-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SWwOJRbh4P5W//Wlmsd2xes3ToJNGRJVU0tUQlv/9sp6iinJZiNmqdy2tAcroLdo 57U2tNO0IwHdzwVkDtlAAA== 0001047469-98-031507.txt : 19980817 0001047469-98-031507.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031507 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA LOGIC INC CENTRAL INDEX KEY: 0000815185 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 042772354 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09605 FILM NUMBER: 98688926 BUSINESS ADDRESS: STREET 1: 310 SOUTH ST STREET 2: P O BOX 2258 CITY: PLAINVILLE STATE: MA ZIP: 02762 BUSINESS PHONE: 5086952006 MAIL ADDRESS: STREET 1: 310 SOUTH ST STREET 2: P O BOX 2258 CITY: PLAINVILLE STATE: MA ZIP: 02762 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: June 30, 1998 -------------- Commission File Number: 1-9605 ------ Media Logic, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-2772354 ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 310 South Street, P.O. Box 2258, Plainville, MA 02762 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) (508) 695-2006 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 (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. X Yes No ---- ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $.01 par value - 13,333,409 shares as of August 7, 1998 INDEX MEDIA LOGIC, INC. PART I. FINANCIAL INFORMATION Item 1. Consolidated condensed financial statements (Unaudited) Consolidated condensed balance sheets - June 30, 1998 and March 31, 1998 Consolidated condensed statements of operations - three months ended June 30, 1998 and 1997 Consolidated condensed statements of cash flows - three months ended June 30, 1998 and 1997 Notes to consolidated condensed financial statements - June 30, 1998 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES - ---------- PART I. FINANCIAL INFORMATION - ------- --------------------- MEDIA LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED) June 30, March 31, 1998 1998 ------------ ------------ ASSETS - ------ CURRENT ASSETS: Cash $ 805,076 $ 155,348 Accounts receivable, net 724,858 375,215 Inventories 3,648,727 3,822,238 Prepaid expenses and other current assets 0 1,500 ------------ ------------ Total current assets 5,178,661 4,354,301 PROPERTY AND EQUIPMENT, net 309,273 278,439 DEFERRED FINANCING COSTS 142,915 157,720 OTHER ASSETS 10,138 6,037 ------------ ------------ $ 5,640,987 $ 4,796,497 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES:: Accounts payable $ 642,598 $ 673,660 Accrued expenses 197,402 283,553 ------------ ------------ Total current liabilities 840,000 957,213 CONVERTIBLE SUBORDINATED DEBENTURES 369,664 348,199 STOCKHOLDERS' EQUITY: Common stock, par value $.01 per share; 20,000,000 shares authorized; 13,333,409 and 11,284,514 shares issued and outstanding as of June 30, 1998 and March 31, 1998, respectively 133,334 112,845 Additional paid-in capital 26,088,106 24,327,502 Accumulated deficit (21,790,117) (20,949,262) ------------ ------------ Total stockholders' equity 4,431,323 3,491,085 ------------ ------------ $ 5,640,987 $ 4,796,497 ------------ ------------ ------------ ------------
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended June 30, 1998 1997 ------------ ------------ NET SALES $ 622,703 $ 332,569 COSTS AND EXPENSES: Cost of products sold 482,195 245,441 Selling, general and administrative expenses 630,713 746,927 Research and development expenses 309,847 429,682 ------------ ------------ LOSS FROM OPERATIONS (800,052) (1,089,481) OTHER INCOME (EXPENSE): Interest income 2,655 12,713 Interest expense-convertible debentures (46,244) (226,372) Other 2,785 1,140 ------------ ------------ NET LOSS $ (840,856) $ (1,302,000) ------------ ------------ ------------ ------------ BASIC AND DILUTED LOSS PER SHARE (Note 3) $ (.07) $ (.21) ------------ ------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 12,565,228 6,321,067 ------------ ------------ ------------ ------------
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION - ------------------------------ MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1998 1997 ----------- ----------- CASH USED BY OPERATING ACTIVITIES $(1,063,586) $(1,218,651) ----------- ----------- CASH PROVIDED (USED) BY INVESTING ACTIVITIES: Purchase of property and equipment, net (63,679) -- (Increase) decrease in other assets (4,101) 12,055 ----------- ----------- (67,780) 12,055 ----------- ----------- CASH PROVIDED BY FINANCING ACTIVITIES: Proceeds from issuance of common stock 1,781,094 1,200 ----------- ----------- 1,781,094 1,200 ----------- ----------- NET INCREASE (DECREASE) IN CASH 649,728 (1,205,396) CASH BALANCE, BEGINNING OF PERIOD 155,348 2,382,875 ----------- ----------- CASH BALANCE, END OF PERIOD $ 805,076 $ 1,177,479 ----------- ----------- ----------- -----------
