UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999
Commission File Number 0-21177
NETSMART TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3680154
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
146 Nassau Avenue, Islip, NY 11751
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 968-2000
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__
Number of shares of common stock outstanding as of August 9, 1999: 2,967,253
Netsmart Technologies, Inc. and Subsidiary
Index
Part I: - Financial Information:
Item 1. Financial Statements: Page
----
Consolidated Balance Sheets - June 30, 1999 (Unaudited)
and December 31, 1998 1-2
Consolidated Statements of Operations (Unaudited) -
Six Months Ended June 30, 1999 and June 30, 1998 3
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 1999 and June 30, 1998 4-5
Consolidated Statement of Stockholders' Equity (Unaudited) -
Six Months Ended June 30, 1999 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
June 30, December 31,
1999 1998
(Unaudited)
--------- -----------
Assets:
Current Assets:
Cash and Cash Equivalents $ 137,572 $ 198,689
Accounts Receivable - Net 5,476,673 3,600,025
Costs and Estimated Profits in Excess
of Interim Billings 3,116,516 2,899,695
Note Receivable 60,000 150,000
Other Current Assets 252,756 109,595
--------- ---------
Total Current Assets 9,043,517 6,958,004
--------- ---------
Property and Equipment - Net 451,200 354,036
--------- ---------
Other Assets:
Software Development Costs - Net 122,100 142,450
Customer Lists - Net 2,566,750 2,733,392
Other Assets 103,664 101,064
--------- ---------
Total Other Assets 2,792,514 2,976,906
--------- ---------
Total Assets $12,287,231 $10,288,946
========== ==========
See Notes to Consolidated Financial Statements.
-1-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
June 30, December 31,
1999 1998
(Unaudited)
--------- -----------
Liabilities and Stockholders' Equity:
Current Liabilities:
Notes Payable $ 1,368,364 $ 1,639,694
Capitalized Lease Obligations 23,544 27,283
Accounts Payable 2,306,257 2,166,333
Accrued Expenses 1,545,751 1,178,893
Interim Billings in Excess of Costs and
Estimated Profits 2,824,009 1,803,999
Due to Related Parties -- 84,000
Deferred Revenue 9,520 47,619
----------- -----------
Total Current Liabilities 8,077,445 6,947,821
----------- -----------
Capitalized Lease Obligations 79,277 57,033
----------- -----------
Commitments and Contingencies -- --
----------- ------------
Stockholders' Equity:
Preferred Stock, $.01 Par Value;
Authorized 3,000,000
Series D 6% Redeemable Preferred
Stock - $.01 Par Value 3,000 Shares
Authorized, none issued or outstanding
1999, 1,210 Issued and Outstanding
in 1998 [Liquidation Preference of
$1,210 and redemption value of $1,210,000] -- 12
Additional Paid-in Capital -
Series D Preferred Stock -- 1,209,509
Common Stock - $.01 Par Value; Authorized
15,000,000 Shares; Issued 2,972,586 Shares
at June 30, 1999, 2,786,921 Shares at
December 31, 1998 29,725 27,869
Additional Paid-in Capital - Common Stock 18,517,747 17,203,904
Accumulated Deficit (14,356,963) (15,097,202)
---------- -----------
4,190,509 3,344,092
Less cost of 5,333 shares of Common Stock
held in Treasury 60,000 60,000
---------- -----------
Total Stockholders' Equity 4,130,509 3,284,092
---------- -----------
Total Liabilities and Stockholders' Equity $ 12,287,231 $ 10,288,946
========== ===========
See Notes to Consolidated Financial Statements.
