=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 0-15223
HEMACARE CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of I.R.S. Employer I.D.
incorporation or organization: California Number: 95-3280412
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
(Address of principal executive offices) (Zip Code)
___________________
Registrant's telephone number, including area code: (818) 986-3883
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: YES X_ NO ___
As of May 14, 1999 7,377,582 shares of Common Stock of the Registrant
were issued and outstanding.
=============================================================================
INDEX
HEMACARE CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - March 31, 1999 (unaudited) and
December 31, 1998
Consolidated statements of operations - Three months ended
March 31, 1999 and 1998 (unaudited)
Consolidated statements of cash flows - Three months ended
March 31, 1999 and 1998 (unaudited)
Notes to consolidated financial statements - March 31, 1999
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
SIGNATURES
2
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEMACARE CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998
(Unaudited) (Audited)
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents............................ $ 1,140,000 $ 1,372,000
Marketable securities................................ 576,000 288,000
Accounts receivable, net of allowance for
doubtful accounts - $446,000 (1999) and $596,000
(1998)............................................. 2,640,000 3,038,000
Product inventories.................................. 67,000 87,000
Supplies............................................. 710,000 604,000
Prepaid expenses..................................... 120,000 160,000
Note receivable from related party - current......... 21,000 24,000
------------ ------------
Total current assets..................... 5,274,000 5,573,000
Plant and equipment, net of accumulated
depreciation and amortization of
$1,912,000 (1999) and $1,869,000 (1998).............. 1,259,000 1,289,000
Goodwill, net of amortization of $32,000............... 721,000 742,000
Note receivable from related party - non-current....... 50,000 49,000
Other assets........................................... 10,000 9,000
------------ ------------
$ 7,314,000 $ 7,662,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 1,120,000 $ 1,414,000
Accrued payroll and payroll taxes.................... 706,000 802,000
Accrued professional fees............................ 116,000 173,000
Other accrued expenses............................... 346,000 418,000
Current obligations under capital leases............. 158,000 203,000
Current notes payable................................ 133,000 109,000
Reserve for discontinued operations.................. 110,000 110,000
------------ ------------
Total current liabilities................ 2,689,000 3,229,000
Obligations under capital leases, net
of current portion................................... 609,000 627,000
Notes payable, net of current portion.................. 454,000 491,000
Other long-term liabilities............................ 24,000 24,000
Commitments and contingencies..........................
Shareholders' equity:
Preferred stock no par value 5,000,000 shares
authorized, 450,0000 issued and outstanding........ 75,000 75,000
Common stock, without par value - 20,000,000
shares authorized, 7,281,120 issued and
outstanding in 1999 and 1998........................ 13,588,000 13,584,000
Accumulated deficit.................................. (10,125,000) (10,368,000)
------------ ------------
Total shareholders' equity............... 3,538,000 3,291,000
------------ ------------
$ 7,314,000 $ 7,662,000
============ ============
The accompanying notes are an integral part of these
consolidated balance sheets.
3
4
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTIION>
Three months ended March 31,
1999 1998
------------- -------------
Revenues:
Blood management programs......................... $ 1,538,000 $ 851,000
Regional operations
Blood products.................................. 1,067,000 582,000
Blood services.................................. 1,848,000 1,484,000
------------ ------------
Total revenue................................. 4,453,000 2,917,000
Operating costs and expenses:
Blood management programs......................... 1,460,000 814,000
Regional operations
Blood products.................................. 737,000 468,000
Blood services.................................. 1,422,000 1,118,000
------------ ------------
Total operating costs and expenses........... 3,619,000 2,400,000
------------ ------------
Operating profit............................. 834,000 517,000
General and administrative expense.................. 686,000 501,000
Gain on sale of Gateway Community Blood Program..... 100,000 -
------------ ------------
Income from continuing operations
before income taxes............................... 248,000 16,000
Provision for income taxes.......................... (5,000) -
------------ ------------
Net income..................................... $ 243,000 $ 16,000
============ ============
Basic and diluted per share amounts:
Net income..................................... $ 0.03 $ 0.00
============ ============
Weighted average shares outstanding - basic......... 7,281,120 7,197,515
============ ============
Weighted average shares outstanding - dilutive...... 7,797,843 7,197,515
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
4
5
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
1999 1998
------------ ------------
Cash flows from operating activities:
Net Income................................................ $ 243,000 $ 16,000
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 63,000 34,000
