SEC Filing | CECO Environmental

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended JUNE 30, 1999 Commission file number 0-7099 --------------- ------------ CECO ENVIRONMENTAL CORP. - -------------------------------------------------------------------------------- NEW YORK 13-2566064 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 505 UNIVERSITY AVENUE, SUITE 1400, TORONTO, ONTARIO, CANADA M5G 1X3 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 416-593-6543 --------------- - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. X Yes No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Class: COMMON, PAR VALUE $.01 PER SHARE -------------------------------- OUTSTANDING at June 30, 1999 8,388,816

CECO ENVIRONMENTAL CORP. ------------------------ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 JUNE 30, 1999 - ------------------------------------------------------------------------------- INDEX ----- Part I - Financial Information: Condensed consolidated balance sheet as of June 30, 1999 and December 31, 1998 2 Condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 1999 and 1998 3 Condensed consolidated statement of cash flows for the six-month periods ended June 30, 1999 and 1998 4 & 5 Notes to condensed consolidated financial statements 6 to 8 Management's discussion and analysis of the financial condition and results of operations 9 to 12 Signature 13 - -1-

CECO ENVIRONMENTAL CORP. ------------------------ CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) - ------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, 1999 1998 ----------- ----------- ASSETS Current assets: Cash $ 203,582 $ 364,648 Marketable securities - trading 1,062,114 695,944 Accounts receivable 2,628,800 4,068,640 Inventories 838,986 541,315 Costs and estimated earnings in excess of billings on uncompleted contracts 337,587 226,504 Due from former owners of Busch Co. 243,212 147,939 Investment in sales-type lease 103,350 95,400 Prepaid expenses and other current assets 295,910 344,961 Prepaid income taxes 94,000 -- Deferred income taxes 84,500 84,500 ----------- ----------- Total current assets 5,892,041 6,569,851 Property and equipment, net 2,055,678 2,062,452 Goodwill, net 4,962,933 5,169,353 Other intangible assets, at cost, net 1,155,161 1,270,780 Investment in sales-type lease 286,200 333,900 Other assets 379,946 -- Deferred income taxes 136,200 68,500 ----------- ----------- $14,868,159 $15,474,836 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term obligations $ 2,100,000 $ 1,200,000 Current portion of long-term debt 345,074 385,149 Accounts payable and accrued expenses 2,610,395 3,107,227 Billings in excess of costs and estimated earnings on uncompleted contracts 728,012 1,174,427 Unearned income 69,300 78,000 Income taxes payable 13,040 253,100 ----------- ----------- Total current liabilities 5,865,821 6,197,903 Long-term debt, less current portion 1,212,943 1,569,713 ----------- ----------- Total liabilities 7,078,764 7,767,616 ----------- ----------- Minority interest 123,519 149,941 ----------- ----------- Shareholders' equity: Preferred stock, $.01 par value; 10,000,000 shares authorized and none issued -- -- Common stock, $.01 par value; 100,000,000 shares authorized and 8,388,816 shares issued 83,888 83,888 Capital in excess of par value 10,139,013 10,139,013 Accumulated deficit (2,208,356) (2,316,953) ----------- ----------- 8,014,545 7,905,948 Less treasury stock, at cost (348,669) (348,669) ----------- ----------- Net shareholders' equity 7,665,876 7,557,279 ----------- ----------- $14,868,159 $15,474,836 =========== =========== See accompanying notes to condensed consolidated financial statements. - -2-