-2-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF OPERATIONS - (Unaudited)
- --------------------------------------------------------------------------------
Six months ended Three months ended
June 30, June 30,
---------------- ------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Software and Related
Systems and Services:
General $ 8,680,503 $ 3,503,762 $ 4,569,805 $ 1,956,175
Maintenance Contract
Services 1,133,654 661,359 534,923 347,438
---------- ---------- ---------- ----------
Total Software and Related
Systems and Services 9,814,157 4,165,121 5,104,728 2,303,613
Data Center Services 992,730 1,175,790 467,376 496,556
---------- ---------- ---------- ----------
Total Revenues 10,806,887 5,340,911 5,572,104 2,800,169
---------- ---------- ---------- ---------
Cost of Revenues:
Software and Related
Systems and Services:
General 5,582,857 2,187,775 2,842,372 1,267,452
Maintenance Contract
Services 848,423 503,642 450,540 236,607
---------- ---------- ---------- ----------
Total Software and Related
Systems and Services 6,431,280 2,691,417 3,292,912 1,504,059
Data Center Services 630,813 553,287 322,015 270,608
---------- ---------- ---------- ----------
Total Cost of Revenues 7,062,093 3,244,704 3,614,927 1,774,667
---------- ---------- ---------- ----------
Gross Profit 3,744,794 2,096,207 1,957,177 1,025,502
Selling, General and
Administrative Expenses 2,484,150 1,376,286 1,306,407 670,782
Related Party Administrative Expense -- 45,000 -- --
Research and Development 390,330 539,593 188,134 224,988
---------- ---------- ---------- ----------
Income from Continuing
Operations before interest 870,314 135,328 462,636 129,732
Interest Expense 130,075 148,901 49,498 81,878
---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations 740,239 (13,573) 413,138 47,854
---------- ---------- ---------- ----------
Loss from Discontinued Operations -- 343,239 -- 129,942
---------- ---------- ---------- ----------
Net Income (Loss) $ 740,239 $ (356,812) $ 413,138 $ (82,088)
========== ========== ========== ==========
Earnings Per Share of Common Stock:
Basic:
Income(Loss)from Continuing Operations $ .26 $ (.01) $ .14 $ .02
(Loss) from Discontinued Operations -- (.12) -- (.05)
---------- ---------- --------- ----------
Net Income (Loss) $ .26 $ (.13) $ .14 $ (.03)
========== ========== ========= ===========
Weighted Average Number of Shares of
Common Stock Outstanding 2,870,992 2,777,999 2,933,920 2,777,999
Diluted:
Income (Loss) from Continuing Operations $ .22 $ (.01) $ .12 $ .02
(Loss) from Discontinued Operations -- (.12) -- (.05)
---------- ---------- --------- ----------
Net Income (Loss) $ .22 $ (.13) $ .12 $ (.03)
========== ========== ========= ==========
Weighted Average Number of Shares of
Common Stock Outstanding 3,405,633 2,804,088 3,461,993 2,804,088
See Notes to Consolidated Financial Statements.
-3-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
- --------------------------------------------------------------------------------
Six months ended
June 30
1999 1998
---- ----
Operating Activities:
Net Income [Loss] from Continuing
Operations $ 740,239 $ (13,573)
Adjustments to Reconcile Net Income
[Loss] from Continuing Operations
to Net Cash [Used for] Operating Activities:
Depreciation and Amortization 282,460 270,392
Cash Used in Discontinued Operations -- (343,239)
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (1,876,648) (459,448)
Costs and Estimated Profits in
Excess of Interim Billings (216,821) (725,083)
Other Current Assets (53,161) (23,551)
Other Assets (2,600) 10,839
Increase [Decrease] in
Accounts Payable 139,924 132,856
Accrued Expenses 366,858 (22,856)
Interim Billings in Excess of
Costs and Estimated Profits 1,020,010 285,815
Due to Related Parties (11,137)
Deferred Revenue (38,099) (78,031)
--------- ---------
Total Adjustments (378,077) (963,443)
--------- ---------
Net Cash - Operating Activities 362,162 (977,016)
--------- ---------
Investing Activities:
Acquisition of Property and Equipment (192,632) (76,093)
--------- ---------
Net Cash - Investing Activities (192,632) (76,093)
--------- ---------
See Notes to Financial Statements.
-4-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
- --------------------------------------------------------------------------------
Six months ended
June 30
----------------
1999 1998
---- ----
Financing Activities:
Proceeds (payments) on
Short term notes $ (271,330) $ 271,812
Payment of Capitalized Lease Obligations (21,495) (10,447)
Repayment of Loans from Related Parties (84,000)
Proceeds from Capitalized Lease Obligation 40,000
Proceeds from Stock Options Exercised 106,178
-------- --------
Net Cash - Financing Activities (230,647) 261,365
-------- --------
Net [Decrease] in Cash (61,117) 791,744
Cash - Beginning of Periods 198,689 854,979
-------- --------
Cash - End of Periods $ 137,572 $ 63,235
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the periods for:
Interest $ 143,061 $ 159,838
Taxes $ 26,371 14,238
See Notes to Financial Statements.