Issuance of common stock and options for compensation. 4,000 9,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable............ 398,000 (266,000)
(Increase) decrease in inventories, supplies
and prepaid expenses................................. (46,000) 134,000
Increase in other assets, net......................... (1,000) -
Increase (decrease) in accounts payable, accrued
expenses and other liabilities...................... (519,000) 53,000
Proceeds from discontinued operations................. - 5,000
------------ ------------
Net cash provided by (used in) operating
activities........................................... 142,000 (15,000)
Cash flows from investing activities:
Decrease in note receivable from related parties.......... 2,000 4,000
Increase in marketable securities......................... (288,000) (309,000)
Purchase of plant and equipment, net...................... (12,000) (3,000)
------------ ------------
Net cash used in investing activities..................... (298,000) (308,000)
Cash flows from financing activities:
Principal payments on line of credit, term loan
and capital leases...................................... (76,000) (37,000)
------------ ------------
Net cash used in financing activities..................... (76,000) (37,000)
------------ ------------
Decrease in cash and cash equivalents....................... (232,000) (360,000)
Cash and cash equivalents at beginning of period............ 1,372,000 1,249,000
------------ ------------
Cash and cash equivalents at end of period.................. $ 1,140,000 $ 889,000
============ ============
Supplemental disclosure:
Interest paid............................................. $ 20,000 $ 4,000
============ ============
Items not impacting cash flows:
Increase in capital lease obligations..................... $ - $ 42,000
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
5
6
HemaCare Corporation
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation and General Information
- -------------------------------------------------------
The accompanying unaudited consolidated financial statements of
HemaCare Corporation (the "Company" or "HemaCare") have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended
March 31, 1999, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999.
Certain 1998 amounts have been reclassified to conform to the
1999 presentation. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
Coral Blood Services, Inc. ("CBS"), a wholly owned subsidiary of
the Company, was formed in October 1998, for the purpose of
purchasing substantially all of the assets of a company which had
been in the business of supplying blood products and services to
hospitals primarily in the eastern United States. (See Note 2.)
Note 2 - Coral Blood Services
- -----------------------------
In October 1998, the Company purchased, through its wholly owned
subsidiary CBS, substantially all of the assets of Coral
Therapeutics, Inc. ("Coral") from Coral's secured lender. Prior
to the acquisition, Coral provided blood services to major
university, teaching and community hospitals in Maine, New
Hampshire, Massachusetts, Connecticut, New York, North Carolina
and other states. HemaCare is in the process of negotiating of
separate agreements with the hospitals previously served by Coral
and is providing services to hospitals that have not signed a new
agreement under interim arrangements.
Note 3 - Line of Credit and Note Payable
- ---------------------------------------
Line of Credit
The Company maintains a line of credit with a commercial bank
secured by its accounts receivable, inventory and equipment. In
February 1999, the commercial bank increased the Company's line
of credit borrowing limit to $1.2 million, from $700,000, and
converted the $600,000 balance then outstanding on the line of
credit to a four-year term loan.
Under the terms of the credit line agreement, which is in effect
until June 1, 1999, the Company may borrow up to 70% of eligible
accounts receivable, up to a maximum of $1.2 million at an
interest rate of prime plus 0.5% and must maintain certain
ratios. The Company was in compliance with all covenants of its
borrowing agreement at March 31,1999, and there was no balance
outstanding under the line of credit. The Company is in the
process of renewing its credit line agreement.
6
7
Note Payable
The Company has a term note with a bank, payable in 48 monthly
payments of principal and interest of approximately $15,000
through February 2003. The note bears interest at the prime rate
plus one percent (8.75% at March 31, 1999).
Note 4 - Commitments and Contingencies
- --------------------------------------
Since 1976, California law has prohibited the infusion of blood
products into patients if the donors of those products were paid
unless, in the opinion of the recipient's physician, blood from
a non-paid donor was not immediately available. Apheresis
platelet products obtained from paid donors, including the
Company's Sherman Oaks center's paid donors, are exempted from
this law by a state statute which contains a "sunset" provision.
Unless a new exemption is obtained, the existing exemption will
expire under its sunset provision on December 31, 2001. The Company
is evaluating a number of available options with regard to the
expiration of the extension.
The State and federal laws set forth antikickback and self-
referral prohibitions and otherwise regulate financial
relationships between blood banks and hospitals, physicians and
other persons who refer business to them. While the Company
believes its present operations comply with applicable
regulations, there can be no assurance that future legislation or
rule making, or the interpretation of existing laws and
regulations will not prohibit or adversely impact the delivery by
HemaCare of its services and products.
