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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1998
-----------------
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
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Commission File Number 0-17192
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CYPRESS FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Nevada 84-1061382
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
5400 Orange Avenue, Suite 200, Cypress CA 90630
(Address of Principle Executive Office) (Zip Code)
Registrant's telephone number including area code (714) 995-0627
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 report), and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes [X] No [_]
(2) Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Common Stock 6,527,571 as of February 12, 1999
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CYPRESS FINANCIAL SERVICES, INC.
FORM 10Q-SB
INDEX
PART I. FINANCIAL INFORMATION Page
--------
Item 1. Condensed Consolidated Balance Sheet as of
December 31, 1998......................................... 1
Condensed Consolidated Statements of
Operations for the three-month periods ended
December 31, 1998 and 1997................................ 2
Condensed Consolidated Statements of
Cash Flows for the three-month periods ended
December 31, 1998 and 1997................................ 3
Notes to Condensed Consolidated Financial
Statements................................................ 4 to 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8 to 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................... 12
Item 2. Changes in Securities..................................... 12
Item 3. Defaults Upon Senior Securities........................... 12
Item 4. Submission of Matters to a Vote of Security Holders....... 12
Item 5. Other Information......................................... 12
Item 6. Exhibits and Reports on Form 8-K.......................... 12
CYPRESS FINANCIAL SERVICES, INC.
--------------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
DECEMBER 31, 1998
-----------------
ASSETS
------
Cash $1,548,293
Restricted cash 337,375
Accounts receivable, net 463,191
Portfolio receivables 1,185,092
Property, net 2,851,814
Notes receivable from officers 152,013
Prepaid expenses and other 61,611
----------
Total assets $6,599,389
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable $ 98,431
Trust payables 337,375
Accrued liabilities 141,237
Notes payable 1,838,740
Capital lease obligations 134,428
Deferred income taxes 375,576
----------
Total liabilities 2,925,787
----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Series A convertible, redeemable preferred stock, $0.001
par value, stated at $2.00 liquidation preference per share,
5,000,000 shares authorized; 345,000 shares issued and
outstanding 690,000
Common stock, $0.001 par value; 30,000,000 shares authorized;
6,527,571 shares issued and outstanding 6,527
Paid-in capital 3,522,403
Accumulated deficit (545,328)
----------
Total shareholders' equity 3,673,602
----------
$6,599,389
==========
The accompanying notes are an integral part of this
condensed consolidated balance sheets.
1
CYPRESS FINANCIAL SERVICES, INC.
--------------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
-----------------------------------------------------
1998 1997
---------- ----------
REVENUES:
Service fees $ 770,472 $ 859,445
Portfolio receivables revenue 251,885 426,390
---------- ----------
1,022,357 1,285,835
---------- ----------
OPERATING EXPENSES:
Salaries, wages and related benefits 913,698 812,437
Selling, general and administrative 332,336 403,063
Depreciation 43,522 41,619
---------- ----------
1,289,556 1,257,119
---------- ----------
INCOME (LOSS) FROM OPERATIONS (267,199) 28,716
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net (14,410) (75,255)
Rental operations, net 26,112 33,977
---------- ----------
11,702 (41,278)
---------- ----------
LOSS BEFORE BENEFIT FOR INCOME TAXES (255,497) (12,562)
BENEFIT FOR INCOME TAXES (87,344) -
---------- ----------
NET LOSS $ (168,153) $ (12,562)
========== ==========
Earnings per share:
Basic $ (0.03) $ (0.00)
Diluted $ (0.03) $ (0.00)
Number of shares used in computing earnings per share:
Basic 6,527,571 4,520,271
Diluted 6,527,571 4,520,271
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
CYPRESS FINANCIAL SERVICES, INC.
