Exhibit 99.3
BL&P Engineers, Inc.
Independent Auditors' Report
Financial Statements
Years Ended December 31, 1998 and 1999,
and Four Months Ended April 28, 2000
BL&P ENGINEERS, INC.
FINANCIAL STATEMENTS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS:
Balance Sheets at December 31, 1998 and 1999 and April 28, 2000 (Unaudited) F-2 - F-3
Statements of Operations for the Years Ended December 31, 1998 and 1999 for and the Four
Months Ended April 30, 1999 and April 28, 2000 (Unaudited) F-4
Statements of Stockholders' Equity for the Years Ended December 31, 1998 and 1999 and
for the Four Months Ended April 28, 2000 (Unaudited) F-5
Statements of Cash Flows for the Years Ended December 31, 1998 and 1999 and for the Four
Months Ended April 30, 1999 and April 28, 2000 (Unaudited) F-6 - F-7
Notes to Financial Statements F-8 - F-13
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
BL&P Engineers, Inc.
Dallas, Texas
We have audited the accompanying balance sheets of BL&P Engineers, Inc. (the
"Company") as of December 31, 1998 and 1999, and the related statements of
operations, stockholders' equity, and of cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998 and
1999, and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Deloitte & Touche LLP
June 30, 2000
F-1
BL&P ENGINEERS, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1999 AND APRIL 28, 2000
- --------------------------------------------------------------------------------
Years Ended Four Months
December 31, Ended
----------------------- April 28,
ASSETS 1998 1999 2000
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 383,526 $ 66,015 $ 91,840
Trade and other receivables, less allowance for doubtful
accounts of $312,000, $337,000 and $333,000 at December
31, 1999 and 1998 and April 28, 2000, respectively 1,326,353 1,927,184 1,434,083
Costs and estimated earnings in excess of billings on
uncompleted projects (Note 2) - 154,517 21,608
Costs inccurred under completed contract method (Note 2) 1,287,222 754,536 1,004,290
Prepaid expenses and other 46,797 60,964 99,795
---------- ---------- ----------
Total current assets 3,043,898 2,963,216 2,651,616
---------- ---------- ----------
PROPERTY AND EQUIPMENT - NET (Note 3) 319,683 406,162 294,793
OTHER 5,921 5,921 79,964
---------- ---------- ----------
TOTAL ASSETS $ 3,369,502 $ 3,375,299 $ 3,026,373
============ ============ ===========
F-2
BL&P ENGINEERS, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1999 AND APRIL 28, 2000
- --------------------------------------------------------------------------------
Years Ended Four Months
December 31, Ended
--------------------- April 28,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1999 2000
(Unaudited)
CURRENT LIABILITIES:
Short-term debt (Note 4) $ 328,307 $ 304,307 $ 492,307
Current portion of long-term debt and capital lease
obligation (Notes 3 and 4) 92,342 133,340 139,079
Accounts payable 199,692 94,602 64,281
Accrued expenses 179,746 65,227 205,149
Income taxes payable (Note 6) 22,513 12,856 12,856
Billings for contracts under completed contract
method (Note 2) 1,645,591 926,365 780,546
Accrued construction administration costs for contracts
under completed contract method (Note 1) 127,287 121,926 76,810
Billings in excess of costs and estimated earnings on
uncompleted projects (Note 2) 38,798 44,312 92,888
Deferred income taxes (Note 6) 218,090 548,036 461,180
----------- ----------- -----------
Total current liabilities 2,852,366 2,250,971 2,325,096
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATION (Notes 3 and 4) 369,010 339,058 261,537
DEFERRED INCOME TAXES (Note 6) 5,631 18,233 -
----------- ----------- -----------
Total liabilities 3,227,007 2,608,262 2,586,633
----------- ----------- -----------
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, noncumulative, participating,
100,000 shares authorized, 10,000 issued and outstanding 100 100 100
Common stock, $1 par value, 10,000 shares authorized,
issued and outstanding 10,000 10,000 10,000
Additional paid-in capital 43,895 43,895 43,895
Retained earnings 616,807 1,241,349 1,004,052
Treasury stock, at cost - 11,447 shares at December 31,
1999 and 1998, 11,547 shares at April 28, 2000 (528,307) (528,307) (618,307)
----------- ----------- -----------
Total stockholders' equity 142,495 767,037 439,740
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,369,502 $ 3,375,299 $ 3,026,373
=========== =========== ===========
See notes to financial statements.