Note 7 - Segment and Related Party Information
- -----------------------------------------------
Business Segments
The Company operates in three business segments, each of which
represents a separate business activity. The segments and a
description of their business activities follows:
- - Blood Management Programs ("BMP"). Outsource programs which
provide all or a major portion of the blood banking functions
to a hospital.
- - Blood Products. Apheresis and whole blood derived products.
- - Blood Services. Therapeutic apheresis and stem cell
collection procedures, autologous interoperative transfusion
and donor testing.
Management uses more than one measure to measure segment
performance. However, the dominant measurements are consistent
with the Company's consolidated financial statements which
present revenue from external customers and pretax income for
each segment.
Related Party Loan
In 1995 and 1994, the Company made a series of personal loans to
Dr. Joshua Levy, then an officer and director of the Company. The
Company received installment payments on these loans in 1997 and
1996. Effective July 31, 1997, the Company entered into an
agreement with Dr. Levy to forgive the remaining balance of Dr.
Levy's loans, including interest accrued at a 10% annual rate,
over a five-year period so long as Dr. Levy remains employed by
the Company.
7
8
Note 6 - Gain on Disposition
- ----------------------------
In September 1995, the Company formed Gateway Community Blood
Program, Inc. ("Gateway"), a wholly owned subsidiary
incorporated in Missouri, to provide blood products and services
in Missouri and Illinois. In August 1997, Gateway's operations
were sold.
The Company is entitled to receive a percentage of Gateway's
revenues, as defined, over the five years subsequent to the date
of sale, up to maximum of $422,000. An additional payment of
$100,000 was due when Gateway received a Food and Drug
Administration establishment license. In the first quarter of
1999, Gateway received this license, and the Company realized an
additional $100,000 gain on the disposition.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
HemaCare's operations include blood management programs ("Blood
Management Programs" or "BMPs") and regional sales of blood products
("Blood Products") and blood services ("Blood Services").
A HemaCare Blood Management Program allows a hospital to outsource
all or a portion of its blood procurement and donor center management
operations and other blood related activities. Blood Products include
apheresis platelets and whole blood components such as red blood
cells and plasma products. Blood Services include therapeutic
apheresis procedures, stem cell collection and cryopreservation and
donor testing.
In October 1998, the Company, through its subsidiary Coral Blood
Services, Inc. ("CBS"), acquired existing blood products and services
operations in the eastern United States. These consist of Blood
Management Programs and other blood services provided to hospitals
and medical centers. Presently, CBS is providing services to some of
its customers under interim arrangements, while negotiating new
contractual agreements.
The Company operates five blood management programs. The University
of Southern California ("USC") program, initiated in 1996, and four
East Coast programs. The East Coast programs are Dartmouth-Hitchcock
Medical Center ("DHMC"), Maine Medical Center ("MMC"), St. Vincent
Hospital ("St. Vincent") and University of North Carolina ("UNC").
Prior to October 1998, Coral Therapeutics, Inc. operated these
programs which are now operated by CBS.
The Gateway Community Blood Program ("Gateway") located in St. Louis,
Missouri, and the Citrus Valley Health Partners ("Citrus Valley")
Blood Management Program, initiated in 1995 and 1996, failed to meet
the Company"s profitability criteria. Gateway was sold in August
1997, and the Citrus Valley contract was terminated in July 1998.
All comparisons within the following discussions are to the
comparable periods of the previous year.
8
9
Revenues and Operating Profit
- -----------------------------
Total revenues increased 53% ($1,536,000) in the first quarter of
1999. The increase was due to the addition of the CBS operations and
to higher California Blood Products revenue, partially offset by lower
California BMP and Blood Services revenue. The decrease in California
BMP revenue was due to the termination of the Citrus Valley contract.
The Company's operating profit as a percentage of sales ("profit
margin") increased to 19% in the first quarter of 1999 from 18% in the
comparable quarter of 1998. In addition, the Company realized a
$100,000 gain on the sale of Gateway, in the first quarter of 1999.
Blood Management Programs
Revenue increased 81% ($687,000) and operating profit increased 1%
($41,000) in the first quarter of 1999. The revenue increase was due
to the addition of the CBS operations, partially offset by the
termination of the Citrus Valley contact. The increase in operating
profit resulted from both the addition of CBS operations and the
termination of the Citrus Valley contract.
Blood Products
Blood Products revenues increased 83% ($485,000) in the first quarter
of 1999 primarily due to an increase in the volume of apheresis
platelet sales in California. This increase was partially offset by a
decrease in the average price per product sold.