--------------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
-----------------------------------------------------
1998 1997
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (168,153) $ (12,562)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 45,532 41,619
Changes in operating assets and liabilities:
(Increase) decrease in restricted cash 80,793 (79,523)
(Increase) decrease in accounts receivable, net (69,405) (106,644)
(Increase) decrease in portfolio receivables (420,059) 154,517
(Increase) decrease in prepaid expenses and other 61,772 2,017
Increase (decrease) in accounts payable 44,102 (5,205)
Increase (decrease) in trust payables (80,793) 79,523
Increase (decrease) in accrued liabilities (21,266) (21,230)
Increase (decrease) in deferred income taxes (89,424) -
---------- ---------
Net cash provided by (used in) operating activities (616,901) 52,512
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property (152,184) (6,604)
---------- ---------
Net cash used in investing activities (152,184) (6,604)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on line of credit - (70,000)
Proceeds from notes payable - 60,000
Principal payments on notes payable (5,003) (138,521)
Principal payments on capital lease obligations (7,370) (12,562)
---------- ---------
Net cash used in financing activities (12,373) (161,083)
---------- ---------
NET DECREASE IN CASH (781,458) (115,175)
CASH, at beginning of period 2,329,751 271,455
---------- ---------
CASH, at end of period $1,548,293 $ 156,280
========== =========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
CYPRESS FINANCIAL SERVICES, INC.
--------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
DECEMBER 31, 1998
-----------------
1. Quarterly Information
---------------------
The accompanying unaudited, condensed and consolidated financial statements have
been prepared in accordance with Securities and Exchange Commission requirements
for interim financial statements. Therefore, they do not include all disclosures
that would be presented in the Annual Report on Form 10-KSB of Cypress Financial
Services, Inc. (the "Company"). These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements contained in the Company's 1998 Annual Report on Form 10-KSB.
The information furnished reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of financial position and results of operations for the
interim periods. The operating results are not necessarily indicative of results
to be expected for the year ending September 30, 1999.
2. Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
a. Organization and Basis of Presentation
--------------------------------------
Cypress Financial Services, Inc., a Nevada corporation, (together with
its subsidiaries, the Company), provides accounts receivable management,
administration, and debt collection services primarily to health care
providers and consumer credit issuers. In addition to its third party
collection business, in January 1995, the Company began acquiring
accounts receivable and other consumer obligations for its own collection
portfolio.
The Company operates primarily through wholly owned subsidiaries that
serve specific segments of the collections service industry. The
Company's subsidiaries include: (i) Merchants Recovery Services, Inc.
(MRSI), a company that primarily offers accounts receivable collection
services to banks, credit unions, public utilities, and retailers; (ii)
Medical Control Services, Inc. (MCSI), a collection agency servicing the
health care industry; (iii) Lien Solutions, Inc. (LSI), a company that
specializes in the recovery of unpaid worker's compensation claims
primarily for healthcare service providers, including hospitals and
doctors; (iv) My Boss, Inc. d.b.a. Business Office Support Services
(BOSS), a company that provides pre-collection consulting and credit
monitoring services to medical providers and other businesses that extend
credit; and (v) Pacific Process Serving, Inc. (PPS), a statewide legal
document process service company.
b. Principles of Consolidation
---------------------------
The condensed consolidated financial statements include the accounts of
Cypress Financial Services, Inc. and its wholly owned subsidiaries. All
significant intercompany accounts have been eliminated in consolidation.
4
c. Accounts Receivable
-------------------
Accounts receivable represent accounts in which the Company provides
collection services for entities in the commercial, retail and medical
industries for a fee. Service fees are reported as income when earned.
Servicing costs are charged to expense as incurred.
d. Portfolio Receivables
---------------------
Portfolio receivables (Receivables) represent liquidating portfolios of
delinquent accounts which have been purchased by the Company for collection
and are stated at the lower of cost or net realizable value. Cost is
reduced by cash collections on an account by account basis until such time
collections equal cost. Net realizable value represents management's
estimate of the remaining net proceeds to be realized from a given
portfolio, based on an account by account evaluation of the remaining
uncollected delinquent receivables and on the historical collection
experience of the specific portfolio and similar portfolios. Revenues from
collections on purchased portfolios of receivables are recognized on an
account by account basis after the cost of each account has been recovered.
Gains and losses are recorded as appropriate when Receivables are sold. The
Company considers a transfer of Receivables where the Company surrenders
control over the Receivables a sale to the extent that consideration other
than beneficial interests in the transferred Receivables is received in
exchange for the Receivables.
On January 1, 1997, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." The adoption of SFAS
No. 125 did not have a material effect on the operations of the Company.
e. Property
--------
Equipment, furnishings and automobiles are carried at cost and depreciated
using both straight-line and accelerated methods over the estimated useful
lives of the assets, which are generally 5 to 7 years. The building is
being depreciated over a period of 39 years.