-5-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1999
Series D Preferred Stock at .01 Par Value Shares Amount
------ ------
Beginning Balance 1,210 $ 12
Elimination of Series D Preferred (1,210) (12)
--------- ---------
Ending Balance -- $ --
========= ==========
Additional Paid-In Capital Preferred Stock
Beginning Balance $ 1,209,509
Elimination of Series D Preferred (1,209,509)
---------
Ending Balance $ --
=========
Common Stock $.01 Par Value Authorized
15,000,000 Shares
Beginning Balance 2,786,921 $ 27,869
Common Stock Issued - Exercise of Options 83,165 831
Common Stock Issued - Consulting 2,500 25
Common Stock Issued - Redemption
of Series D Preferred Stock 100,000 1,000
--------- ---------
Ending Balance 2,972,586 $ 29,725
========= =========
See Notes to Financial Statements.
-6-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1999
Additional Paid-In Capital Common Stock Shares Amount
------ ------
Beginning Balance $ 17,203,904
Common Stock Issued - Exercise of Options 99,722
Common Stock Issued - Elimination of
Series D Preferred 1,208,521
Common Stock Issued - Stock Issued to Consultant 5,600
----------
Ending Balance $ 18,517,747
==========
Accumulated Deficit
Beginning Balance $(15,097,202)
Net Income 740,239
----------
Ending Balance $(14,356,963)
Treasury Stock
Beginning Balance 5,333 $ (60,000)
----- ----------
Ending Balance 5,333 $ (60,000)
===== ==========
Total Stockholders Equity $ 4,130,509
==========
See Notes to Financial Statements.
-7-
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company as
of June 30, 1999 and the results of its operations for the six months ended
June 30, 1999 and 1998 and the changes in cash flows for the six months ended
June 30, 1999 and 1998. The results of operations for the six months ended June
30, 1999 and 1998 are not necessarily indicative of the results to be expected
for the full year.
(2) The accounting policies followed by the Company are set forth in Notes 1
and 2 to the Company's consolidated financial statements as filed in its Form
10-K for the year ended December 31, 1998.
(3) Income (Loss) per share - Income (Loss) per share is computed by dividing
the net loss for the period by the weighted average number of shares of common
stock. The common stock equivalents are assumed converted to common stock when
dilutive. During periods in which losses were incurred, common stock
equivalents were excluded from the weighted average number of shares of common
stock because their inclusion would be anti-dilutive.
(4) During the period ended June 30, 1999, stock options to purchase 83,165
shares were exercised and the Company received gross proceeds of $100,554. As a
result, common stock and additional paid in capital increased by $832 and
$99,722, respectively.
During the period ended June 30, 1999, the Company issued 2,500 shares of common
stock to a consultant. The value of such shares, $5,625, was charged to general
and administrative expense.
(5) Pursuant to a March 25, 1999 agreement between the Company, Consolidated
Technology Group Ltd. ("Consolidated"), SIS Capital Corp., a wholly-owned
subsidiary of Consolidated ("SISC"), and a group of purchasers, consisting
principally of the Company's management and directors, on April 8, 1999,
Consolidated transferred to the Company the 1,210 shares of the Company's Series
D 6% Redeemable Preferred Stock ("Series D Preferred Stock"), including the
right to receive $145,200 of accumulated dividends and warrants to purhase
shares of the Company's common stock, for which the Company issued 100,000
shares of common stock to SISC. The shares of Series D Preferred Stock have been
canceled as well as the annual dividends of $72,600 associated with the Series D
Preferred Stock.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Six Months Ended June 30, 1999 and 1998
Our revenue for the six months ended June 30, 1999 (the "June 1999 period") was
$10,807,000, an increase of $5,466,000, or 102% from the revenue for the six
months ended June 30, 1998 (the "June 1998 period") which was $5,341,000. The
largest component of revenue in the June 1999 period was turnkey systems labor,
which increased to $3,654,000 in the June 1999 period, from $1,333,000 in the
June 1998 period, reflecting a 174% increase. This increase is substantially
the result of growth in the behavioral health information systems business and
our ability to provide the staff necessary to generate additional revenue.
Revenue from third party hardware and software, increased to $3,245,000 in the
June 1999 period from $697,000 in the June 1998 period, an increase of 365%.
