AGREEMENT AND PLAN OF REORGANIZATION
AND CORPORATE SEPARATION
The parties to this Agreement are AMTECH SYSTEMS, INC. ("Amtech"), an
Arizona corporation having its principal place of business at 131 South Clark
Drive, Tempe, Arizona 85281, and EUGENE R. HARTMAN ("Hartman") whose address is
1607 Waltham Court, Lutherville, Maryland 21093. The parties hereby agree as
follows:
1. RECITALS
1.1 Stock Ownership. Amtech is the owner of all of the issued and
outstanding capital stock of ECHELON SERVICE COMPANY ("Echelon"), a Maryland
corporation having its principal place of business at 7400 York Road, Third
Floor, Towson, Maryland 21204 ("Echelon"), which is engaged in the temporary
personnel business. Hartman is the Vice President, Chief Operating Officer of
Technical Contract Personnel Business and a director of Amtech, and the
President of Echelon. Hartman owns 98,016 shares of the common stock, $.01 par
value per share, of Amtech (the "Amtech Shares").
1.2 Purpose. Amtech desires to divest its contract personnel business
that is operated through Echelon in order to focus its resources on its core
semiconductor equipment business. Toward that end, pursuant to the terms hereof,
Amtech agrees to distribute all of the outstanding capital stock of Echelon to
Hartman in exchange for the Amtech Shares.
1.3 Tax Treatment. The parties intend that the transactions
contemplated by this Agreement shall be treated as a tax-free split-off pursuant
to Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the parties agree to take any and all actions that are appropriate and
consistent with such tax treatment, whether such acts are required, appropriate
or necessary before or after the Closing.
2. THE TRANSACTION
2.1 The Exchange. As consideration for this transaction, the parties
agree as follows:
(a) Amtech Shares. Hartman shall deliver to Amtech at the Closing, the
Amtech Shares, duly endorsed for transfer to Amtech.
(b) Echelon Stock. In exchange for the Amtech Shares, Amtech will
deliver to Hartman at the Closing all of the outstanding capital stock of
Echelon ("Echelon Stock"), duly endorsed for transfer to Hartman.
2.2 Dividend. In order to equalize the value of the securities being
exchanged, the parties agree that, at or prior to the Closing, there shall be a
cash dividend by Echelon to Amtech of $393,368 (the "Cash Dividend").
2.3 Amtech Options; Other Compensation. The parties agree that
Hartman's stock options to purchase shares of Amtech common stock shall continue
in effect in accordance with their existing terms. The parties agree that Amtech
shall have no obligation to Hartman for any accrued incentive compensation,
stock bonus or other compensation accrued through the Closing Date. Echelon
shall be responsible for Hartman's compensation.
2.4 Resignation. Effective as of the Closing, Hartman shall tender his
resignation as an officer of Amtech. In addition, upon Amtech's request, Hartman
agrees to tender his resignation as a director of Amtech.
2.5 Closing. The delivery of all consideration and documents
contemplated herein ("the Closing") shall take place as soon as practicable
after the date hereof at such place and time as the parties may mutually agree
(the "Closing Date").
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF AMTECH
In order to induce Hartman to enter into this Agreement and to deliver
the Amtech Shares and other consideration provided for herein, Amtech
represents, warrants and agrees as follows:
3.1 Organization and Good Standing. Echelon (a) is a corporation duly
organized, validly existing and in good standing under the laws of Maryland, (b)
has in all material respects full corporate power and authority to own and lease
the property and assets it now owns and leases and, in all material respects, to
carry on its business as and where such property and assets are now owned or
leased and such business is now conducted and (c) is duly licensed or qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the property and assets now owned or
leased by it or the nature of the business now conducted by it require it to be
so licensed or qualified and in which the failure to be so qualified or licensed
would have a material adverse effect on the business now conducted by it. There
are no dissolution, liquidation or bankruptcy proceedings pending, contemplated
by or, to the best knowledge of Amtech, threatened against Echelon.