CECO ENVIRONMENTAL CORP. ------------------------ CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) - ------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenues: Net sales - products $ 2,064,389 $ 1,775,781 $ 4,594,235 $ 4,190,770 Contract revenues 1,900,468 3,730,385 4,143,279 7,062,128 ------------ ------------ ------------ ------------ Total revenues 3,964,857 5,506,166 8,737,514 11,252,898 ------------ ------------ ------------ ------------ Costs and expenses: Cost of revenues - products 1,065,081 818,199 2,349,727 2,103,209 Cost of revenues - contracts 1,038,578 2,585,537 2,535,293 4,794,966 Selling and administrative 1,651,638 1,300,686 3,145,418 3,011,486 Depreciation and amortization 155,664 78,322 298,688 211,546 ------------ ------------ ------------ ------------ 3,910,961 4,782,744 8,329,126 10,121,207 ------------ ------------ ------------ ------------ Income from continuing operations before investment income and interest expense 53,896 723,422 408,388 1,131,691 Investment income 120,289 18,513 158,468 35,445 Interest expense (64,013) (62,022) (139,511) (108,720) ------------ ------------ ------------ ------------ Income from continuing operations before provision for income taxes 110,172 679,913 427,345 1,058,416 Provision for income taxes (35,840) 272,000 179,400 437,000 ------------ ------------ ------------ ------------ Income from continuing operations before minority interest 74,332 407,913 247,945 621,416 Minority interest 2,709 (28,911) (5,621) (59,003) ------------ ------------ ------------ ------------ Income from continuing operations 77,041 379,002 242,324 562,413 ------------ ------------ ------------ ------------ Discontinued operations: Loss from operations of discontinued division, net of income tax benefit 3,200 (172,960) (121,245) (220,535) and minority interest Loss from disposal of discontinued division -- -- (12,482) -- ------------ ------------ ------------ ------------ 3,200 (172,960) (133,727) (220,535) ------------ ------------ ------------ ------------ Net income $ 80,241 $ 206,042 $ 108,597 $ 341,878 ============ ============ ============ ============ Net income per share, basic and diluted $ .01 $ .02 $ .01 $ .04 ============ ============ ============ ============ Weighted average number of common shares outstanding: Basic 8,250,896 8,250,896 8,250,896 8,203,935 ============ ============ ============ ============ Diluted 9,414,640 8,680,198 9,445,495 8,633,236 ============ ============ ============ ============ See accompanying notes to condensed consolidated financial statements. - -3-

CECO ENVIRONMENTAL CORP. ------------------------ CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - ------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 1999 1998 ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activities: Net income $ 108,597 $ 341,878 Adjustments to reconcile net income to net cash (used in) operating activities: Loss from discontinued operations 133,727 220,535 Depreciation and amortization 240,202 154,812 Deferred income taxes (67,700) - Unearned income (8,700) - Goodwill amortization - CECO Filters, Inc. 58,486 56,734 Minority interest 5,621 43,739 (Increase) decrease in operating assets: Accounts receivable 575,058 (579,997) Inventories (297,671) 59,972 Costs and estimated earnings in excess of billings on uncompleted contracts (144,471) (361,564) Due from former owners of Busch Co. (95,273) - Investment in sales-type lease 39,750 - Prepaid expenses and other current assets 38,224 82,552 Prepaid and refundable income taxes (94,000) 150,200 Other assets (207,428) - Marketable securities - trading (366,170) 7,928 Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 96,352 694,865 Billings in excess of costs and estimated earnings on uncompleted contracts (301,052) (1,032,401) Accrued income taxes (240,060) 100,800 ---------- ---------- Net cash (used in) continuing operations (526,508) (59,947) Net cash provided by discontinued operations 35,896 6,226 ----------- ------------ Net cash (used in) operating activities (490,612) (53,721) ---------- ----------- Cash flows from investing activities: Additions to property and equipment and intangible assets (113,071) (21,665) Capital expenditures of discontinued operations (1,856) (109,608) Acquisition of additional shares of CECO Filters, Inc. (55,459) (97,932) Acquisition of IFM, net of cash acquired, comprised of the following: Excess of current liabilities over current assets, net of cash acquired - 169,756 Equipment - (125,132) Goodwill - (152,533) ---------- ---------- Net cash (used in) investing activities (170,386) (337,114) ---------- ---------- CONTINUED ON NEXT PAGE See accompanying notes to condensed consolidated financial statements. - -4-

CECO ENVIRONMENTAL CORP. ------------------------ CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED (unaudited) - ------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 1999 1998 ---------- --------- Cash flows from financing activities: Proceeds from short-term obligations $2,286,014 $ -- Net borrowings (repayments) of short-term obligations (1,386,014) 800,000 Proceeds from long-term debt 1,412,155 -- Repayments of long-term debt and capital lease obligation (1,812,223) (277,682) Due to former owners of Busch Co. -- (709,983) ---------- --------- Net cash provided by (used in) financing activities 499,932 (187,665) ---------- --------- Net (decrease) in cash (161,066) (578,500) Cash at beginning of period 364,648 847,827 ---------- --------- Cash at end of period $ 203,582 $ 269,327 ========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 139,511 $ 137,752 ---------- ---------- Income taxes $ 485,960 $ 53,100 ---------- --------- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES On March 31, 1999, the Company sold the contracts and customer list of a division in exchange for a non-interest bearing promissory note with a present value of $174,493. - -5-

