PriceWaterhouseCoopers  has  performed  the audit of JSC "Gutta" annual

report for

1997.  The auditing was done according to the international accountancy

norms.

Since  in 1996 PriceWaterhouseCoopers was not the auditor of Gutta, the

auditing  company was not able to evaluate the profit and loss and cash

flow statements for 1997.

The Auditor has paid attention to following issues:

The LVL 450 000 large reserve for the deferred tax was not established;

The  value of investments and loans to the foreign subsidiaries was not

corrected  according to the law of the Republic of Latvia "About annual

reports",   which   stipulates   the   evaluation   of  investments  in

subsidiaries;

The  Auditor  had  no possibility to become acquainted with the audited

annual reports of the subsidiaries of Gutta;

Gutta  has  started legal proceedings against the debtor and intends to

regain  the  debt of 2.6 milj USD. 2.5 milj USD (1.48 milj LVL) of this

sum are included as trade debtors in the balance sheet of 1997.