Repairs and maintenance are charged to expense as incurred; replacements
and betterments are capitalized.
f. Trust Accounts and Restricted Cash
----------------------------------
The Company maintains trust accounts for the benefit of its customers.
Related funds are deposited in trust bank accounts and reflected as a trust
liability until such amounts held in trust are remitted to customers. The
trust accounts cash balances of $337,375 are reflected as restricted cash
and trust payables in the accompanying condensed consolidated balance
sheet.
g. Fair Value of Financial Instruments
-----------------------------------
Fair values of financial instruments are estimated using available market
information and other valuation methodologies. The fair values of the
Company's financial instruments are estimated to approximate the related
book value, unless otherwise indicated.
5
h. Earnings Per Share
------------------
During fiscal 1998, the Company adopted SFAS No. 128, "Earnings per Share
(EPS)." This standard is effective for both interim and annual reporting
periods ending after December 15, 1997. SFAS No. 128 replaces primary EPS
with basic EPS and fully diluted EPS with diluted EPS. Basic EPS is
computed by dividing reported earnings by weighted average shares
outstanding. Diluted EPS is computed in the same way as fully diluted EPS,
except that the calculation now uses the average share price for the
reporting period to compute dilution from options under the treasury stock
method. All earnings per share amounts have been restated to conform to the
SFAS No. 128 requirements.
i. Income Taxes
------------
The Company accounts for income taxes using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes," which requires
the asset and liability method of accounting for income taxes.
j. Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
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 reported periods. Actual results could materially
differ from those estimates.
k. Reclassification
----------------
Certain amounts in the accompanying 1997 financial statements have been
reclassified to conform to 1998 presentation.
3. Portfolio Receivables
---------------------
The cost basis of portfolio receivables (Receivables) activity consists of the
following as of December 31, 1998, and for the three months then ended:
Portfolio receivables at September 30, 1998 $ 765,033
Purchases of portfolio receivables 717,601
Collections applied to cost basis (108,965)
Sales of portfolio receivables applied to cost basis (188,577)
----------
Portfolio receivables at December 31, 1998 $1,185,092
==========
For the three months ended December 31, 1998 and 1997, the Company had gross
collections from the Receivables of $194,426 and $433,055, respectively. After
applying $108,965 and $115,189 to cost basis for the three months ended December
31, 1998 and 1997, respectively, $85,461 and $317,866 was recognized as
portfolio receivables revenue in the accompanying condensed consolidated
statements of operations.
6
On August 14, 1998 the Company sold Receivables with a book value of $224,634 to
a wholly-owned subsidiary for $2,750,000, which issued interest-bearing asset-
backed securities to Pacific Life Insurance Company for the same amount. As
permitted by SFAS No. 125, the Company considers a transfer of Receivables where
the Company surrenders control over the Receivables a sale to the extent that
consideration other than beneficial interests in the transferred Receivables is
received in exchange for the Receivables. For the three months ended December
31, 1998, the Company had gross collections from these Receivables of $402,920,
of which $80,584 was recognized as service fee revenue in the accompanying
condensed consolidated statements of operations.
Due to the nature of these Receivables, there is no assurance that historical
collection results will reflect the future collectibility of the face value of
the Receivables.
4. Property
--------
Property consists of the following:
Land $ 866,575
Building 1,540,577
Equipment and furnishings 1,910,372
Autos 132,415
----------
4,449,939
Less--Accumulated depreciation 1,598,125
----------
$2,851,814
==========
5. Notes Payable
-------------
Notes payable consists of a mortgage note payable to a bank, collateralized by
land and a building, due in monthly payments of $14,089, including interest at 8
percent per annum, through December 2000, at which time the entire principal
balance is due and payable.
6. Income Taxes
------------
Income tax expense for the periods presented are based on the estimated
affective tax rate to be incurred for the year. Because certain items of income
and expense are not recognized in the same year in the financial statements of
the Company as in its Federal and California tax returns, deferred assets and
liabilities are created. As of December 31, 1998, the accompanying condensed
consolidated balance sheet reflects net deferred tax liabilities of $375,576.