CECO ENVIRONMENTAL CORP. ------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - ------------------------------------------------------------------------------- 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position as of June 30, 1999 and the results of operations for the three-month and six-month periods ended June 30, 1999 and 1998 and cash flows for the six-month periods ended June 30, 1999 and 1998. The results of operations for the three-month and six-month periods ended June 30, 1999 are not necessarily indicative of the results to be expected for the full year. 2. Discontinued Operations On March 31, 1999, the Company's subsidiary, CECO Filters, Inc. ("CECO"), sold the contracts and customer list of a division for $250,000. The sales price was paid through a non-interest bearing promissory note from the purchaser. Monthly principal payments of $1,500 commence October 1, 1999 with a balloon payment for the balance due on April 1, 2007. The following is a summary of operating activity for this discontinued division: SIX MONTHS ENDED JUNE 30, 1999 1998 --------- ---------- Revenues $387,656 $1,826,163 Cost of revenues (493,439) (1,748,486) Selling and administrative (128,651) (464,940) Depreciation and amortization (7,998) (12,029) Interest expense - (4,069) --------- ---------- Operating loss (242,432) (403,361) Income tax benefit 112,200 161,000 Minority interest 8,987 21,826 --------- ---------- Loss from operations of discontinued division ($121,245) ($220,535) ========= ========== The following is a summary of the loss recorded from the disposal of this division: Net present value note receivable $174,493 Impairment of goodwill (166,932) Disposition costs (20,043) -------- Loss from disposal of discontinued division ($12,482) ======== The following is a summary of the balance sheet for this discontinued division: DECEMBER 31, 1998 ------------ Current assets $1,332,463 Property and equipment, net 233,740 Other assets 166,932 Current liabilities (992,384) ---------- Net assets of discontinued operations $ 740,751 ========== - -6-

CECO ENVIRONMENTAL CORP. ------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (unaudited) - ------------------------------------------------------------------------------- 3. Inventories consisted of the following: JUNE 30, DECEMBER 31, 1999 1998 -------- -------- Raw materials $449,174 $380,477 Finished goods 127,041 46,742 Parts for resale 262,771 114,096 -------- -------- $838,986 $541,315 ======== ======== 4. Investment in CECO Filters, Inc. The Company acquired 65,800 shares of CECO's common stock on the open market for the amount of $55,459 during the six-month period ended June 30, 1999. As of June 30, 1999, the Company owned 93.8% of CECO's common stock. Summarized financial information of CECO as of and for its six months ended June 30, 1999, is as follows: Financial position: Working capital (deficiency) ($ 928,820) ========== Total assets $9,900,922 ========== Net shareholders' equity $2,401,698 ========== Results of operations: Continuing: Total revenues $8,737,514 ========== Income before income taxes $ 153,963 ========== Income from continuing operations $ 89,363 ========== Discontinued: Loss from discontinued operations ($ 142,714) ========== Net loss ($ 53,351) ========== 5. Debt On March 16, 1999, CECO entered into a formal financing arrangement with a bank which provides for a $5,000,000 line of credit, a $625,000 term loan, a $787,155 mortgage note payable and a $2,000,000 acquisition line of credit. A portion of the proceeds was used to repay the previous line of credit, term loan and mortgage note payable. The $5,000,000 line of credit expires March 16, 2000. The term loan is payable in monthly installments of $20,833 plus interest through September 1, 2001. The mortgage note payable is due in monthly installments of $8,032 plus interest with a balloon payment on March 1, 2006. Interest is charged at prime less .25% or LIBOR plus 2.25%. The bank financing is collateralized by CECO's receivables, intangibles, property and equipment. The bank debt is also subject to certain financial covenants. - -7-

CECO ENVIRONMENTAL CORP. ------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (unaudited) - ------------------------------------------------------------------------------- 6. Segment and Related Information The Company has two reportable segments: Air Quality Improvement and Ventilation and Environmental Products. The Company provides standard and engineered systems and filter media for air quality improvement through its Air Quality Improvement segment. The Ventilation and Environmental Products segment assembles and manufactures ventilation, environmental and process-related products. The Interfacility Maintenance segment, which provided interfacility repair, preventative maintenance and inter-facility construction, was discontinued on March 31, 1999. VENTILATION ELIMINATION AIR AND OF INTER- QUALITY ENVIRONMENTAL SEGMENT TOTAL IMPROVEMENT PRODUCTS OTHER ACTIVITY CONSOLIDATED ----------- ------------- ----- ---------- ------------ Six Months ended June 30, 1999 Revenues $3,816,594 $5,126,189 $23,537 ($228,806) $ 8,737,514 Operating income 69,832 284,188 54,368 408,388 Six Months ended June 30, 1998 Revenues $4,281,970 $7,048,917 $13,211 $(91,200) $11,252,898 Operating income (loss) 699,925 567,066 (135,300) 1,131,691 - -8-