The profit margin on Blood Products sales increased to 31% from 20%
in the first quarter of 1999. The increase resulted primarily from a
decrease in the average cost per product sold in California,
partially offset by a decrease in the average price per products
sold.
Blood Services
Blood Services revenues increased 25% ($364,000) in the first quarter
of 1999. The increase resulted from the addition of CBS operations,
partially offset by decreases in California-based revenue. In
California, albumin sales, the volume of therapeutic procedures and
the average price per procedure all decreased in the first quarter of
1999. Albumin, a protein replacement fluid used in certain therapeutic
procedures, is offered for sale to non-hospital customers only when
the Company is able to obtain an excess supply at a favorable price.
The decrease in the average price per California apheresis procedure
was due primarily to the mix of procedures performed.
The profit margin on Blood Services sales decreased to 23% from 25%
in the first three months of 1999. The decrease was due to CBS
therapeutic apheresis operations, which have lower profit margins.
This decrease was partially offset by increased profit margins in
California therapeutic apheresis services, resulting from a lower
average cost per procedure.
Gain on Disposition
- -------------------
As a part of the terms of the sale of Gateway's operations, the
Company was entitled to receive a payment of $100,000 when Gateway
received a Food and Drug Administration establishment license. In the
first quarter of 1999, Gateway received this license, and the Company
realized an additional $100,000 gain on the disposition.
9
10
General and Administrative Expense
- ----------------------------------
General and administrative expense increased 37% ($185,000) in the
first quarter of 1999. The increase reflects costs associated with
the addition of the CBS operations.
Liquidity and Capital Resources
- --------------------------------
At March 31, 1999, the Company had cash and cash equivalents and
marketable securities of $1,716,000 and working capital of
$2,586,000. The Company has a $1,200,000 line of credit with a
commercial bank which is in effect through June 1, 1999. Under the
terms of the credit line agreement, which is in the process of
renewal, the Company may borrow up to 70% of eligible accounts
receivable, up to a maximum of $1,200,000, and must maintain certain
financial ratios. The Company was in compliance with all covenants of
its borrowing agreement at March 31, 1999, and there were no
borrowings outstanding on the line of credit at that date.
The Company also has a term note with a bank of $600,000, payable in
48 monthly payments of principal and interest of approximately
$15,000 through February 2003. The note bears interest at the prime
rate plus one percent (8.75% at March 31, 1999). The term note is
cross collateralized with the Company's line of credit.
The Company's blood products and services businesses, other than the
USC Blood Donor Center (the "Center") are profitable and cash flow
positive. The Center operations are expected to continue to be
unprofitable until a higher level of Center blood collections can be
achieved. The operating losses of the Center reduce the overall
profitability of the USC Blood Management Program to the Company. The
Company continues to implement changes intended to increase the level
of Center collections, but there can be no assurance that the Center
will be able to achieve and maintain a breakeven or profitable level
of collections.
The Company is providing services to many of its East Coast customers
under interim arrangements, while negotiating formal contractual
agreements. The Company believes that contractual agreements will be
satisfactorily concluded with most of these customers. However, there
can be no assurance that satisfactory contracts can be negotiated
with all major customers, and the loss of one or more major customers
could have an adverse effect on the Company's revenue and operating
profit.
Since 1976, California law has prohibited the infusion of blood
products into patients if the donors of those products were paid
unless, in the opinion of the recipient's physician, blood from a
non-paid donor was not immediately available. Apheresis platelet
products obtained from paid donors, including the Company's Sherman
Oaks center's paid donors, are exempted from this law by a state
statute which contains a "sunset" provision. Unless a new exemption
is obtained, the existing exemption will expire under its sunset
provision on December 31, 2001, in the event the existing exemption
is not extended. The Company is evaluating a number of alternatives
with regard to continuing its California based apheresis platelet
business after the year 2001. However, there can be no assurance that
these initiatives will be successful. Should the Company be unable to
continue to sell apheresis platelets collected from paid donors, the
Company's revenue and operating profit could be materially adversely
effected.
10
11
Joshua Levy, M.D., medical director of the Company and a shareholder,
treats patients through his private practice, who require therapeutic
services. Amendments to the Federal self-referral laws and related
regulations which became effective in 1995 could restrict the
Company's ability to provide therapeutic services to Dr. Levy's
patients who are covered by Medicare or MediCal. It is estimated that
revenues from these patients represented approximately 2% ($295,000)
of the Company's 1998 revenues. New regulations which have been
proposed but not yet issued may provide an exemption for therapeutic
apheresis services. If the new regulations do not provide an
exemption for therapeutic apheresis services, the Company could lose
the revenue from its services for Dr. Levy's Medicare and MediCal
patients.
