According  to  preliminary  data,  the 1997 non-audited profit of Gutta

head  company  in Latvia was about 2.9 million LVL. After consolidation

of  the  1997  figures for the entire Gutta group, the consolidated net

profit  is  expected  to reduce. The adjustments are caused by the high

foundation costs of new companies and by mastering new markets, as well

as  by  extra  expenditures  related  to  launching  of  new production

enterprises in Moscow and in Kijev.

To  ensure  a more advanced and direct management to the Gutta daughter

company  in  Moscow, where the opening of the new production enterprise

is  scheduled  for  August-September  1998,  Mr. Nikolay Lovtsov, Gutta

President,  has  personally  undertaken  the  responsibilities  of  the

general manager of Gutta daughter company in Moscow.

Gutta  has  signed  material  agreements regarding acquisition of large

production  units  in  Russia and in the Ukraine. In Moscow, apart from

the  production  building  purchased in 1997, Gutta has also acquired a

significant  production  unit, conveniently located both for production

and  service purposes, close to highway and railroad, and equipped with

all  the  public utilities (gas, water, electricity, heating etc.). The

total production floor space is 10,000 sq. m.

The  production  unit purchased by Gutta in the Ukraine is within 30 km

distance  from  Kiev,  in  a  very  close  vicinity of the Kijev-Odessa

highway.  It  is  also  equipped  with  public  utilities  required for

production.  The  total production floor space is 6,760 sq., warehouses

and other supplementary buildings not included. The total value of both

acquisitions is about 2.5 million USD.

Consequently,  Gutta  has at its disposal production space to carry out

the 1998

projects and the prospective projects in future.

A full report is available from

<a href='http://www.rfb.lv/other/listing/reports/gtta.xls' target='_blank'>http://www.rfb.lv/other/listing/reports/gtta.xls</a>