3.2 Authority. Amtech has duly and validly taken all necessary
corporate proceedings to authorize the execution, delivery, and performance of
this Agreement by Amtech. This Agreement has been duly and validly authorized,
executed, and delivered by Amtech, constitutes
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a legal, valid, and binding obligation of Amtech, and (except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the rights of creditors generally or general equitable
principles) is enforceable as to Amtech in accordance with its terms.
3.3 Absence of Conflicts. Neither the execution and delivery of this
Agreement the compliance with the terms and conditions thereof, nor the
consummation of the transactions contemplated herein by Amtech will (i) conflict
with any of the terms, conditions or provisions of the articles or certificate
of incorporation, bylaws or other constituent instruments of Amtech or Echelon,
or (ii) conflict with, result in a breach of, constitute a default or event of
default under (whether by notice or the lapse of time or both) or accelerate or
permit the acceleration of the performance required by, or require any consent,
authorization or approval (other than those required to be obtained and which
have been duly obtained) under any indenture, mortgage, lien, lease, agreement
or instrument to which Amtech or Echelon is a party or by which either of them
or any of their assets may be bound, except for Echelon's existing premises
lease, as to which all necessary consents or waivers have been or will be
obtained prior to the Closing.
3.4 Capitalization. The authorized capital stock of Echelon consists of
500 shares of common stock, without par value, of which 100 shares are
outstanding. All of said outstanding shares are validly issued, fully paid and
non-assessable. To the knowledge of Amtech, there are no outstanding options,
calls or commitments of any character relating to the authorized and unissued
capital stock of Echelon or to any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or to acquire
any shares of capital stock of Echelon.
3.5 Ownership of Shares. At the Closing, Amtech will have full legal
title to the Echelon Stock free and clear of any liens or encumbrances and of
any rights or interests therein, direct or contingent or indirect in favor of
any other person or party, and Amtech has full right, power and authority to
deliver the outstanding certificates therefor, or to cause the same to be
transferred pursuant hereto. Amtech has owned all of the outstanding stock of
Echelon for the five year period preceding the date hereof.
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3.6 Echelon Financial Statements. Amtech has furnished to Hartman and
attached hereto as Schedule 3.6 copies of the following (sometimes herein
collectively called the "Echelon Financial Statements"):
(a) The unaudited balance sheets for the two (2) most recent fiscal
years and statements of income or loss and supplemental schedules for
the two (2) most recent fiscal years respectively of Echelon, reviewed
by Arthur Andersen LLP, who are independent certified public
accountants ("Arthur Andersen"), in connection with their audit of
Amtech's consolidated financial statements, and
(b) The unaudited consolidated balance sheets as of October 31, 1995
and related statements of income or loss of Echelon for the interim
period ended on October 31, 1995.
To the best knowledge of Amtech, all of the Echelon Financial
Statements, together with the Notes thereto, have been prepared in accordance
with generally accepted accounting principles consistently applied from period
to period, except that substantially all disclosures have been omitted and
income taxes have not been reflected, are true and correct and fairly present
the financial position of Echelon at the dates indicated and the results of its
operations for the periods ended thereon.
3.7 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the Echelon Financial Statements or known to
Hartman, Amtech is not aware of any liabilities or obligations of Echelon as of
the respective dates thereof, secured or unsecured (whether accrued, absolute,
contingent or otherwise), and Echelon has incurred no liabilities or obligations
since the date of the audited Echelon Financial Statements, except current
liabilities incurred in the ordinary course of business or in connection with
the transactions contemplated hereby. Amtech will be responsible for paying the
balance of fiscal 1995 income taxes of Echelon.
3.8 Absence of Certain Changes or Events. To the best knowledge of
Amtech, there has not since the date of the Echelon Financial Statements been
any event which materially adversely affects, or which may in the future (as far
as Amtech can foresee) materially adversely affect, the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of Echelon, including without limitation the loss, or threatened or
impending
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loss of any significant customer; provided, however, that no representation is
made herein as to political or economic matters of general applicability.