CECO ENVIRONMENTAL CORP. ------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited) - ------------------------------------------------------------------------------- Financial Condition, Liquidity and Capital Resources - The Company - ------------------------------------------------------------------ The Company's consolidated cash and marketable securities position increased from $1,060,592 at December 31, 1998 to $1,265,696 at June 30, 1999. This increase of $205,104 is attributable to net cash provided by financing activities of $499,932, offset by cash used in operating activities of $124,442 (excluding activities relating to marketable securities), additions to property and equipment and intangible assets of $114,927, and the acquisition of additional shares of CECO of $55,459. The investment in marketable securities is primarily in high yield bonds and common stock of major U.S. corporations. CECO Filters, Inc. ("CECO") maintains a $5,000,000 line of credit with a commercial bank of which $2,100,000 was outstanding as of June 30, 1999. Management believes that the expected revenues from operations of CECO, supplemented by the available line of credit, will be sufficient to provide adequate cash to fund anticipated working capital and other cash needs during the remainder of the year. Since January 1, 1994, the Company and CECO have been parties to a management and consulting agreement pursuant to which the Company has provided management and financial consulting services to CECO for a monthly fee of $20,000 through July, 1998 and $35,000 per month from August, 1998 through May, 1999 and $50,000 from June, 1999 thereafter. This agreement automatically renews at December 31 of each year for one-year terms unless cancelled by the Company. The Company believes its consulting agreement with CECO and interest income from its investments in marketable securities, should provide sufficient revenue to meet its general and administrative expenses. Results of Operations - The Company - ----------------------------------- The Company's consolidated statement of operations for the six-month periods ended June 30, 1999 and 1998 reflects the operations of the Company consolidated with the operations of CECO. At June 30, 1999, the Company owned 93.8% of CECO. Minority interest in the consolidated statement of operations has been presented as a reduction in net income. The Company received $225,000 and $120,000 during the six-month periods ended June 30, 1999 and 1998, respectively, for management and financial consulting services provided to CECO. This amount is not reflected in the consolidated results of operations since it is eliminated in consolidation. The Company has no income, revenues or expenses other than as a result of its investment in CECO, its consulting agreement with CECO, and its investment in marketable securities. The Company does not engage in operations other than through its operating subsidiary, CECO. CECO is comprised of CECO Filters, Inc., Air Purator Corporation ("APC"), U.S. Facilities Management Company, Inc. ("USFM-Indiana") and New Busch Co., Inc. (collectively referred to as the CECO Group) which provide innovative solutions to air quality problems through particle and chemical control technologies and services. - -9-

CECO ENVIRONMENTAL CORP. ------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - ------------------------------------------------------------------------------- CECO manufactures and markets filters known as fiber bed mist eliminators, designed to trap, collect and remove solid soluble and liquid particulate matter suspended in an air or other gas stream whether generated from a point source emission or otherwise. CECO offers innovative patented technologies, Catenary Grid(R) and Narrow Gap Venturi(TM) designed for use with heat and mass transfer operations and particulate control. APC designs and manufactures high performance filter media and bags for use in high temperature pulse-jet baghouses, the most effective type of baghouse for capturing submicron particulate from gas streams. USFM-Indiana provides facilities management, as well as outsourced plant-wide maintenance management to help customers achieve their performance goals. Busch is engaged in designing, manufacturing and supplying equipment used to control the environment in and around industrial plants with a variety of proprietary and patented technologies. On March 31, 1999, CECO sold the contracts and customer list of a division for $250,000. The sales price was paid through a non-interest bearing promissory note from the purchaser. Monthly principal payments of $1,500 commence October 1, 1999 with a balloon payment for the balance due on April 1, 2007. Results of Operations - CECO (Company's Subsidiary) - --------------------------------------------------- Comparison of Six Months Ended June 30, 1999 to Six Months Ended June 30, 1998 - ------------------------------------------------------------------------------ Revenues from continuing operations were approximately $8.7 million and $11.3 million for the six months ended June 30, 1999 and 1998, respectively, a decrease of 22%. The decrease in revenues from 1998 to 1999 resulted primarily from a decrease in sales orders, particularly new orders. The sales in CECO's Air Quality Improvement segment were approximately 11% lower ($3.8 million for the six months ended June 30, 1999 compared to $4.3 million for the six months ended June 30, 1998) and revenues in CECO's Ventilation and Environmental Product segment were approximately 27% lower ($5.1 million for the six months ended June 30, 1999 compared to $7.1 million for the six months ended June 30, 1998). CECO's backlog of orders at June 30, 1999 was approximately $6.5 million as compared to approximately $10 million at June 30, 1998, a decrease of $3.5 million or 35%. There can be no assurance that order backlog will be replicated, or increased, or translate into higher revenues in the future. The success of CECO's business depends on a multitude of factors that are out of CECO's control. CECO's operating results can be significantly impacted by the introduction of new products, new manufacturing technologies, rapid change in the demand for its product, decrease in the average selling price over the life of a product as competition increases, and CECO's dependence on the efforts of middle men to sell a significant portion of its product. - -10-