Sales of third party hardware and software are made in connection with the
sales of turnkey systems. The data center (service bureau) revenue decreased to
$993,000 in the June 1999 period from $1,176,000 in the June 1998 period,
reflecting a decrease of 16%. This decrease was substantially the result of a
special project performed for a client during the June 1998 period which did
not continue at the same rate in the June 1999 period. License revenue
increased to $1,193,000 in the June 1999 period from $1,031,000 in the June
1998 period, an increase of 16%. License revenue is generated as part of a sale
of a behavioral health information system pursuant to a contract or purchase
order that includes delivery of the system and maintenance. Maintenance revenue
increased to $1,134,000 in the June 1999 period from $661,000 in the June 1998
period, reflecting an increase of 71%. Revenue from the sales of the Company's
small turnkey division increased to $588,000 in the June 1999 period from
$442,000 in the June 1998 period, reflecting an increase of 33%.
Revenue from contracts from government agencies represented 54% of revenue for
the June 1999 period and 39% of revenue for the June 1998 period. This increase
represents an increase in our contracts with state agencies.
Gross profit increased to $3,745,000 in the June 1999 period from $2,096,000 in
the June 1998 period, a 79% increase. Our overall gross margin was 35% for the
June 1999 period compared to 39% for the June 1998 period. The reduction in
gross margin was substantially attributable to the increase in our third party
hardware and software revenue which yields margins significantly less than our
remaining revenue components. Additionally, our margins were reduced as a
result of hiring additional staff in preparation for the delivery of the
increased backlog. Since there is approximately a six month lag time between
the commencement of employment and the ability to generate revenue, our margins
were reduced in the June 1999 period.
Selling, general and administrative expenses were $2,484,000 in the June 1999
period, an increase of 81% from the $1,376,000 in the June 1998 period. This
increase was substantially the result of an increase in sales and marketing
salaries and related direct selling costs, commissions expense and an increase
in the provision for incentive bonuses.
We incurred product development expense of $390,000 in the June 1999 period, a
decrease of 28% from the $540,000 in the June 1998 period. These expenses were
related to our behavioral health information systems products such as our
clinician workstation, behavioral health information system for Windows,
managed care and methadone dispensing products.
Interest expense was $130,000 in the June 1999 period, a decrease of $19,000,
or 13% from the $149,000 in the June 1998 period. This decrease was the result
of lower borrowings during the June 1999 period, in addition to a reduction in
the cost of borrowings. The most significant component of the interest expense
on an ongoing basis is the interest payable to our asset-based lender. We pay
interest on such loans at a rate equal to prime plus 5 %.
-9-
Related party administrative expense was $45,000 in the June 1998 period. These
charges were pursuant to a management services agreement with our principal
stockholder to provide general business, management and financial consulting
services for a monthly fee of $15,000. This agreement was mutually terminated,
effective April, 1 1998.
The net loss from our discontinued operations, the smart card division, was
$343,000 in the June 1998 period.
As a result of the foregoing factors, we generated a net income of $740,000, or
$.22 per diluted share in the June 1999 period, as compared to a net loss of
$357,000, or $.13 per diluted share in the June 1998 period, resulting in a
$1,097,000 improvement.
Three Months Ended June 30, 1999 and 1998
Our revenue for the three months ended June 30, 1999 (the "June 1999 quarter")
was $5,572,000, an increase of $2,772,000, or 99% from the revenue for the six
months ended June 30, 1998 (the "June 1998 quarter") which was $2,800,000. The
largest component of revenue in the June 1999 quarter was turnkey systems
labor, which increased to $2,092,000 in the June 1999 quarter from $683,000 in
the June 1998 quarter, reflecting a 206% increase. This increase is
substantially the result of growth in the behavioral health information systems
business and our ability to provide the staff necessary to generate additional
revenue. Revenue from third party hardware and software, increased to
$1,513,000 in the June 1999 quarter from $389,000 in the June 1998 quarter an
increase of 289%. Sales of third party hardware and software are made in
connection with the sales of turnkey systems. The data center (service bureau)
revenue decreased to $467,000 in the June 1999 quarter from $497,000 in the
June 1998 quarter, reflecting a decrease of 6%. This decrease was substantially
the result of a special project performed for a client during the June 1998
quarter which did not continue at the same rate in the June 1999 quarter.
License revenue decreased to $623,000 in the June 1999 quarter from $671,000 in
the June 1998 quarter, a decrease of 7%. License revenue is generated as part
of a sale of a behavioral health information system pursuant to a contract or
purchase order that includes delivery of the system and maintenance.