3.9 Continuation of Business. After the Closing, Amtech intends to
continue to operate its current business at substantially the same level and has
no plan or intent to substantially alter or dispose of such business.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF HARTMAN
In order to induce Amtech to enter into this Agreement and to deliver
the Echelon Stock as provided herein, Hartman represents, warrants and agrees as
follows:
4.1 Authority. Hartman has full power and authority to enter into and
perform under this Agreement free of any rights in or equity in favor of any
other person
4.2 Ownership of Amtech Shares. At the Closing, Hartman will have full
legal title to the Amtech Shares free and clear of any liens or encumbrances and
of any rights or interests therein, direct or contingent or indirect in favor of
any other person or party, and Hartman has full right, power and authority to
deliver the certificates for the Amtech Shares, and all title and right thereto,
to Amtech. Prior to the Closing, Hartman agrees that he will not sell, transfer,
encumber, hypothecate or dispose of any of the Amtech Shares. Hartman represents
and acknowledges that the Amtech Shares being transferred herein represent all
of Hartman's ownership of outstanding capital stock of Amtech and that, except
for outstanding options to purchase 5,000 shares of Amtech common stock, Hartman
has no other rights to own or acquire any capital stock of Amtech.
4.3 Financial Condition of Echelon. To the best knowledge of Hartman
(a) the Echelon Financial Statements fairly represent and do not materially
understate or overstate the financial condition of Echelon, and (b) there have
been no developments or events that would materially increase or decrease the
financial condition of Echelon above or below that reflected in the Echelon
Financial Statements.
4.4 Acknowledgement of Information. Hartman acknowledges that to the
extent that he has requested of Amtech information concerning Echelon, Hartman
has received the same. Further, Hartman acknowledges that, as the President of
Echelon, he is intimately familiar with the financial condition and business of
Echelon.
4.5 Restricted Securities. Hartman represents and warrants to Amtech
that, subject to the further provisions of this Agreement, it is and will be at
the time of the acquisition
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thereof, his intention to acquire the Echelon Stock to be issued pursuant to
this Agreement for his own account, for investment and not with a view to the
distribution or resale thereof. Hartman hereby acknowledges his understanding
that the Echelon Stock has not been registered under the Securities Act of 1933,
as amended, or any applicable state securities laws.
4.6 Tax Advice and Consequences. Hartman represents and acknowledges
that he has sought tax advice concerning the transaction(s) contemplated by this
Agreement from his own advisors and that, although Amtech has agreed to the
formulation of this Agreement in certain respects so as to obtain a favorable
tax result for Hartman, neither Amtech nor any of its agents or representatives
has acted as such advisor and Amtech has not made and does not make any
representations or warranties concerning any tax treatment or result of any
transaction arising out of this Agreement.
5. FURTHER AGREEMENTS OF HARTMAN AND AMTECH
Pending the Closing:
5.1 Preservation of Business. From and after the date of this Agreement
and until the Closing Date, Amtech will cause Echelon to use its best efforts to
(i) continue to maintain, in all material respects, its properties in accordance
with present practices in a condition suitable for their current use, (ii)
continue to conduct its business in the ordinary course, (iii) keep its books of
account, records and files in the ordinary course and in accordance with
existing practices and (vi) keep available the services of its employees and
continue to maintain existing business relationships with suppliers and
customers to the extent that such relationships are, at said time, judged to be
economically beneficial to Echelon, as the case may be.
5.2 Conduct of Business. From and after the date of this Agreement and
until the Closing Date, without the consent of Hartman and except as provided
herein, Amtech will not take any action to cause Echelon to (a) amend its
Articles of Incorporation, (b) issue, sell, or otherwise dispose of any of its
authorized capital stock, (c) declare or pay any dividend or make any other
distribution in cash or property on its capital stock, (d) merge or consolidate
with or into any corporation, (e) make or become liable for any bonus, pension
or profit-sharing or incentive payment to any of its officers, directors,
employees or stockholders, (f) sell or otherwise dispose of or encumber or
contract to sell or otherwise dispose of or encumber any of its properties or
assets other than in sales or dispositions in the ordinary course of business or
in connection with normal repairs, renewals and replacements, (g) modify, amend
or cancel
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any of its existing leases or understandings other than in the ordinary course
of business, which shall not include the making of any commitment extending
beyond three (3) months from the date hereof, (h) take any other action which
might materially adversely affect the interests of Echelon, or (i) fail to
operate its business in the customary manner or to maintain in good condition
its business premises, plant, fixtures, furniture and equipment.