7. Subsequent Event
----------------
On February 12, 1999, the Company issued a warrant to Batchelder & Partners,
Inc. to purchase up to 400,000 shares of the Company's common stock in
connection with their agreement to act as the Company's non-exclusive financial
advisor. This warrant is subject to specific exercise price and vesting
provisions as described in the agreement and will be exercisable until November
13, 2005.
7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The Company provides accounts receivable management services to various health
care providers, banks, financial institutions, and retail firms. These services
include, among other things, billing, delinquent debt recovery, management of
litigation and bankruptcy claims, and workers' compensation lien claim
resolution. In the early nineties, financial institutions, primarily credit card
issuers, began changing their approach regarding the management of charged off
consumer receivables. These financial institutions started to sell portions of
their charged off portfolios to certain delinquent debt recovery firms and
investment groups in lieu of third party placements. Accordingly, in February
1994, the Company began to purchase portfolios of consumer receivables for its
own account, and has continued to do so through December 31, 1998.
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the condensed consolidated
financial statements and notes thereto included elsewhere in this report.
Certain statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, as well as elsewhere in this
Quarterly Report on Form 10-QSB are forward-looking statements, and the actual
results and developments may be materially different from those expressed in or
implied by such statements.
Results of Operations
Three months ended December 31, 1998 versus three months ended December 31, 1997
As of December 31, 1998, the Company's direct purchases of Portfolio Receivables
had a remaining face value of $32.8 million as compared to a remaining face
value of $157 million as of December 31, 1997. This decrease was due to the sale
of certain Portfolio Receivables totaling $149.5 million through a private
securitization in August 1998. During the three months ended December 31, 1998,
the Company purchased over $23 million of such obligations for its own account.
Revenue decreased $263,479 or 20.5% to $1,022,356 for the three months ended
December 31, 1998 from $1,285,835 for the three months ended December 31, 1997.
Revenue from Portfolio Receivables purchased by the Company decreased to
$251,885 for the three months ended December 31, 1998 from $426,390 for the same
period in 1997 primarily due to the securitization discussed above. However,
gross collections on Portfolio Receivables, including those securitized,
increased to $597,346 for the for the three months ended December 31, 1998 from
$433,055 for the same period in 1997. For the three months ended December 31,
1998, the Company had gross collections of $402,920 from Portfolio Receivables
which the Company securitized, of which $80,584 was recognized as service fee
revenue in the accompanying condensed consolidated statements of operations.
8
The following table summarizes the gross collection and revenue activities from
Portfolio Receivables for the three months ended December 31, 1998 and 1997.
1998 1997
--------- ----------
Gross collections on Portfolio Receivables $ 597,346 $ 433,055
Remittances on securitized portfolios (322,336) (0)
Collections applied to cost basis (108,965) (115,189)
--------- ----------
Revenue recognized on Portfolio Receivables $ 166,045 $ 317,866
========= ==========
Service fees decreased to $770,472 for the three months ended December 31, 1998
from $859,445 for the same period in 1997, primarily due to the shift in Company
resources from third party collections to collecting Portfolio Receivables
purchased for its own account.
Operating expenses for the three months ended December 31, 1998 were $1,289,556
as compared to $1,257,119 for the three months ended December 31, 1997. The
majority of this increase can be attributed to the Company's ongoing recruiting
and training effort. With the completion of our training center in August 1998,
the Company has been aggressively recruiting and training in anticipation of the
strategic growth plan it will pursue during the next three years. Additionally,
depreciation expense increased 4.4% over the same period last year principally
due to certain technology upgrades as well as furniture purchases made by the
Company in Q4 1998.
Interest expense decreased to $14,410 for the three months ended December 31,
1998 from $75,255 for the three months ended December 31, 1997. This 80.9%
decrease resulted from retiring the Company's credit facility and equipment
loans in the fourth quarter of 1998 using proceeds of a $3,000,000 private
placement as well as a $2,750,000 securitization.
The Company's EBITDA (defined as earnings before interest, taxes, depreciation
and amortization and is a measure of the Company's free cash flow) decreased to
$(195,555) for the three months ended December 31, 1998 from $104,312 for the
three months ended December 31, 1997. This decrease is principally due to the
decrease in revenues noted above.
Liquidity and Capital Resources
The Company is funded primarily through cash flows from operations.