Maintenance revenue increased to $535,000 in the June 1999 quarter from
$347,000 in the June 1998 quarter, reflecting an increase of 54%. Revenue from
the sales of the Company's small turnkey division increased to $342,000 in the
June 1999 quarter from $213,000 in the June 1998 quarter, reflecting an
increase of 61%.
Revenue from contracts from government agencies represented 52% of revenue for
the June 1999 quarter and 50% of revenue for the June 1998 quarter.
Gross profit increased to $1,957,000 in the June 1999 quarter from $1,026,000
in the June 1998 quarter, a 91% increase. Our overall gross margin was 35% for
the June 1999 quarter compared to 37% for the June 1998 quarter. The reduction
in gross margin was substantially attributable to the increase in our third
party hardware and software revenue which yields margins significantly less
than our remaining revenue components. Additionally, our margins were reduced
as a result of hiring additional staff in preparation for the delivery of the
increased backlog. Since there is approximately a six month lag time between
the commencement of employment and the ability to generate revenue, our margins
were reduced in the June 1999 quarter.
Selling, general and administrative expenses were $1,306,000 in the June 1999
quarter, an increase of 95% from the $671,000 in the June 1998 quarter. This
increase was substantially the result of an increase in sales and marketing
salaries and related direct selling costs, commissions expense and an increase
in the provision for incentive bonuses.
We incurred product development expense of $188,000 in the June 1999 quarter, a
decrease of 16% from the $225,000 in the June 1998 quarter. These expenses were
related to our behavioral health information systems products such as our
clinician workstation, behavioral health information system for Windows,
managed care and methadone dispensing products.
-10-
Interest expense was $50,000 in the June 1999 quarter, a decrease of $32,000,
or 40% from the $82,000 in the June 1998 quarter. This decrease was the result
of lower borrowings during the June 1999 quarter, in addition to a reduction in
the cost of borrowings. The most significant component of the interest expense
on an ongoing basis is the interest payable to our asset-based lender. We pay
interest on such loans at a rate equal to prime plus 5 %.
The net loss from our discontinued operations, the smart card division, was
$130,000 in the June 1998 quarter.
As a result of the foregoing factors, we generated a net income of $413,000, or
$.12 per diluted share in the June 1999 quarter as compared to a net loss of
$82,000, or $.03 per diluted share in the June 1998 quarter.
Liquidity and Capital Resources
We had working capital of $966,000 at June 30, 1999 as compared to working
capital of $10,000 at December 31, 1998. Our cash position decreased from
$199,000 at December 31, 1998 to $138,000 at June 30, 1999. The increase in
working capital for the six months ended June 30, 1999 was substantially due to
the net income after adding back depreciation and amortization.
Our principal source of funds, other than revenue, is an accounts receivable
financing agreement with an asset based lender which permits us to borrow up to
80% of eligible accounts receivable up to a maximum of $2,000,000. At June 30,
1999, the outstanding borrowings under this facility was $1,368,000 and the
maximum amount available under this formula was $2,000,000.
At June 30, 1999, accounts receivable and costs and estimated profits in excess
of interim billings were approximately $8.6 million, representing approximately
143 days of revenue based on annualizing the revenue for the six months ended
June 30, 1999, although no assurance can be given that revenue will continue at
the same level as the six month period. Accounts receivable at June 30, 1999
increased by $1.9 million from $3,600,000 at December 31, 1998 to $5,477,000 at
June 30, 1999. We believe that, the income from operations, the availability
with our asset based lender and the cash on hand, will be sufficient to enable
us to continue to operate at least through the end of 1999 without additional
funding. We may require additional funding if we continue to grow at the
existing rate. We are therefore exploring various funding possibilities. No
assurances can be given as to the ability of Netsmart to obtain additional
financing and our inability to do so could have a material adverse affect on
our ability to grow at our existing rate.
Forward Looking Statements
Statements in this Form 10-Q include forward-looking statements that are
subject to risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors, including those
identified in this Form 10-Q, the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 and in other documents filed by the Company with
the Securities and Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
A Form 8-K dated March 25, 1999, reporting Items 5 and 7 was filed with the
Commission on March 30, 1999.
-11-
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.
NETSMART TECHNOLOGIES, INC.
/s/ James L. Conway President, Chief Executive August 10, 1999
- ----------------------- Officer and Director (Principal
James L. Conway Executive Officer)
/s/ Anthony F. Grisanti Chief Financial Officer August 10, 1999
- ------------------------ (Principal Financial and
Anthony F. Grisanti Accounting Officer)