5.3 Consents. Hartman and Amtech shall work together to cause Echelon
to take all necessary action and use all reasonable efforts to obtain all
consents, approvals, permits and licenses required by it to carry out the
transactions contemplated by this Agreement.
5.4 Reasonable Efforts. Hartman shall use all reasonable efforts to
assist Amtech to cause all conditions precedent to the consummation of the
transactions contemplated hereby applicable to Echelon to be fulfilled as
promptly as practicable.
5.5 Limitation of Liability. The parties agree that Amtech will not be
liable for a breach of its warranties contained herein pertaining to Echelon's
capitalization, financial condition or business affairs if such breach was
caused by the actions or omissions of Hartman or if Hartman was aware of facts
that render such representation or warranties to be inaccurate. The parties
further agree that Hartman will not be liable for a breach of his warranties
contained herein pertaining to Echelon's capitalization, financial condition or
business affairs if such breach was caused by the actions or omissions of Amtech
or if Amtech was aware of facts that render such representation or warranties to
be inaccurate.
5.6 Future Tax Liability. Hartman agrees to cause Echelon to pay to
Amtech after the Closing Date an amount equal to 45% of Echelon's taxable income
for the fiscal quarter ended December 31, 1995. The purpose of such payment is
to offset that portion of Amtech's consolidated income tax liability resulting
solely from Echelon's operations. Such payment shall be in immediately available
funds and may be paid in four equal installments on January 15, March 15, June
15 and September 15, 1995. The amount of Echelon's taxable income for the
quarter ended December 31, 1995 shall be mutually agreed upon by Hartman and
Amtech. If the parties do not agree on such amount, the determination of Arthur
Andersen as to such amount shall be final.
5.7 Past Tax Liability. If after the Closing Date Echelon is assessed
with additional income tax liability for any time during the period commencing
April 1, 1989 and ending
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September 30, 1995, and Amtech received economic benefit as a result of having
underpaid Echelon's tax liability, Amtech agrees to indemnify Hartman for such
tax liability.
6. CONDITIONS TO THE OBLIGATIONS OF AMTECH
All of the obligations of Amtech under this Agreement, except with
respect to confidentiality, are subject to each of the following conditions:
6.1 Representations are True At Closing. The representations and
warranties of Hartman contained in this Agreement shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
were made on and as of such date, and each and all of the agreements and
conditions to be performed and satisfied hereunder by Hartman at or prior to the
Closing Date shall have been duly performed and satisfied.
6.2 No Litigation. No action or proceeding shall be pending or
threatened at any time prior to the Closing Date before any court or other
governmental body by any person or public authority seeking to restrain or
prohibit, or to obtain damages or other relief in connection with, the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
6.3 Certificates. Hartman shall have delivered to Amtech a certificate,
dated the Closing Date, to the effect that to the best of his knowledge the
representations and warranties of Hartman contained in this Agreement are true
and correct on and as of the Closing Date with the same effect as though made on
the Closing Date and that he has complied with all of the covenants and
satisfied all of the conditions to be performed or satisfied at or prior to the
Closing Date.
6.4 Valuaton Report. Amtech shall have received an opinion from an
independent financial business appraiser that, combined with other information
available to Amtech, satisfies Amtech that this transaction is fair to its
stockholders.
7. CONDITIONS TO THE OBLIGATIONS OF HARTMAN
7.1 Representations of Amtech True. The representations and warranties
of Amtech contained in this Agreement shall be true on and as of the Closing
Date with the same effect as though such representations and warranties were
made on and as of such date, and each of the agreements and conditions to be
performed and satisfied under this Agreement by Amtech on or prior to the
Closing Date shall have been duly performed and satisfied.