CECO ENVIRONMENTAL CORP. ------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - ------------------------------------------------------------------------------- CECO's overall cost of revenues from continuing operations decreased as a percentage of sales for the six months ended June 30, 1999 (56%) compared to the six months ended June 30, 1998 (61%). The decrease is attributed to lower material costs, as well as lower costs incurred to service CECO products. CECO continues to use the latest technology available in an effort to reduce both cost of revenues (and the maintenance of optimal inventory levels) and operating expenses, and ultimately increase overall company profits. CECO's selling and administrative expenses from continuing operations amounted to $3,068,818 for the six-month period ended June 30, 1999 compared to $2,854,000 for the six-month period ended June 30, 1998, representing an increase of $214,818 or 7% predominately resulting from non-recurring costs incurred in 1999. CECO incurred management fees to the Company of $225,000 and $120,000 during the six months ended June 30, 1999 and 1998, respectively. Interest expense increased by $30,791, or 28%, during the six-month period ended June 30, 1999 when compared to the same period in 1998. The increase in interest expense can be attributed to an increased utilization of the bank line of credit from a new credit facility during the six months ended June 30, 1999, compared to the previous year. CECO earned income from continuing operations, after taxes, of $89,363 for the six months ended June 30, 1999 as compared to $655,190 for the six months ended June 30, 1998. This change is attributed principally to the decrease in revenues and increase in selling and administrative expenses resulting from non-recurring costs for the six-month period ended June 30, 1999 compared to the same period in 1998. The provision for federal and state income taxes for the six-month period ended June 30, 1999 amounted to $64,600 compared to $437,000 for the six-month period ended June 30, 1998 and reflects an effective income tax rate of approximately 42% and 40% for each respective period. Comparison of Three Months Ended June 30, 1999 to Three Months Ended June 30, 1998 - ---------------------------------------------------------------------------- Sales were approximately $4.0 million and $5.5 million for the three-month periods ended June 30, 1999 and 1998, respectively. This represents a decrease of 28% compared to the three months ended June 30, 1998. CECO's overall cost of revenues decreased as a percentage of revenues for the three months ended June 30, 1999 (53%) compared to the three months ended June 30, 1998 (62%). The decrease, compared to the prior year, is attributed to lower material costs, as well as lower costs incurred to service CECO's products. CECO continues to use the latest technology available in an effort to reduce both cost of revenue (and the maintenance of optimal inventory levels) and operating expenses, and ultimately increase overall company profits. CECO's selling and administrative expenses amounted to $1,607,379 for the three-month period ended June 30, 1999 compared to $1,239,413 for the three-month period ended June 30, 1998, representing an increase of $367,966 or 30% predominately resulting from non-recurring costs incurred in the three-month period ended June 30, 1999. - -11-

CECO ENVIRONMENTAL CORP. ------------------------ SIGNATURE - ------------------------------------------------------------------------------- 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. CECO ENVIRONMENTAL CORP. ------------------------- Phillip DeZwirek Chief Financial Officer Chief Executive Officer Date: August 6, 1999 - -13-

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

6-MOS DEC-31-1999 JUN-30-1999 203,582 1,062,114 2,628,800 0 838,986 5,892,041 4,138,336 2,082,658 14,868,159 5,865,821 3,658,017 0 0 83,888 7,581,988 14,868,159 4,594,235 8,737,514 2,349,727 8,329,126 139,511 0 139,511 427,345 179,400 242,324 133,727 0 0 108,597 .01 .01