F-3
BL&P ENGINEERS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1999 AND
FOUR MONTHS ENDED APRIL 30, 1999 AND APRIL 28, 2000
- --------------------------------------------------------------------------------
Years Ended Four Months Ended
December 31, ----------------------------------
---------------------- April 30, April 28,
1998 1999 1999 2000
(Unaudited)
REVENUES:
Fee income $ 3,551,240 $ 5,085,225 $ 1,483,881 $ 1,342,583
Reimbursable income 76,329 157,793 25,760 37,823
----------- ----------- ----------- -----------
Total revenues 3,627,569 5,243,018 1,509,641 1,380,406
----------- ----------- ----------- -----------
PROJECT EXPENSES:
Direct expenses 876,482 266,022 124,257 123,411
Reimbursable expenses 57,622 192,279 35,934 61,904
----------- ----------- ----------- -----------
Total project expenses 934,104 458,301 160,191 185,315
----------- ----------- ----------- -----------
NET PRODUCTION INCOME 2,693,465 4,784,717 1,349,450 1,195,091
DIRECT LABOR 947,683 1,784,715 369,244 671,302
INDIRECT EXPENSES (Note 5) 1,432,106 1,932,616 486,741 913,813
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 313,676 1,067,386 493,465 (390,024)
----------- ----------- ----------- -----------
OTHER (INCOME) EXPENSE:
Interest expense, net 49,586 67,196 22,603 23,152
Other (income) expense, net 1,468 15,743 (10,575) (44,769)
----------- ----------- ----------- -----------
Total other (income) expense, net 51,054 82,939 12,028 (21,617)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES 262,622 984,447 481,437 (368,407)
PROVISION (BENEFIT) FOR
INCOME TAXES (Note 6) 102,650 359,905 180,158 (131,110)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 159,972 $ 624,542 $ 301,279 $ (237,297)
=========== =========== =========== ===========
See notes to financial statements.
F-4
BL&P ENGINEERS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1999 AND
FOUR MONTHS ENDED APRIL 28, 2000
- --------------------------------------------------------------------------------
Preferred Stock Common Stock Additional
--------------- -------------------- Paid-in
Shares Amount Shares Amount Capital
BALANCE, JANUARY 1, 1998 10,000 $ 100 10,000 $ 10,000 $ 43,895
Purchase of treasury stock - - - - -
Net income - - - - -
--------- --------- -------- --------- ---------
BALANCE, DECEMBER 31, 1998 10,000 100 10,000 10,000 43,895
Net income - - - - -
--------- --------- -------- --------- ---------
BALANCE, DECEMBER 31, 1999 10,000 100 10,000 10,000 43,895
Purchase of treasury stock - - - - -
Net loss - - - - -
--------- --------- -------- --------- ---------
BALANCE, APRIL 28, 2000
(Unaudited) 10,000 $ 100 10,000 $ 10,000 $ 43,895
========= ========= ======== ========= =========
Retained Total
Treasury Earnings Stockholders'
Stock (Deficit) Equity
BALANCE, JANUARY 1, 1998 $ (148,372) $ 456,835 $ 362,458
Purchase of treasury stock (379,935) - (379,935)
Net income - 159,972 159,972
----------- ------------ -----------
BALANCE, DECEMBER 31, 1998 (528,307) 616,807 142,495
Net income - 624,542 624,542
----------- ------------ -----------
BALANCE, DECEMBER 31, 1999 (528,307) 1,241,349 767,037
Purchase of treasury stock (90,000) - (90,000)
Net loss - (237,297) (237,297)
----------- ------------ -----------
BALANCE, APRIL 28, 2000
(Unaudited) $ (618,307) $ 1,004,052 $ 439,740
=========== ============ ===========
See notes to financial statements.