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7.2 No Litigation. No action or proceeding shall be pending or
threatened at any time prior to the Closing Date before any court or other
governmental body by any person or public authority seeking to restrain or
prohibit, or to obtain damages or other relief in connection with, the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
7.3 Certificates. The chief executive officer and chief financial
officer of Amtech shall have delivered to Hartman a certificate, dated the
Closing Date, to the effect that to the best of their knowledge the
representations and warranties of Amtech contained in this Agreement are true
and correct on and as of the Closing Date with the same effect as though made on
the Closing Date and Amtech has complied with all of the covenants and satisfied
all of the conditions to be performed or satisfied at or prior to the Closing
Date.
8. GENERAL AND MISCELLANEOUS
8.1 No Broker. Each of the parties represents and warrants to the other
that no person, firm or corporation has acted in the capacity of broker or
finder on his or its behalf to bring about the negotiation of this Agreement or
the Closing of the transactions contemplated hereby, and agrees to indemnify and
hold the other party harmless against any claims or liabilities asserted against
him or it by any person acting or claiming to act as a broker or finder on
behalf of the party against whom indemnity is sought.
8.2 Survival Past Closing. The respective representations and
warranties of the parties herein contained shall survive the Closing and any
investigation by either party.
8.3 Indemnification. Each of the parties agrees to indemnify the other
and hold him or it harmless from any loss, damage or expense (including
attorneys' fees incurred in enforcing a claim for indemnification) which he or
it may incur or suffer by reason of the breach of any of their respective
representations, warranties or agreements herein contained; provided that no
claim shall be made pursuant to this paragraph 8.3 unless the claimant has
suffered such loss, damage or expense in a cumulative minimum of $5,000. As to
claims made by third parties which might be the subject of indemnification
hereunder and as a condition precedent to indemnification, the party against
whom the claim is made shall promptly notify the indemnifying party of any such
claim arising prior to the date of transfer hereunder and the indemnifying party
shall render reasonable assistance to the party against whom the claim is made
in evaluating the validity of any such claim, debt or liability.
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Further, a party seeking indemnification shall promptly upon discovery
notify the other party of any claim by him or it for misrepresentation, breach
of warranty, breach of covenant or right of indemnification under this
Agreement.
8.4 Termination. In the event that the Closing hereunder does not take
place by January 31, 1996 because a condition specified in Article 6 or Article
7 hereof is not satisfied, or because a party hereto is not able to perform its
obligations or deliver its consideration prior to that time, then (unless
extended by mutual written agreement) this Agreement shall thereupon terminate,
and unless the foregoing is caused by the willful failure of Amtech or Hartman
to perform or satisfy an agreement or condition to be performed or satisfied by
it hereunder, Amtech shall have no further obligation or liability to Hartman
and Hartman shall have no further obligation or liability to Amtech, under this
Agreement.
8.5 Notices. All notices requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the date of mailing if mailed to the party to whom notice is
to be given, by first class mail, registered or certified, postage prepaid, to
either party at the address shown above for each. Any party may change its
address for purposes of this paragraph by giving the other party written notice
of the new address in the manner set forth above.
8.6 Transaction Expenses. Amtech and Hartman will bear their respective
expenses in connection with this transaction and if the Closing takes place,
Echelon will not be charged with any thereof.
8.7 Successors. This Agreement may not be assigned by any party, but
shall be binding upon and shall inure to the benefit of any successor of Amtech.
8.8 Entire Agreement. This Agreement represents the entire
understanding between the parties as to the subject matter hereof and may not be
modified or altered except by an instrument signed by duly authorized
representatives of each party.
8.9 Governing Law. This Agreement shall be deemed to be made under, and
shall be governed by and construed in accordance with, the laws of the State of
Arizona without reference to conflict of laws principles. Suit to enforce any
provision of this Agreement shall be brought in the Superior Court of Maricopa
County, Arizona, and each party hereto irrevocably consents to the jurisdiction
of such Court.
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8.10 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect, in any way, the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on and as of
December 29, 1995.
AMTECH SYSTEMS, INC.
By /s/ J.S. Whang
- ---------------------------
J. S. WHANG, PRESIDENT
"AMTECH"
/s/ Eugene R. Hartman
- ---------------------------
EUGENE R. HARTMAN
"HARTMAN"
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Schedule 3.6(a)
ECHELON SERVICE CO.