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MEDIA LOGIC, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) June 30, 1998 (1) Operations and Basis of Presentation Media Logic, Inc. (the "Company") designs and manufactures tape-based data storage libraries targeted at the information needs of small to mid-sized businesses. As permitted by rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998. In the opinion of the Company's management, the accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the Company's financial position at June 30, 1998, and the results of its operations and its cash flows for the three months ended June 30, 1998 and June 30, 1997. (2) Inventories
June 30, 1998 March 31, 1998 ------------- -------------- Raw materials $ 949,176 $1,087,245 Work in process 206,996 289,996 Finished goods 2,492,555 2,444,997 ------------- -------------- $3,648,727 $3,822,238 ------------- -------------- ------------- --------------
(3) Loss per Share Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted average number of dilutive common shares outstanding during the period. Dilutive weighted average shares reflect the dilutive effect, if any, of common stock options based on the treasury stock method. Basic and diluted earnings per share are the same for the three months ended June 30, 1998 and 1997 because potentially dilutive common shares are antidilutive. (4) Convertible Subordinated Debentures On March 24, 1997, the Company issued 7% convertible subordinated debentures (the "March Debentures") for gross proceeds of $3,530,000. Each March Debenture had a face amount of $10,000 and bore interest at 7% per annum. Interest was payable upon conversion or redemption of the March Debentures and was payable in either cash or shares of common stock at the average market price of common stock over the five days preceding the conversion dates, at the option of the Company. The March Debentures were convertible at the option of the holder into common stock of the Company beginning on the earlier of (i) the effective date of the S-3 Registration Statement to register such conversion shares or (ii) June 23, 1997. The conversion price was equal to the lower of (i) 120% of the average closing bid price of the common stock for the five trading-day period ending on the trading day prior to the subscription date (March 24, 1997) or (ii) 80% of the average closing bid price for five days immediately preceding the conversion date, subject to a $.90 per share minimum conversion price. During fiscal 1998, all of the March Debentures plus accrued interest were converted into common stock. In connection with the issuance of the March Debentures, the Company issued warrants to purchase 1,550,870 shares of common stock at $3.00 per share and 200,000 shares of common stock at $2.00 per share. Warrants to purchase 650,870 shares of common stock at an exercise price of $3.00 per share are exercisable at any time prior to September 22, 2001 and warrants to purchase 900,000 of such shares are exercisable at any time prior to March 24, 2002. As of June 30, 1998, none of these warrants have been exercised. The Company recognized the estimated fair value of the warrants based on the Black-Scholes valuation model and the guaranteed return conversion feature attributable to the March Debentures as deferred financing costs with an increase to additional paid-in capital. These amounted to approximately $1,280,000 along with actual cash financing costs of approximately $432,000. Deferred financing costs were being amortized over three years, the stated term of the March Debentures. However, upon conversion of the March Debentures, all unamortized deferred financing costs were charged against additional paid-in capital. On October 29, 1997, the Company issued 7% convertible subordinated debentures (the "October Debentures") for gross proceeds of $750,000. The October Debentures bear interest at 7% per annum. Interest is payable upon conversion or redemption of the October Debentures and is payable in either cash or shares of common stock at the average market price of common stock over the five days preceding the conversion dates, at the option of the Company. The October Debentures are convertible at the option of the holder into common stock of the Company at any time prior to maturity at a conversion price equal to the lower of (i) $1.95, which amount is 120% of the average closing bid price of the common stock for the five trading-day period ending on October 29, 1997) and (ii) 80% of the average closing bid price for five days immediately preceding the conversion date, subject to a $.90 per share minimum conversion price. The October Debentures mature on October 29, 2000. As of June 30, 1998, October Debentures with a face value totaling $180,000 plus accrued interest have been converted into common stock. In connection with the issuance of the October Debentures, the Company issued warrants to purchase 500,000 shares of common stock at $2.00 per share. The warrants are exercisable at the option of the warrantholder at any time on or prior to January 26, 2003. As of June 30, 1998, none of these warrants have been exercised. The Company recognized the estimated fair value of the warrants based on the Black-Scholes valuation model and the guaranteed return conversion feature attributable to the October Debentures as deferred financing costs with an increase to additional paid-in capital. These amounted to approximately $84,000 along with actual cash financing costs of approximately $93,000. Deferred financing costs are being amortized over three years, the stated term of the October Debentures. However, upon conversion of the October Debentures, any unamortized deferred financing costs will be charged against additional paid-in capital. 5) Common Stock On December 29, 1997, the Company sold 1,700,000 shares of is common stock, $.01 par value per share, to private investors at a price of $.90 per share. The Company's net proceeds from this transaction totaled $1,060,961 and were restricted to utilization in connection with the Company's automated tape library business. In connection with this private placement, the Company issued warrants to private investors to purchase 1,000,000 shares of common stock at an exercise price of $3.00 per share and warrants to purchase 1,000,000 shares of common stock at $1.50 per share. The warrants are exercisable at the option of the warrantholder at any time prior to December 29, 2002. The Company also issued warrants to purchase 500,000 shares of common stock at $2.00 per share to the placement agents for the offering. These warrants are exercisable at any time on or prior to December 29, 2002. During May 1998, the Company sold 2,048,895 shares of common stock to private investors with gross proceeds of $1,850,000. In connection with this private placement, the Company issued warrants to purchase 26,666 shares at $1.25 per share, 1,011,114 shares at $1.50 per share and 1,011,115 shares at $3.00 per share. These warrants are exercisable at any time prior to 5:00 PM on various dates between May 1, 2003 and May 29, 2003. Management's Discussion and Analysis of Financial Condition and Results of Operations Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997 Results of operations - --------------------- Sales: - ------ Sales for the three months ended June 30, 1998 were $622,703 as compared with $332,569 for the three months ended June 30, 1997, an increase of 87%. Sales of tape libraries for the three months ended June 30, 1998, were approximately $450,000, while revenues and demand for the Company's traditional product lines of certification, evaluation and duplication equipment continue to decline. The Company's business strategy is to devote substantially all of its resources to the development, marketing and sale of its automated tape libraries. The Company will continue to support its historical product lines on a limited basis but will no longer continue to actively pursue all sales opportunities for new equipment, spare parts and service of its historical product lines that become available. Gross Profit: - ------------- Gross profit for the three months ended June 30, 1998 was $140,508 (23%) as compared with $87,128 (26%) for the three months ended June 30, 1997. The decline in gross margin is the result of the sales mix with tape libraries yielding a higher margin significantly offset by the sale of traditional products at significantly lower margins. Future gross margins will be impacted by the ability of the Company to implement additional cost controls and the mix of product sales anticipating an increase in revenues from tape libraries. Expenses: - --------- Selling, General and Administrative ("S,G&A") expenses for the three months ended June 30, 1998 were $630,713 (101.3% of sales) as compared with $746,927 (224.6% of sales) for the three months ended June 30, 1997. The consolidation of all Company operations in corporate headquarters in Plainville, MA, during the second quarter of fiscal year 1998 is the primary reason for the decrease in S,G&A expenses. Research and development expenses for the three month period ended June 30, 1998 were $309,847 (49.8% of sales) as compared to $429,682 (129.2% of sales) for the three month period ended June 30, 1997. All of the Company's research and development are related to the development of the product line of automated data libraries. The decrease in research and development expenses is due primarily to the consolidation of all research and development activites in Plainville, MA, during the second quarter of fiscal year 1998. The Company will continue to incur research and development expenses in the future as it makes improvements and modifications to its tape library products. Liquidity and Capital Resources: - -------------------------------- At June 30, 1998, the Company had working capital of $4.3 million compared to $3.4 million at March 31, 1998. The current ratio was 6.2 to 1 as of June 30, 1998 and 4.5 to 1 as of March 31, 1998. The increase in working capital is principally due to the proceeds from the private placement of common stock during May 1998. On March 24, 1997, the Company issued 7% convertible subordinated debentures (the "March Debentures") for gross proceeds of $3,530,000. Each March Debenture had a face amount of $10,000 and bore interest at 7% per annum. Interest was payable upon conversion or redemption of the March Debentures and was payable in either cash or shares of common stock at the average market price of common stock over the five days preceding the conversion dates, at the option of the Company. The March Debentures were convertible at the option of the holder into common stock of the Company beginning on the earlier of (i) the effective date of the S-3 Registration Statement to register such conversion shares or (ii) June 23, 1997. The conversion price was equal to the lower of (i) 120% of the average closing bid price of the common stock for the five trading-day period ending on the trading day prior to the subscription date (March 24, 1997) or (ii) 80% of the average closing bid price for five days immediately preceding the conversion date, subject to a $.90 per share minimum conversion price. During fiscal 1998, all of the March Debentures plus accrued interest were converted into common stock. In connection with the issuance of March Debentures, the Company issued warrants to purchase 1,550,870 shares of common stock at an exercise price of $3.00 per share and warrants to purchase 200,000 shares of common stock at an exercise price of $2.00 per share. Warrants to purchase 650,870 shares at an exercise price of $3.00 are exercisable at any time prior to September 21, 2001 and warrants to purchase 900,000 shares are exercisable at any time prior to March 24, 2002. On October 29, 1997, the Company issued 7% convertible subordinated debentures (the "October Debentures") for gross proceeds of $750,000. The October Debentures bear interest at 7% per annum. Interest is payable upon conversion or redemption of the October Debentures and is payable in either cash or shares of common stock at the average market price of common stock over the five days preceding the conversion dates, at the option of the Company. The October Debentures are convertible at the option of the holder into common stock of the Company at any time prior to maturity at a conversion price equal to the lower of (i) $1.95, which amount is 120% of the average closing bid price of the common stock for the five trading-day period ending on October 29, 1997 or (ii) 80% of the average closing bid price for five days immediately preceding the conversion date, subject to a $.90 per share minimum conversion price. The October Debentures mature on October 29, 2000. As of June 30, 1998, October Debentures with a face value totaling $180,000 plus accrued interest have been converted into common stock. In connection with the issuance of the October Debentures, the Company issued warrants to purchase 500,000 shares of common stock at an exercise price of $2.00 per share. These warrants are exercisable at any time on or prior to January 26, 2003. On December 29, 1997, the Company sold 1,700,000 shares of is common stock, $.01 par value per share, to private investors at a price of $.90 per share. The Company's net proceeds from this transaction totaled $1,060,961 and were restricted to utilization in connection with the Company's automated tape library business. In connection with this private placement, the Company issued warrants to private investors to purchase 1,000,000 shares of common stock at an exercise price of $3.00 per share and warrants to purchase 1,000,000 shares of common stock at $1.50 per share. The warrants are exercisable at the option of the warrantholder at any time prior to December 29, 2002. The Company also issued warrants to purchase 500,000 shares of common stock at $2.00 per share to the placement agents for the offering. These warrants are exercisable at any time on or prior to December 29, 2002. During May 1998, the Company sold 2,048,895 shares of common stock to private investors with gross proceeds of $1,850,000. In connection with this private placement, the Company issued warrants to purchase 26,666 shares at $1.25 per share, 1,011,114 shares at $1.50 per share and 1,011,115 shares at $3.00 per share. These warrants are exercisable at any time prior to 5:00 PM on various dates between May 1, 2003 and May 29, 2003. The Company, because of its continuing losses from operations, anticipates that, unless revenues increase significantly, it will require additional capital in order to continue its operations. The Company has no assurance that it will be able to raise such additional capital, if needed, in a timely manner or on favorable terms, if at all. If the Company is unable to increase revenues significantly and/or secure additional financing, the Company could be forced to curtail or discontinue its operations. The Company does not fully satisfy all of the American Stock Exchange guidelines for continued listing and there is no assurance listing will be continued. The Company continually monitors the changing business conditions and takes whatever actions it deems necessary to protect and promote the Company's interests. Uncertainties - ------------- The discussion in this report which express "belief", "anticipation", "plans", "expectation", "future" or "intention" as well as other statements which are not historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve a number of risks and uncertainties. The Company's actual results could differ significantly from the results discussed in these forward-looking statements. Factors that could cause future results to differ materially from such expectations include, but are not limited to: the uncertainty surrounding the Company's change in product base from floppy disk/magnetic tape certifiers and evaluators to automated data libraries: the Company's limited experience in manufacturing, marketing and selling automated data libraries and the risk that the Company's new products may not be able to be marketed at acceptable prices or receive commercial acceptance in the markets that the Company expects to target; the loss of the services of one or more of the Company's key individuals, which could have a material adverse impact on the Company; the development of competing or superior technologies and products from competitors, many of whom have substantially greater financial, technical and other resources than the Company; the cyclical nature of the computer industry; the availability of additional capital to fund continued operations on acceptable terms, if at all; and, general economic conditions in both the United States and overseas markets. As a result, the Company's future operations involve a high degree of risk. Year 2000 Compliance - -------------------- The Year 2000 issue refers to potential problems with computer systems or any equipment with computer chips or software that use dates where the date has been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock or data recording mechanism incorporating the date sensitive software which uses only two digits to represent the year may recognize a date using 00 as the year 1900 rather that the year 2000. This could result in a system failure or miscalculations causing disruption of operations including, among other things, a temporary inability to process transactions, send invoices, or engage in similar business activities. The Company has conducted a review of its internal information systems to determine the extent of any Year 2000 problem. Based on such review, the Company does not currently believe that it has material exposure to the Year 2000 issue with respect to its own information systems, since its core existing business information systems correctly define the year 2000. The Company is in the process of contacting its major suppliers and customers in an effort to determine the extent to which the Company may be vulnerable to those parties' failure to timely correct their own Year 2000 problem. To date, the Company is unaware of any situations of noncompliance that would materially adversely affect its operations or financial condition. There can be no assurance, however, that instances of compliance which could have a material adverse effect on the Company's operations or financial condition will not be identified; that the systems of other companies with which the Company transacts business will be corrected on a timely basis; or that a failure by such entities to correct a Year 2000 problem or a correction which is incompatible with the Company's information systems would not have a material adverse effect on the Company's operations or financial condition. PART II. OTHER INFORMATION - --------------------------- Item 1. LEGAL PROCEEDINGS None Item 2. CHANGES IN SECURITIES On various dates during May 1998, the Company sold an aggregate of 2,048, 895 shares of common stock to accredited investors in a private placement exempt from registration pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as amended, for gross proceeds of $1,850,000. In connection with this private placement, the Company issued warrants to purchase 26,666 shares at $1.25 per share, 1,011,114 shares at $1.50 per share and 1,011,115 shares at $3.00 per share. These warrants are exercisable at any time prior to 5:00 PM on various dates between May 1, 2003 and May 29, 2003. 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 (a) Exhibits 27 Financial data schedule (b) Reports on Form 8-K The Company filed a report on Form 8-K dated June 5, 1998 announcing that the Company had completed a private placement of common stock in which it raised gross proceeds of $1,850,000. The Company filed a report on Form 8-K dated June 26, 1998 announcing that it had restated the results of operations for the three and nine months ended December 31, 1997. 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. MEDIA LOGIC, INC. Date: August 14, 1998 \S\ John T. Loughran --------------- ------------------------- John T. Loughran Principal Accounting Officer EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOUND IN THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-1999 JUN-30-1998 805,076 0 730,562 5,704 3,648,727 5,178,661 1,774,617 1,465,344 5,640,987 840,000 369,664 0 0 133,334 26,088,106 5,640,987 622,703 622,703 482,195 1,422,755 0 0 46,244 (840,856) 0 (840,856) 0 0 0 (840,856) (.07) (.07)
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