not highly seasonal, and franchise
owners' sales generally follow overall economic trends. The business is not
impacted materially by inflation.
YEAR 2000 COMPLIANCE
The Company believes its efforts adequately addressed Year 2000 concerns
and, as of May 31, 2000, has no reason to believe any internal problems will
arise nor does it expect any material Year 2000 problems from its outside
vendors or franchise operations. Although the Company believes that no
significant Year 2000 matters will arise and have a material impact on its
business, financial conditions and results of operations, it cannot assure that
all potential Year 2000 issues that may affect the Company have been resolved.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. With the exception of historical matters, the matters
discussed herein are forward looking statements that involve risks and
uncertainties. These forward-looking statements are based on management's goals,
estimates, assumptions and projections. Actual results and events could differ
materially from those projected, anticipated, or implicit, in the
forward-looking statements as a result of certain risk factors. These include,
but are not limited to, increased competition from other business printing
centers, reduced demand for print media and other factors of which the Company
is unaware at this time. If any of these risks were to materialize, royalty
revenue from franchised locations and sales of products to such location by the
Company would be reduced, thus reducing revenue and profits.
The preceding discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and the
related notes thereto appearing elsewhere herein.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiary are involved in various legal
proceedings arising in the normal course of business, none of which is
expected to result in any material loss to the Company or its
subsidiary.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to Vote of Security Holders
On approximately March 27, 2000, proxy statements were mailed to the
holders of record of 4,859,087 shares of common stock to solicit
proxies in connection with the Annual Meeting of Shareholders on April
26, 2000. Three proposals, as follows, were submitted and approved by
a vote of shareholders.
(a) Election of Directors--all current directors (Robert J. Sutter,
Dennis M. Mathisen, Irwin L. Jacobs, Daniel T. Lindsay and Howard
Grodnick) were up for re-election to terms of one year.
(b) Approve an Amendment to the 1994 Long-Term Incentive Plan, which
increases the shares from 300,000 to 500,000.
(c) Ratification and Appointment of Independent Auditors--Arthur
Andersen LLP.
10
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Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K Page
(a) Exhibits.
*11 Statement Re: Computation of per share earnings 12
*27 Financial Data Schedule 13
(b) Reports on Form 8-K.
On May 10, 2000, Form 8-K was filed related to a material
purchase of common stock of Conseco, Inc. (NYSE:CNC), which was
done for investment purposes only.
-------------------------------
*Filed herewith
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.
Dated: July 13, 2000 IPI, Inc.
By: /S/ Robert J. Sutter
--------------------------------------------
Robert J. Sutter
President and Chief Executive Officer
(Principal Executive Officer)
By: /S/ David M. Engel
--------------------------------------------
David M. Engel
Chief Financial Officer
(Principal Financial and Accounting Officer)
11