F-5
BL&P ENGINEERS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1999 AND
FOUR MONTHS ENDED APRIL 30, 1999 AND APRIL 28, 2000
- --------------------------------------------------------------------------------
Four Months
Years Ended Ended
December 31, ---------------------------
--------------------- April 30, April 28,
1998 1999 1999 2000
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 159,972 $ 624,542 $ 301,279 $ (237,297)
Adjustments to reconcile net income to net
cash used in operating activities:
(Gain) loss from disposals of property
and equipment - 18,142 (9,675) 9,217
Bad debt expense 91,988 223,109 8,748 158,540
Depreciation and amortization 101,087 92,389 43,350 33,332
Write off of property and equipment - - - 68,820
Deferred income taxes 71,975 342,552 - (105,089)
Changes in assets and liabilities which
increased (decreased) cash:
Trade and other receivables (431,054) (319,170) (768,132) 334,561
Costs and estimated earnings in excess of
billings on uncompleted projects, net 38,798 (149,003) 101,578 181,485
Costs of construction under completed
contract method (484,380) 27,916 (332,815) (249,754)
Prepaid expenses and other assets 54,254 (14,165) 35,278 (112,874)
Accounts payable (69) (105,090) (10,953) (30,321)
Accrued expenses 1,359 (114,525) (78,322) 139,922
Billings for contracts under completed
contract method 597,162 (719,225) 197,424 (145,819)
Accrued construction administration costs for
contracts under completed contract method 42,633 (5,361) 12,159 (45,116)
Income taxes payable 28,513 (9,659) 157,642 -
--------- -------- -------- --------
Net cash provided by (used in) operating
activities 272,238 (107,548) (342,439) (393)
--------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (207,388) (97,020) (62,376) -
Proceeds from disposals of property and
equipment - 17,446 - -
--------- -------- -------- --------
Net cash used in investing activities (207,388) (79,574) (62,376) -
--------- -------- -------- --------
F-6
BL&P ENGINEERS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1999 AND
FOUR MONTHS ENDED APRIL 30, 1999 AND APRIL 28, 2000
- --------------------------------------------------------------------------------
Four Months
Years Ended Ended
December 31, -------------------------
--------------------- April 30, April 28,
1998 1999 1999 2000
(Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances (payments) on revolving line of
credit $ 128,307 $ (24,000) $ 105,000 $ 188,000
Principal advances of long-term debt 428,208 - - -
Principal payments on long-term debt and
capital lease obligation (47,141) (106,389) (13,341) (71,782)
Purchases of treasury stock (379,935) - - (90,000)
------------- --------- ---------- ----------
Net cash provided by (used in) financing
activities 129,439 (130,389) 91,659 26,218
------------- --------- ---------- ----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 194,289 (317,511) (313,156) 25,825
CASH AND CASH EQUIVALENTS:
Beginning of period 189,237 383,526 383,526 66,015
------------- --------- ---------- ----------
End of period $ 383,526 $ 66,015 $ 70,370 $ 91,840
============= ========= ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION - Cash paid during
the period for:
Interest $ 59,442 $ 74,700 $ 23,426 $ 24,146
============= ========= ========== ==========
Income taxes $ 24,675 $ 19,840 $ - $ 3,459
============= ========= ========== ==========
SUPPLEMENTAL DISCLOSURE OF
NONCASH FINANCING ACTIVITIES -
Fixed assets acquired under capital leases $ - $ 117,435 $ 117,435 $ -
============= ========= ========== ==========
See notes to financial statements.
F-7
BL&P ENGINEERS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1999 AND
FOUR MONTHS ENDED APRIL 28, 2000
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business - BL&P Engineers, Inc. (the "Company") is an
engineering firm located in Dallas, Texas. The Company specializes in
engineering services for architects, construction companies and the
general public. The Company's financial statements are prepared on the
accrual basis of accounting.
Operating Cycle - Assets and liabilities related to long-term contracts
are included in current assets and current liabilities in the accompanying
balance sheets, as they are typically liquidated in the normal course of
contract completion, usually within one year.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.
Revenue and Cost Recognition - Revenue is recognized on certain longer
term contracts (those six months or longer in length), at estimated
collectible amounts, in the period the services are performed. More
specifically, the Company recognizes revenues on these contracts on the
percentage-of-completion method whereby the extent of the contract
performance is measured by the percentage of cost incurred to date to
estimated total cost for each contract. Consultant expenses, project
expenses, direct labor and indirect expenses are charged to expense as
incurred. Provisions for estimated losses on uncompleted projects are made
in the period in which such losses are first subject to reasonable
estimation. Unanticipated changes in project performance, project
conditions and estimated profitability may result in revisions to costs
and income and are recognized in the period in which the revisions are
determined.
