Wise Investments

[Linchuck]

Scrooge. Here are some paragraphs from the filing that will explain the administative expenses. It looks to me like that isn't the problem. From what I can see, they make alot more money on their medical sales than on their dental sales because they can get the medical supplies at cheaper prices which means larger profits. This Quarter their dental supplies sales was much greater than their medical supply sales so that means they had to pay higher prices to the suppliers. Last Quarter the medical supply sales were greater which meant less expenses.

Here is parts of the filing.


General and administrative expenses for the nine months ended June 30, 2003 increased by $173,328 or 14.7% over the nine months ended June 30, 2002. Total compensation including payroll taxes increased by approximately, $123,700 which included a bonus of $268,000 for one of the officers for attaining sales levels included in his employment agreement. Without this bonus, employment expenses would have decreased by approximately $144,200 which includes the reduction of two employees and voluntary salary reductions by the three officers of the Company. Other increases included consulting fees which increased by $77,582, as the Company was exploring the possibilities of an acquisition or merger. The consulting agreements have been cancelled and this nonrecurring item will be eliminated in the future. Professional and financing expenses decreased by approximately $21,900 as legal expenses in defending the litigation decreased by approximately $40,000 while the cost of the new financing agreement increased financing costs by approximately $20,000. All other general and administrative expenses decreased by approximately $6,000.



For fiscal 2003, the Company has reduced its budget for both selling and general and administrative expenses by approximately $255,000 eliminating unnecessary expenses and revising some of the operations. In addition the Company expects that consulting and other professional fees will be reduced by approximately $150,000 which it estimated were non-recurring items. The above reductions would provide the Company with income from operations based on the current sales volume.



Effective October 1, 2001, the Company has entered into a three-year employment agreement with its chief executive officer that provides for a minimum annual salary of $250,000 with incentives based on the Company's attainment of specified levels of sales and earnings as defined in the agreement. The employment agreement expires September 30, 2004 and shall be automatically renewed for successive periods of one year unless either party gives written notice to terminate the agreement



The gross margin for the three months ended June 30, 2003 was $735,402 or 4.23% compared to $549,177 or 6.53% for the three months ended June 30, 2002. The decrease in the gross profit margins are a result of increased revenue from wholesale products which have significantly lower profit margins than retail sales and the decrease in revenue from retail dental sales. Medical supply sales which have a higher gross profit margin than the wholesale products have increased but have not yet made up for the decrease in the dental sales. The Company expects that the increases in sales of medical supplies will make up for the loss in dental sales and increase the Company's overall gross profit margin.