Historically, the Company has used its credit facility to acquire Portfolio
Receivables. However, in July 1998, the Company sold 2,000,000 shares of its
common stock to Pacific Life Insurance Company for $3,000,000, representing 28%
of the outstanding common stock of the Company on a fully diluted basis.
Additionally, in August 1998, the Company completed its first securitization of
Portfolio Receivables which generated net cash flows to the Company of
$2,552,000. The combined $5,552,000 was used to retire the Company's credit
facility and existing equipment loans leaving the balance available for
expansion as well as ongoing purchases of Portfolio Receivables under a forward
flow contract with a major financial institution.
9
The Company currently has outstanding long-term debt with financial institutions
of $1,973,000 which is secured by a mortgage and certain equipment. The
Company's mortgage note has a remaining balance of $1,839,000, carries an
interest rate of 8% per annum and is due in December 2000. Management is
currently evaluating the feasibility of refinancing the mortgage note payable.
The Company also finances certain capital leases for computer equipment that
have a remaining balance of approximately $134,000 at December 31, 1998.
Management expects to continue to service its outstanding long-term debt through
its cash flows from operations.
In addition to capital required for the Company's existing business and its
growth, the Company may require additional capital resources if it should choose
to expand its operations by acquisitions of other businesses. Although the
Company has no commitments to make any acquisition, it does regularly review
proposals to make acquisitions in the accounts receivable management field and
considers acquisitions a significant component of its strategic plan.
There can be no assurance that such additional financing, if required, will be
available to the Company, nor can there be any assurance as to the cost of any
such financing that may be available. The Company is exploring the possibility
of issuing additional debt and/or equity to provide additional capital, but has
no commitment to do so.
Year 2000
State of Readiness -- Since early 1997, the Company has been addressing the
impact of the Year 2000 to its data processing systems. Key financial
information and operational systems were addressed and detailed plans were
developed to ensure that Year 2000 system modifications were in place by
September 1998 for all critical systems. As most of the critical software is
purchased from vendors which have already made the necessary Year 2000 changes,
the Company is concentrating its efforts on testing its "Year 2000 Compliant"
systems.
Costs to Address Year 2000 Issues -- In the process of identifying the Company's
critical systems and determining the extent to which they must be modified or
replaced, management has found no systems which need to be replaced or
extensively modified to ensure they will function as intended. Accordingly,
management does not anticipate a material adverse impact to the Company's
results of operations or financial position.
Risks for the Company -- The primary risk of failure to adequately address the
Year 2000 problem would be the inability to accurately process and track
financial records and transactions. Additionally, the Company is exposed to risk
if its customers, clients, and financial institutions are unable to adequately
address the Year 2000 dates in their own data processing systems. The Company
has contacted all of the major customers, clients and financial institutions
with whom it does business to ensure that they are addressing the issue for
themselves and their customers.
Contingency Plans -- Should the Company's vendor for its core processing
applications fail to provide the modifications necessary to correctly recognize
Year 2000 dates, as a contingency plan for core operations, the Company would
out source its mainframe computer applications. For non-core operations, the
Company will rely on manual processing until modifications or replacement
systems are in place.
10
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS Nos.
130 and 131, "Reporting Comprehensive Income" and "Disclosures about Segments of
an Enterprise and Related Information," respectively. SFAS Nos. 130 and 131 are
effective for fiscal years beginning after December 15, 1997, with earlier
adoption permitted. The Company believes that adoption of these standards will
not have a material impact on the Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 is effective for fiscal
quarters beginning after June 15, 1999, with earlier adoption permitted. The
Company believes that adoption of this standard will not have a material impact
on the Company.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Registrant's Information Statement dated January 30, 1999, as
previously filed, includes a description of matters approved by
written consent of a majority of outstanding shares in lieu of an
annual meeting of stockholders, and is incorporated by reference
herein.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.5 Warrant to Purchase 400,000 Shares of Common Stock dated
February 12, 1999 issued to Batchelder & Partners, Inc.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Not Applicable
12
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.
CYPRESS FINANCIAL SERVICES, INC.
Date: February 12, 1999 By: /s/ Manuel Occiano
-------------------------------------
Manuel Occiano
Director and Chief Executive Officer
Date: February 12, 1999 By: /s/ John C. Hindman
-------------------------------------
John C. Hindman
Chief Financial Officer and Treasurer
(Principal Accounting Officer)
13