The asset "costs and estimated earnings in excess of billings on
uncompleted projects" represents revenues recognized in excess of amounts
billed. The liability "billings in excess of costs and estimated earnings
on uncompleted projects" represents billings in excess of revenues
recognized.
For all other contracts, the Company recognizes revenues and reports
profits under the completed contract method. This method is used because
these contracts are completed in six months or less (execution of the
contract until the engineering drawings are delivered and accepted by the
customer) and the financial position and results of operations do not vary
significantly from those results which would result from use of the
percentage-of-completion method. Under the completed contract method,
contract costs and billings are accumulated during periods of
construction, but no revenues, costs or profits are recognized until the
contract is substantially complete. Contracts are considered substantially
complete when the engineering drawing for the project is complete and has
been delivered and accepted by the customer. After the drawings are
accepted and the contract has entered the construction administration
phase, the Company estimates any liability for costs to be incurred and
charges operations in the current period. Costs included in the liability
"accrued construction administration costs for contracts under completed
contract method" include direct material, direct labor and related
overhead. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.
F-8
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The most
significant estimate impacting the accompanying financial statements
relates to revenue recognition under the percentage-of-completion method.
Property and Equipment - Property and equipment are recorded at cost.
Assets held under capital leases are recorded at the lower of the net
present value of the minimum lease payments required over the term of the
lease or their fair value. Expenditures for maintenance and repairs are
expensed as incurred. The estimated useful lives of property and equipment
for financial reporting purposes are as follows:
Furniture and equipment 5 years
Automobiles 5 years
Assets held under capital leases 5 years
Leasehold improvements Lease term, not to exceed the useful life of the asset
Advertising Costs - Advertising costs are expensed as incurred. Amounts
expensed for the years ended December 31, 1998 and 1999 were
insignificant.
Income Taxes - The provision for income taxes includes federal and state
taxes currently payable adjusted for the net change in the deferred taxes
during the year. Deferred income tax assets and liabilities represent the
future income tax effect of temporary differences between book and tax
bases of assets and liabilities assuming they will be realized and settled
at the amounts reported in the accompanying financial statements.
Recent Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. SFAS No. 133 was amended to be effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Management is in the process
of evaluating the impact of SFAS No. 133 on the Company's financial
statements.
F-9
2. CONTRACTS IN PROGRESS
Information relative to contracts in progress under the
percentage-of-completion method as of December 31, 1998 and 1999 and April
28, 2000 is as follows:
December 31,
-------------------------------- April 28,
1998 1999 2000
(Unaudited)
Costs incurred on uncompleted projects (excluding
overhead) $ 476,869 $ 799,229 $ 1,561,970
Estimated earnings (loss) thereon (6,317) 28,425 359,008
--------------- --------------- ---------------
Total 470,552 770,804 1,202,962
Less billings to date 509,350 660,599 1,274,242
--------------- --------------- ---------------
Net under (over) billings $ (38,798) $ 110,205 $ (71,280)
============== ============== ================
Net underbillings are included in the accompanying balance sheets as follows:
December 31,
------------------- April 28,
1998 1999 2000
(Unaudited)
Costs and estimated earnings in excess of billings on
uncompleted projects $ - $ 154,517 $ 21,608
Billings in excess of costs and estimated earnings on
uncompleted projects (38,798) (44,312) (92,888)
----------- ----------- -----------
Net under (over) billings $ (38,798) $ 110,205 $ (71,280)
=========== =========== ===========
The components of costs and billings for contracts under the completed
contract method at December 31, 1998 and 1999 and April 28, 2000 are as
follows:
December 31,
------------------- April 28,
1998 1999 2000
(Unaudited)
Costs of construction under completed contract method $ 1,287,222 $ 754,536 $ 1,004,290
============= =========== =============
Billings for contracts under completed contract method $ 1,645,591 $ 926,365 $ 599,061
============= =========== =============
F-10
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 and 1999 consists of the
following:
1998 1999
Furniture and equipment $ 609,438 $ 518,756
Automobiles 131,879 134,734
Assets held under capital leases 61,476 61,476
Leasehold improvements 57,011 52,827
------------- -------------
859,804 767,793
Less accumulated depreciation and amortization (540,121) (361,631)
------------- -------------
Property and equipment, net $ 319,683 $ 406,162
============= =============
Certain automobiles and equipment are pledged as collateral for related
debt.