BALANCE SHEET
As of September 30, 1995
CURRENT YEAR PRIOR YEAR VARIANCE
------------ ---------- --------
ASSETS
CURRENT ASSETS:
Cash & Cash Equivalents $ 428,406.58 $ 497,911.96 $ (69,505.38)
Accounts Receivable 393,928.25 483,650.27 (89,722.02)
Accounts Receivable 500.00 500.00 0.00
Intercompany Transactions 516,929.50 248,763.27 268,166.23
Prepaid Expenses 6,039.77 4,997.67 1,042.10
---------------- --------------- --------------
TOTAL CURRENT ASSETS 1,345,804.10 1,235,823.17 109,980.93
---------------- --------------- --------------
PROPERTY, PLANT & EQUIPMENT:
Leasehold Improvements 1,390.50 1,390.50 0.00
Furniture & Fixtures 54,237.73 154,220.72 (99,982.99)
-------------- ---------------- -------------
55,628.23 155,611.22 (99,982.99)
Accum. Depreciation/Amortization 38,381.09 123,265.38 (84,884.29)
-------------- ---------------- -------------
NET PROPERTY, PLANT & EQUIPMENT 17,247.14 32,345.84 (15,098.70)
-------------- ---------------- -------------
PURCHASE PRICE IN EXCESS OF NET 85,315.00 91,303.00 (5,988.00)
Assets Acquired -------------- ---------------- -------------
INTANGIBLE ASSETS 17,253.86 17,253.86 0.00
------------- ------------- ---------------
TOTAL ASSETS $ 1,465,620.10 $ 1,376,725.87 $ 88,894.23
============== ============== ===============
Schedule 3.6(a)
ECHELON SERVICE CO.
BALANCE SHEET
As of September 30, 1995
CURRENT YEAR PRIOR YEAR VARIANCE
------------ ---------- --------
LIABILITIES &
STOCKHOLDERS INVESTMENT
CURRENT LIABILITIES:
Accounts Payable $ 1,406.11 $ 1,151.13 $ 254.98
Accrued Liabilities 87,023.81 97,617.32 (10,593.51)
-------------- -------------- --------------
TOTAL CURRENT LIABILITIES 88,429.92 98,768.45 (10,338.53)
DEFERRED LIABILITIES -------------- -------------- --------------
TOTAL DEFERRED LIABILTIES 0.00 0.00
-------------- -------------- --------------
STOCKHOLDERS INVESTMENT:
Common Stock 3,315.41 3,315.41 0.00
Retained Earnings 1,270,775.01 1,044,874.48 225,900.53
Net Profit / (Loss) 103,099.76 229,767.53 (126,667.77)
-------------- -------------- --------------
TOTAL STOCKHOLDERS INVESMENT 1,377,190.18 1,277,957.42 99,232.76
-------------- -------------- --------------
TOTAL LIABILITIES &
STOCKHOLDERS INVESTMENT $ 1,465,620.10 $ 1,376,725.87 $ 88,894.23
============== =============== ===============
Schedule 3.6(b)
ECHELON SERVICE CO.
INCOME STATEMENT
For the period October 1, 1994 to September 30, 1995
YEAR TO DATE PRIOR YEAR TO DATE
------------ ------------------
REVENUES $4,547,859.68 $6,128,617.68
COST OF SALES 4,005,154.21 5,514,049.84
------------- -------------
GROSS MARGIN 542,705.47 614,567.84
------------- -------------
EXPENSES
Selling, General & Admin. Expenses 452,689.76 389,676.79
------------- -------------
TOTAL EXPENSES 452,689.76 389,676.79
------------- -------------
INCOME FROM OPERATIONS 90,015.71 224,891.05
------------- -------------
OTHER INCOME & EXPENSES
Echelon - Interest Income 13,084.05 4,876.48
------------- -------------
TOTAL OTHER INCOME & EXPENSES 13,084.05 4,876.48
------------- -------------
INCOME BEFORE INCOME TAXES $ 103,099.76 $ 229,767.53
============ ============