Management is evaluating opportunities to develop and implement new
outsourcing models, including its Blood Management Program. Because
of the increase in the cost of acquiring red blood cells and their
decreasing availability, it is likely that future HemaCare
outsourcing arrangements will either involve fixed price supply
contracts for these products or will focus on providing specialized
donation services, apheresis based products and services, and other
technology based blood therapies. However, development and
introduction of a revised Blood Management Program model or other
outsourcing programs may require that the Company obtain additional
financing or partner with other blood product and service providers.
There can be no assurance that the Company will be successful in
developing and marketing its outsourcing programs, that it will be
able to obtain the funds necessary to finance such programs or that
required partnering relationships can be developed.
The Company anticipates that cash flow from profitable operations,
collection of the accounts receivable purchased from Coral, borrowing
available from its bank line of credit and its cash and investments
on hand will be sufficient to provide funding for its existing needs
during the next twelve months.
Year 2000 Disclosure
- --------------------
The Company has developed and is implementing a comprehensive program
to address year 2000 issues. The program considers the effect of the
Year 2000 on the Company's internal systems, customers, products and
services, production systems, and suppliers and other critical
business partners. Implementation of the Company's plan is
substantially complete, and the Company believes that all identified
potential Year 2000 issues have been effectively resolved. The cost
to identify and resolve Year 2000 issues was not material to the
Company's financial results and has been expensed as incurred.
Management does not believe that there will be a significant
disruption to the Company's business due to Year 2000 issues.
However, the Company has begun contingency planning to address any
situations which may arise in which the planning of the Company or
third parties prove to be inadequate, and where practical
alternatives are available. There can be no assurance that the
Company's Year 2000 program or the programs of critical business
partners will be successful, and failure could have a material
adverse affect on the Company's business and results of operations.
Factors Affecting Forward-Looking Information
- ---------------------------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" from liability for forward-looking statements. Certain
information included in this Form 10-Q and other materials filed or to
be filed by the Company with the Securities and Exchange Commission
(as well as information included in oral statements or other written
statements made or to be made by or on behalf months of the Company)
are forward-looking, such as statements relating to operational and
financing plans, competition, the effects of discontinued operations,
11
12
the effect of state and Federal regulation and demand for the
Company's products and services. Such forward-looking statements
involve important risks and uncertainties, many of which will be
beyond the control of the Company. These risks and uncertainties could
significantly affect anticipated results in the future, both short-
term and long-term, and accordingly, such results may differ from
those expressed in forward-looking statements made by or on behalf
months of the Company. These risks and uncertainties include, but are
not limited to, those relating to the ability of the Company to expand
its operations, obtain additional financing, to repay existing debt,
to achieve profitability in its USC Center, to retain existing
customers and obtain new customers, to integrate the assets recently
acquired from Coral Therapeutic, Inc.'s secured lender, to retain the
Coral Therapeutic, Inc. customers, to improve the profitability of the
Company's other operations, the effects of the Year 2000 and to comply
with the covenants under its bank line of credit. Each of these risks
and uncertainties as well as others are discussed in greater detail in
the preceding paragraphs of this Management's Discussion and Analysis
of Financial Condition and Results of Operations and in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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
4.1 Warrant Agreement between the Registrant and
Kibel, Green, Inc., dated March 4, 1999.
4.2 Warrant Agreement between the Registrant and
Stuart Dinney, dated March 4, 1999.
10.1 Services Agreement between the Registrant and
Alan C. Darlington, dated March 10, 1999.
27 Financial Data Schedule for the Quarter
Ending March 31, 1999.
12
13
b. The Company did not file any reports on Form 8-K
during the three months ended March 31, 1999.
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 May 17, 1998 HEMACARE CORPORATION
---------------- (Registrant)
/s/ Sharon C. Kaiser
----------------------------
Sharon C. Kaiser, Senior Vice
President, Finance and
Chief Financial Officer
13
14
INDEX TO EXHIBITS
Method of Filing
--------------------------
4.1 Warrant Agreement between the Registrant and
Kibel Green, Inc. dated March 4, 1999 Filed herewith electronically
4.2 Warrant Agreement between the Registrant and
Stuart Dinney, dated March 4, 1999 Filed herewith electronically
10.1 Services Agreement between the Registrant and
Alan C. Darlington, dated March 10, 1999 Filed herewith electronically
27 Financial Data Schedule for the quarter ending
September 30, 1998 Filed herewith electronically