4. FINANCING ARRANGEMENTS
Short-term debt at December 31, 1998 and 1999 consists of the following:
1998 1999
Unsecured revolving credit facility, up to $500,000, interest at
9.75%, maturing March 31, 2000, guaranteed by stockholder $ 328,307 $ 304,307
A summary of long-term debt and capital lease obligation at December 31,
1998 and 1999 is as follows:
1998 1999
Unsecured note payable to related party, due in monthly
installments of $2,917, including interest at 6.50%,
maturing December 19, 2003 $ 325,479 $ 268,624
Note payable to related party, secured by automobile,
due in monthly installments of $872, including interest
at 8.50%, maturing April 14, 2001 22,078 13,148
Notes payable to bank, secured by automobiles and equipment
due in monthly installments ranging from $529 to of $1,058, plus interest
ranging from 8.50% to 10% maturing May 14, 1999
through October 8, 2003 53,976 56,431
Capital leases due in monthly installments ranging from $1,261
to $5,024 including interest ranging from 8.50% to 9.75%,
maturing from February 5, 2001 to October 1, 2003 59,819 134,195
------- -------
Total long-term debt and capital lease obligation 461,352 472,398
Less current maturities (92,342) (133,340)
------- -------
Long-term portion $ 369,010 $ 339,058
======== =========
F-11
Annual principal payments on long-term debt and capital lease obligation
are as follows:
2000 $ 133,340
2001 138,229
2002 105,814
2003 95,015
---------
Total $ 472,398
=========
5. COMMITMENTS
The Company leases office space and certain equipment under noncancelable
operating lease arrangements. The office space lease is subject to renewal
upon its expiration in 2003. The total minimum rental commitment under
these arrangements at December 31, 1999 is as follows:
2000 $ 152,146
2001 160,871
2002 143,315
2003 106,490
2004 36,093
--------
Total $ 598,915
=========
Rent expense was approximately $97,000 and $133,000 during 1998 and 1999
and is included in indirect expenses within the accompanying financial
statements.
6. INCOME TAXES
The provision for income taxes at December 31, 1998 and 1999 is as
follows:
1998 1999
$ 35,175 $ 12,858
67,475 347,047
----------- ----------
Current payable
Deferred taxes $ 102,650 $ 359,905
=========== ===========
Total
F-12
The tax effect of temporary differences giving rise to deferred income tax
liabilities as of December 31, 1998 and 1999 are as follows:
1998 1999
Differences between the accrual basis and cash basis of
accounting related to certain assets and liabilities $ 213,098 $ 548,036
Differences between book and tax bases of property
and equipment 10,623 18,233
------- --------
Deferred income tax liabilities, net $ 223,721 $ 566,269
========= =========
The Company's effective income tax rate during 1998 and 1999 was higher
than the statutory federal rate of 34%. The significant item that
increased the Company's tax rate over the federal statutory rate is the
effect of state income taxes.
7. RELATED PARTY TRANSACTIONS
As of December 31, 1998 and 1999, the Company has approximately $77,000
and $129,000 due from the majority stockholder and approximately $45,000
and $33,000 due from an entity controlled by a former stockholder included
within accounts receivable. In addition, the Company has indebtedness of
approximately $22,000 and $13,000 for a vehicle owned by the majority
stockholder and indebtedness of approximately $325,000 and $269,000 for
treasury stock purchased from a former stockholder that is included within
long-term debt in the accompanying financial statements. Interest expense
of approximately $25,000 and $21,000, respectively was incurred in
connection with this related party indebtedness.
8. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution plan (the "Plan") that provides
retirement and other related benefits to eligible employees. Employees can
make contributions up to a specified level. Company contributions to the
Plan were approximately $30,000 and $36,000 for the years ended December
31, 1998 and 1999, respectively.
9. SUBSEQUENT EVENT
The stockholders of the Company have entered into an agreement with HLM
Design, Inc. ("HLMD") whereby HLMD purchased all of the outstanding
capital stock of the Company for $1.46 million in cash, promissory notes
bearing interest at 7 percent in the aggregate amount of $2.0 million and
an aggregate of 50,000 shares of HLMD common stock. The sale was finalized
on April 29, 2000.
********
F-13