Michigan Heritage Bancorp (MHBC) 10QSB 2003 Q1 Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

x Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the period ended

MARCH 31, 2003

or

o Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from           to           

Commission file number: 333-17317

MICHIGAN HERITAGE BANCORP, INC.
(Exact name of small business issuer as specified in its charter)

Michigan	38-3318018
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

28300 Orchard Lake Road, Suite 200, Farmington Hills, MI 48334
(Address of principal executive offices)

248-538-2525
(Issuer’s telephone number, including area code)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes:x No:o

At May 13th there were 1,488,764 shares of Common Stock of the issuer issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes:o No:x

TABLE OF CONTENTS

906 Certification of Chief Financial Officer

906 Certification of Chief Executive Officer

PART I—FINANCIAL INFORMATION

Michigan Heritage Bancorp, Inc.
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
(Unaudited)

				(000s omitted for dollars)
				March 31, 2003			December 31, 2002
ASSETS
Cash and due from banks, noninterest bearing				$	1,477		$	1,031
Interest bearing deposits with banks					3,150			58
Federal funds sold					4,633			9,897
	Cash and cash equivalents				9,260			10,986
Securities available for sale					18,655			17,913
Federal Reserve Bank stock and other stock					1,137			1,137
	Total investments				19,792			19,050
Gross Loans and Leases					110,584			118,531
	Less: Net deferred fees				68			87
	Allowance for credit losses				2,006			2,013
		Net loans and leases			108,510			116,431
Loans held for sale					4,612			3,136
	Total earning assets				140,697			148,572
Leasehold improvements, net					198			208
Furniture & equipment, net					373			380
	Total fixed assets				571			588
Interest receivable					718			713
Other real-estate and assets owned					474			400
Other assets					1,023			1,024
	Total other assets				2,215			2,137
			Total assets	$	144,960		$	152,328
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total deposits				$	122,192		$	120,242
Other borrowed funds					6,700			16,700
Other liabilities					1,669			1,329
	Total liabilities				130,561			138,271
Stockholders’ Equity
	Preferred stock—no par value; 500,000 shares authorized, none issued and outstanding				—			—
	Common stock—no par value; 4,500,000 shares authorized, issued and outstanding— 1,488,764 shares in 2002 and 2001				13,730			13,730
	Accumulated earnings (deficit)				249			(109	)
	Accumulated other comprehensive income				420			436
		Total stockholders’ equity			14,399			14,057
			Total liabilities and stockholders’ equity	$	144,960		$	152,328
Total loan loss reserve ratio					1.81	%		1.70	%
Total loan to asset ratio					76	%		78	%

Michigan Heritage Bancorp, Inc.
Consolidated Statement of Earnings
Three Month Periods Ended
March 31, 2003 and March 31, 2002
(Unaudited)

				(000s omitted
				except per share data)
				Three Months Ended March 31,
				2003		2002
OPERATING INCOME:
Interest income				$	2,668	$	2,802
Interest expense					1,062		1,307
	Net interest income before provision for credit losses				1,606		1,495
Less: provision for credit losses					18		75
	Net interest income after provision for credit losses				1,588		1,420
Gain on sale of securities held available for sale					20		—
Gain on sale of loans and other assets					334		79
Other income					31		26
	Total other operating income				385		105
		Total operating income			1,973		1,525
OTHER OPERATING EXPENSES:
Salaries and employee benefits					790		630
Occupancy expense					123		107
Equipment expense					60		59
Data processing expense					35		33
Insurance expense					18		14
Advertising/promotion expense					52		40
Office supplies and printing expense					12		10
Professional fees					148		131
FDIC assessment					5		5
Lien, recording, and other loan fees, net					103		35
Michigan single business tax					15		45
Other expense					84		87
	Total other operating expense				1,445		1,196
		Net operating income			528		329
Provision for federal income taxes					169		104
			Net income	$	359	$	225
Per Common Share Data
Basic earnings per share				$	0.24	$	0.15
Diluted earnings per share				$	0.24	$	0.15

Michigan Heritage Bancorp, Inc.
Consolidated Statement of Cash Flow
Three Month Periods Ended
March 31, 2003 and March 31, 2002
(Unaudited)

		(000s omitted)
		Three Months Ended March 31,
		2003			2002
Operating activities:
	Net income	$	359		$	225
	Adjustments to reconcile net income to net cash provided in operating activities		(968	)		1,388
	Net cash provided by (used in) operating activities		(609	)		1,613
Investing activities:
	Purchase of U.S. Treasury and agency securities		(1,000	)		(3,750	)
	Proceeds from sale, maturity or called U.S. Treasury and agency securities		500			1,000
	Purchase of other securities		(1,000	)		(500	)
	Proceeds from sale, maturity or called other securities		520			20
	Purchase of leasehold improvements, furniture and equipment		(34	)		(20	)
	Net change in gross loans		7,947			2,013
	Net cash provided by (used in) operating activities		6,933			(1,237	)
Financing activities:
	Increase in deposits		1,950			(1,797	)
	Payments of federal funds purchased		(4,000	)		(5,000	)
	Proceeds from federal funds purchased		—			1,040
	Payments of Federal Home Loan Bank advances		(7,000	)		(2,000	)
	Proceeds from Federal Home Loan Bank advances		1,000			2,000
	Net cash used in financing activities		(8,050	)		(5,757	)
Net decrease in cash and cash equivalents			(1,726	)		(5,381	)
Cash and cash equivalents at beginning of year			10,986			6,732
Cash and cash equivalents at end of period		$	9,260		$	1,351

Allowance for Credit Losses — Summary

The following table summarizes changes in the allowance for credit losses arising from additions to the allowance which have been charged to expense, selected ratios, and the allocation of the allowance for credit losses.

	($ in 000s)
	Amount as of March 31,
	2003			2002
Average loans and leases outstanding		114,464			117,203
Total loans and leases at period end		110,584			117,253
Allowance for credit losses at beginning of period		2,013			1,802
Provision charged to expense		18			75
Loan and lease charge-offs during the period		(40	)		(110	)
Loan and lease recoveries during the period		15			6
Allowance for credit losses at end of year		2,006			1,773
Ratio of net charge-offs during the period to average loans and leases outstanding		0.02	%		0.09	%
Allowance for credit losses as a percentage of loans and leases at period end		1.81	%		1.51	%
Specific allowance for impaired loans and leases		293			186
Unallocated allowance		1,713			1,587
Total allowance for credit losses		2,006			1,773

Nonaccrual, Past Due and Restricted Loans and Leases

The following table summarizes the Banks non-performing loans and leases for the respective period ended March 31.

		($ in 000s)
		Amount as of March 31,
		2003		2002
Nonaccrual, Past Due and Restricted Loans and Leases
	Loans accounted for on a nonaccrual basis	$	2,016	$	684
	Accruing loans that are contractually past due 90 days or more to interest or principle payments		1,210		557
Total		$	3,226	$	1,241

Allowance for Credit Losses — Detail

The following table summarized the allowance for credit losses in the Bank’s portfolio for the respective period ended March 31.

		($ in 000s)
		Amount as of March 31,
		2003			2002
Total loans and leases at year end		$	110,584		$	117,253
Allowance for credit losses at beginning of period			2,013			1,802
Loan and lease charge-offs during the period
	Commercial & Financial		40			76
	Real Estate — Mortgages		—			34
	Installment Loans to Individuals		—			—
Total charge-offs			40			110
Loan and lease recoveries during the period
	Commercial & