SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending June 30, 1999
Commission File No. 0-15927
COMPUTER POWER, INC.
(Exact name of small business issuer as specified in its Charter)
New Jersey 22-1981869
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
124 West Main Street, High Bridge, New Jersey 08829
(Address of principal or executive office) (Zip Code)
(908) 638-8000
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
prior twelve 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 ninety (90)
days.
YES [X]; NO [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date prior
to filing: August 23, 1999; $0.01 par value per share; 3,670,714
shares of Common Stock.
Table of Contents on Page 2
Total number of pages - 14
Computer Power, Inc. & Subsidiary
Table of Contents
PART I - Basis of the Presentation of the Financial
Statements 3.
CONSOLIDATED BALANCE SHEETS 4.
As of June 30, 1999 and December 31, 1998
CONSOLIDATED STATEMENTS OF OPERATIONS 5.
For the three months and six months ended
June 30, 1999 and June 30, 1998
CONSOLIDATED STATEMENTS OF CASH FLOWS 6.
For the three months and six months ended
June 30, 1999 and June 30, 1998
NOTES TO FINANCIAL STATEMENTS 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF 9.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
PART II - OTHER INFORMATION 12.
SIGNATURES 13.
Computer Power, Inc. & Subsidiary
PART I - FINANCIAL INFORMATION
Basis of the Presentation of the Financial Statements
The financial statements set forth herein are unaudited for the three and
six month periods ended June 30, 1999 but, in the opinion of the Company, all
adjustments necessary to present fairly the financial position and the results
of operations for these periods have been made.
The accompanying unaudited financial statements have been prepared in
Accordance with the instructions to Form 10-QSB for quarterly reports under
Section 13 or 15(d) of the Securities Act of 1934, and therefore do not
include all information and footnotes necessary for fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.
The financial information included in this report has been prepared in
conformity with the accounting principles reflected in the financial statements
included in the Form 10-KSB as filed with the Securities and
Exchange Commission. Reference should be made to the notes to those financial
statements for a description of significant accounting policies,
commitments and other pertinent financial information.
Computer Power, Inc. & Subsidiary
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1999 1998
---------- ------------
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents $ 55,290 $ 63,204
Accounts Receivable, less allowances of $173,721
at June 30, 1999 and $211,485 at
December 31, 1998 33,851 1,478,937
Inventories 760,747 742,991
Prepaid Expenses and Other Current Assets 11,868 32,714
---------- ----------
Total Current Assets 1,761,756 2,317,846
---------- ----------
Property, Plant and Equipment, at cost
Machinery, Equipment, and Furniture 1,290,268 1,280,783
Leasehold Improvements 333,274 333,274
Less: Accumulated Depreciation and
Amortization (1,319,267) (1,265,402)
--------- ---------
Net Property, Plant and Equipment 304,275 348,655
--------- ---------
TOTAL ASSETS 2,066,031 2,666,501
--------- ---------
LIABILITIES AND SHAREHOLDERS DEFICIT
CURRENT LIABILITIES
Notes and Other Debt Payable 1,775,308 2,337,667
Current Maturities of Long Term Debt 726,290 775,694
Current Maturities of Capital Leases 31,004 53,143
Accounts Payable 938,455 798,866
Accrued Liabilities 845,158 1,014,221
--------- ---------
Total Current Liabilities 4,316,215 4,979,591
--------- ---------
LONG TERM LIABILITIES
Capital leases excluding current maturities 76,683 85,374
Long term debt excluding current maturities 70,139 224,306
--------- ---------
Total Long Term Liabilities 146,822 309,680
--------- ---------
Total Liabilities 4,453,037 5,289,271
--------- ---------
COMMITMENTS & CONTINGENCIES
SHAREHOLDERS' DEFICIT
Preferred Stock, par value $0.01 per
share; 2,000,000 shares authorized,
none issued
Common Stock, par value $0.01 per share;
12,000,000 shares authorized 3,695,114
shares issued at June 30, 1999 and
2,602,700 shares issued at December 31,
1998 36,951 26,027
Capital in Excess of Par 4,021,723 3,757,119
Accumulated Deficit (6,380,992) (6,331,228)
Treasury Stock, 24,400 shares, at cost (74,688) (74,688)
--------- ---------
Total Deficit (2,387,006) (2,622,770)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $2,066,031 $2,661,501
========== ==========
See notes to the consolidated financial statements
Computer Power, Inc. & Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
1999 1998 1999 1998
---- ---------- --------------
(Unaudited) (Unaudited)
NET SALES $ 1,449,309 $ 2,032,412 $ 3,085,231 $ 4,078,464
COST OF SALES 1,140,482 1,575,447 2,493,599 3,128,450
--------- --------- --------- ---------
GROSS PROFIT 308,828 456,965 591,633 950,014
--------- --------- --------- ---------
OPERATING AND OTHER EXPENSES
Selling Expense 170,257 239,880 267,740 499,492
General and Administrative
Expenses 207,491 260,061 437,324 536,851
Interest Expense, net 69,260 105,008 126,926 208,366
TOTAL OPERATING AND OTHER --------- --------- --------- ---------
EXPENSES 447,008 604,949 831,990 1,244,709
--------- --------- --------- ---------
Net (Loss) before
Extraordinary Gain (138,181) (147,984) (240,358) (294,695)
Extraordinary Gain
(Note 5, Note 6 and Note 7)
190,592 0 190,592 0
--------- -------- --------- ---------
NET GAIN (LOSS) $ 52,411 $(147,984) $ (49,766)$ (294,695)
========= ======== ========= =========
EARNINGS PER SHARE AVAILABLE TO COMMON SHAREHOLDERS (a):
EPS-before Extraordinary
Gain $ (0.04) $ (0.06) $ (0.08)$ (0.11)
EPS-Extraordinary Gain 0.06 0 0.06 0
EPS Net Gain (Loss) 0.02 (0.06) (0.02) (0.11)
Weighted average common
shares outstanding 3,155,442 2,578,300 3,002,209 2,578,300
Diluted EPS is not presented for either period, as the effect of this
inclusion of potential shares would be immaterial or antidilutive.
The accompanying notes to the consolidated financial statements
are an integral part of the financial statements
Computer Power, Inc. & Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999 and June 30, 1998
(Unaudited)
June 30, 1999 June 30, 1998
------------- -------------
(Unaudited) (Unaudited)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net (Loss) $ (49,766) $ (294,695)
Adjustments to reconcile net loss to
cash provided by (used for) Operating
activities
Extraordinary Gain (190,592) 0
Depreciation & Amortization 53,865 31,337
Changes in Current Assets and Liabilities
Accounts Receivable 545,086 (15,172)
Inventories (17,756) (65,365)
Prepaid Expenses and Other Current Assets 20,846 7,779
Accounts Payable 139,589 170,590
Accrued Liabilities (113,471) 133,226
-------- --------
Cash Provided by (Used for) Operating
Activities 387,805 (32,300)
CASH USED FOR INVESTING ACTIVITIES:
Capital Expenditures (9,485) (42,259)
-------- --------
Cash (Used for) Investing Activities (9,485) (42,259)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from Issuance of Debt 100,000 100,097
Repayment of Debt (486,234) (30,000)
Decrease in Debt due to Warrant Exercise (275,528) 0
Increase in Equity due to Warrant Exercise 275,528 0
Cash Provided by (Used for) -------- --------
Financing Activities 386,234 70,097
(DECREASE) CASH & CASH EQUIVALENTS (7,914) (4,462)
-------- --------
CASH & CASH EQUIVALENTS, beginning of period 63,204 67,300
CASH & CASH EQUIVALENTS, end of period $ 55,290 $ 62,838
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income Taxes Paid $ 0 $ 0
Interest Paid $ 71,013 $ 71,626
The accompanying notes to the consolidated financial statements are
an integral part of the financial statements.
Computer Power, Inc. & Subsidiary
NOTES TO FINANCIAL STATEMENTS
Note 1: The financial information as of June 30, 1999 and the six months
ended June 30, 1999 are unaudited but in the opinion of the Company, all
adjustments necessary to present fairly the financial position and the results
of operations for these periods have been made. Reference should be made to
the notes to the financial statements included in the Company s Form 10-KSB
for a description of significant accounting policies, commitments and other
pertinent financial information.
Note 2: Inventories, which include material, labor and manufacturing
overhead costs, are stated at the lower of cost (on a first in, first out
basis) or market.
Note 3: At June 30, 1999 and December 31, 1998, notes payable and current
debt included amounts due to related parties and other lenders as follows:
June 30, 1999 December 31, 1998
------------- -----------------
Revolving Credit agreement due January
31, 2000, secured by Accounts Receivable
and Inventory, bearing interest at the
Prime Rate (7.75% at June 30, 1999)
(See Note 4) $574,513 $ 910,098
Subordinated, unsecured notes to a related
entity due July 1, 1999 bearing interest
at 9.5%, with quarterly interest payments
(See Note 5) 518,043 565,000
Term loan, secured by Accounts Receivable
and Inventory, due January 31, 2000, bearing
interest at the Prime Rate (See Note 4) 210,183 285,000
Subordinated, unsecured note payable to a
related entity due February 1, 1998, bearing
interest at 10%, with quarterly interest
payments (See Note 5) 225,000 250,000
Subordinated, unsecured note payable to a
director due July 1, 1999, bearing interest
at 9.5%, with quarterly interest payments
(See Note 6) 0 150,000
Working Capital loan payable to a related
party, secured by Accounts Receivable and
Inventory 100,000 0
Subordinated, unsecured demand note, bearing
interest at 8% 96,569 96,569
Subordinated, unsecured note payable originally
due October 31, 1997 now extended indefinitely,
bearing interest at 10%, with quarterly
interest payments 32,000 32,000
Subordinated, unsecured note payable to a
director due February 1, 1998, bearing
interest at 10% (See Note 6) 0 30,000
Subordinated, unsecured note payable to a
director originally due October 31, 1997
now extended indefinitely, bearing interest
at 10%, with quarterly interest payments 19,000 19,000
---------- ----------
Total Notes and Other Debt Payable $1,775,308 $2,337,667
========== ==========
Long-term debt consists of the following at June 30,1999 and December 31, 1998:
June 30, 1999 December 31, 1998
Subordinated note, due August 1, 2000
bearing interest at prime plus 4%,
payable monthly (See Note 5) $ 521,429 $ 700,000
Convertible debenture, due November
2000 bearing interest at 9.5%, payable
monthly (See Note 5) 275,000 300,000
--------- ---------
Total Long Term Debt 796,429 1,000,000
Less: Current Portion 726,290 775,694
--------- ---------
Net Long Term Debt $ 70,139 $ $224,306
========= =========
Note 4: The Company has a revolving credit agreement and a term loan with
an asset based lender. The revolving agreement provides for a maximum
borrowing of 85% of eligible accounts receivable, as defined. The loan
provides for a maximum borrowing of 50% of eligible inventory, as defined.
The total amount of revolving credit and loan borrowing is capped at
$2,000,000. Based on the amount of eligible Accounts Receivable and
Inventory at June 30, 1999, the Company was fully borrowed.
Note 5: On May 25, 1999, Public Access Lighting LLC exchanged $275,528.50
of principal on a number of debt instruments it had acquired in the first
quarter of 1999 for 1,102,114 shares of Common Stock through the exercise of
warrants it had also acquired in the first quarter of 1999.
Note 6: On June 30, 1999, the Company repaid $45,000 of debt to a former
director. As part of the same transaction, that director simultaneously
forgave accrued interest of $55,592 and the remaining $ 135,000 of principal.
Note 7: In management s opinion, the debt forgiven in connection with the
capital restructuring discussed in Notes 6 above is exempt from income taxes
in accordance with the Internal Revenue Code which excludes such gain from
taxable income. Therefore, no income taxes have been provided for this
extraordinary gain.
Note 8: At June 30, 1999 the Company had 8,869 stock subscription warrants
and 263,500 stock options outstanding. The stock subscription warrants are
exercisable at $0.25 per share. The exercise period for the warrants ranges
from June 1, 1996, through June 1, 2006. 13,500 stock options were issued
under an approved stock option plan at market prices at the time of issue.
250,000 options were issued on June 1, 1999 to the new President at an
exercise price of $0.25. At June 30, 1999, no warrants or options were
determined to be common stock equivalents because the average market price
for the first quarter of 1999 was lower than the exercise price of the
warrants and options.
Note 9: At 12/31/98, the Company had an Operating Loss Carryforward of
approximately $6,472,000 available to offset future taxable income through
2009.
Note 10: There were 3,002,209 diluted weighted average common shares
outstanding for the six-month period ending June 31, 1999 and 2,578,300 for
the same period in 1998. For the six months ending June 30, 1999, and 1998
the effects of options and warrants were not considered when calculating fully
diluted earnings per share, since the results would have been either
immaterial or anti-dilutive.
COMPUTER POWER, INC. & SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS
FORWARD-LOOKING STATEMENTS: NO ASSURANCES INTENDED
This report contains certain forward-looking statements regarding the
Company, its business prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause the Company s actual business, prospects and results of operations to
differ materially from those that may be anticipated by such forward
looking statements. Factors that may affect such forward-looking results,
includes the Company s ability to successfully develop new products for new
markets; acceptance of new products; the possibility of the Company losing a
large customer or key personnel; the Company s ability to manage growth;
periodic cash shortages; the impact of the competition on the Company s
revenue; delays in the Company s introduction of new products; and the
possibility of the Company failing to keep pace with emerging technologies.
Accordingly no assurances can be given that events or results mentioned in
any such forward-looking statements will in fact occur. When used in this
discussion, words such as believes and phrases such as are expected and
similar expressions are intended to identify forward looking statements, but
are not the exclusive means of identifying forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. The Company
undertakes no obligation to revise any forward-looking statements in order to
reflect events or circumstances that may subsequently arise. Readers are
urged to carefully review and consider the various disclosures made by the
Company in this report and in the Company s reports filed with the
Securities and Exchange Commission.
The analysis of the Company s financial condition, capital resources and
operating results should be viewed in conjunction with the accompanying
consolidated financial statements, including the notes thereto.
EXTRAORDINARY GAIN
During the second quarter, the Company restructured its balance sheet.
It was able to conclude negotiations on $ 180,000 in principal and $55,592 in
accrued interest. As a result, $135,000 in principal and $55,592 in accrued
interest was forgiven. In addition, $275,528.50 in principal was used by the
Company s largest shareholder to convert the warrants it had bought in the
first quarter into equity.
The Company recorded a net gain of $52,411 during the second quarter of 1999,
or $0.02 per share, after giving effect to the Capital Restructuring. Before
giving effect to this event, the Company recorded a net loss of ($138,181) or
($0.04) per share, compared to a net loss of ($147,984) or ($0.06) per share
during the second quarter in 1998.
The Company recorded a net loss of $(49,766) during the first half of 1999, or
($0.02) per share, after giving effect to the Capital Restructuring.
Before giving effect to this event, the Company recorded a net loss of
($240,358) or ($0.08) per share, compared to a net loss of ($294,695) or
($0.11) per share during the first half of 1998.
2. REVENUES
For the second quarter ended June 30, 1999, net sales were $1,449,309, or
$583,103 (29%), below the same period in 1998. These results continued to
show the effects of declining sales in the Astralite unit due to regulatory
changes in the marketplace.
For the six months ended June 30, 1999 net sales were $3,085,231, or $993,233
(24%), below the first half of 1998. These results occurred primarily
for the following reasons. First, regulatory changes in the marketplace
occurred and had an adverse effect on Astralite Sales. Astralite was not
equipped to react to these changes in a timely manner. Second, The Original
Equipment Manufacture s ( OEM ) Lighting portion of the Company s Power
Protection business was down 25% for the first 6 months. This is the result
of both the timing of new construction schedules and the increasing
competitive nature of this segment of the business. The Custom
Uninterruptible Power Supply ( UPS ) business was also down for the period
but is expected to rebound in the third quarter with the launch of the new
Trimax V series of Three Phase UPS products.
In June 1999, the Board of Directors appointed Mr. James J. Hooley as
President and CEO. Mr. Hooley has spent the last 30 years in both the
Emergency Lighting and Power industry and the UPS industry. His vision for
the company going forward includes the development of new products for all
businesses, the redefinition of the company s business relationship with its
OEMs and an emphasis on market penetration in the UPS and Astralite
businesses. Fulfillment of this vision is dependent upon the availability of
external capital. To strengthen revenues, strategic partnering arrangements
are now being pursued with many customers, suppliers, and new sales
representative organizations. The company expects to release its new
Illuminator II series to the Emergency Lighting market in September.
Additionally, the new Trimax V UPS family of products will be released in
September. Astralite will introduce at least two new product families in the
fourth quarter. Even if these new products are successful, however, there
will be a period of time before they achieve sufficient market penetration to
make a significant contribution to the Company s financial results.
Accordingly, management does not anticipate positive financial results in
the near term.
3. COST OF SALES
Cost of sales declined from $1,575,447 for the second quarter ending June 30,
1998 to $1,140,482 for the period ending June 30, 1999. The decline in the
cost of sales is primarily due to lower sales volume. Cost of Sales as a per
cent of Sales increased to 79% in 1999 versus 77% in 1998 due to the lower
sales volume resulting in spreading fixed costs over a smaller base. This
ratio is marginally better than the six-month ratio, showing that cost cutting
measures are beginning to have an effect.
Cost of sales declined from $3,128,450 for the first half ending June 30,
1998 to $2,493,599 for the period ending June 30, 1999. The decline in the
cost of sales is primarily due to lower sales volume. Cost of Sales as a per
cent of Sales rose to 81% versus 77% as the higher initial effects of cost
cutting measures taken in the first quarter overshadowed the improvements of
the second quarter.
4. OPERATING AND OTHER EXPENSES
Operating and other expenses for the second quarter of 1999 declined to
$447,008 compared to $604,949 for the same period in 1998, due to the
interest forgiveness that occurred both at December 31, 1998 and March 31,
1999 as Interest Expense declined $35,748, or (34%), to $69,290 and lower
selling expenses due to a reduction in salaries, lower commissions and
reduced advertising and promotion expenses.
Operating and other expenses for the first half of 1999 totaled $831,990
compared to $1,244,709, representing a decrease of $412,719, due to the
interest forgiveness that occurred both at December 31, 1998 and March 31,
1999 as Interest Expense declined $81,440, or (39%), to $126,926 and lower
selling expenses due to a reduction in salaries, lower commissions and
reduced advertising and promotion expenses.
General and administrative expenses were $207,491 in the second quarter
of 1999 compared to $260,061 in the same period in 1998. The decrease was
primarily due to a reduction in personnel and other expense reductions.
General and administrative expenses were $437,324 for the first half of 1999
compared to $536,851 in the same period in 1998. The decrease was primarily
due to a reduction in personnel and other expense reductions.
5. LIQUIDITY AND CAPITAL RESOURCES
For the period ended June 30, 1999, the Company's operations generated
$387,803 in cash. This was largely the result of a $545,086 decrease in
accounts receivable. This additional cash flow from operations was primarily
used to reduce bank borrowings and capital leases by $486,232. As a result,
cash for the first half showed a modest decline of $7,914
The Company s financial resources are primarily borrowings available to it
through its revolving credit agreement and inventory loan facilities. As its
borrowings are tied to the levels of accounts receivable and inventory, the
Company is typically fully borrowed. At June 30, 1999, the Company was fully
borrowed given the amount of Accounts Receivable and Inventory it had on its
books at that time. Should those levels increase due to increasing sales, the
Company has available an additional $1,215,304 in borrowing capacity to meet
that growth.
As noted in Note (12) to the Company s audited Consolidated Financial
Statements for the year ended December 31, 1998, in January and February,
1999 Public Access Lighting, L.L.C. ( PAL ) purchased certain Company notes,
warrants and shares of Common stock. At that time, PAL stated its
intent to recapitalize the Company with new financing and to assist in a
marketing association with the Company. As noted in Note 5, PAL has
converted its warrants, paying for it by surrendering $275,528.50 in
principal. In addition at June 30, 1999, it had begun the infusion of working
capital through a loan of $100,000. It has stated that it intends to
provide an additional $200,000 over the short term.
The Company made its first step in its debt-restructuring program when it
repaid $45,000 of debt to a former director. As part of the same
transaction, that director simultaneously forgave accrued interest of $55,592
and the remaining $ 135,000 of principal. The Company continues to
work on restructuring the remainder of its long-term debt. However, there can
be no assurance that it will successful in these efforts. Should it be
unsuccessful, the Company s ability to attract the capital necessary to move
forward will be seriously in question.
6. YEAR 2000 ISSUES
With respect to the Company s information technology systems, the Company's
accounting and manufacturing systems have been in use almost since the
inception of the Company. During 1998, management determined that their
current version was not Year 2000 compliant. The software vendor offered an
upgrade to make the system date sensitive. However, the system was not
Microsoft compatible and very limited in scope as compared with new
information technology. Accordingly, the Company purchased a new operating
system to transition into Year 2000. New system software has been installed
and user training has commenced. Future updates to that system will be made
available under technical support contracts with the software service provider.
The Company is about six months late in their original implementation schedule
due to management changes and demands made to run the existing business with a
limited staff. There are currently systems problems as manufacturing orders
and raw materials on order are now being taken for finished products
scheduled for delivery in Year 2000. The problems in controlling these
issues are being managed. The Company can not provide total assurance that
there will not be a systems interruption, or other material adverse event,
should the implementation schedule or ultimate success of the implementation
notoccur within the required timeframes.
Non-information technology systems, including telecommunications, have been
tested and appear to be Year 2000 compliant.
With respect to external factors concerning its vendors and customers
readiness for Year 2000, in 1998 the Company began an information survey of
its key vendors and customers to determine any Year 2000 vulnerability.
Additionally, current management has developed a structured questionnaire,
which will be sent out during the third quarter. The Company expects to
receive and monitor all responses from vendors and customers. To date, on an
informal basis in normal business dealings with these third parties, nothing
has come to the Company s attention that requires action.
Notwithstanding such cautionary initiatives, intelligence gathered from
informal discussions and the results from targeted mailing to key
vendors and customers, (even if all responses come in with assurances of
Year 2000 compliance), there can be no guarantee that the systems of such
third parties, customers and suppliers, on which the Company relies, will be
converted in a timely manner, or that the failure to convert would not have a
material adverse effect on the Company.
COMPUTER POWER, INC. & SUBSIDIARY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
None
ITEM 2. CHANGE 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:
The Company entered into an employment agreement with Mr. James Hooley
effective June 1, 1999. The agreement is for a term of two years,
appoints Mr. Hooley as President of the Corporation at a salary of
$120,000 per year and grants Mr. Hooley Incentive Stock Options to
purchase up to 250,000 shares of Common Stock at $0.25 per share.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
None
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.
Date: August 23, 1999 /s/.
James Hooley
President
/s/.
William H. Hastings, Jr.
Controller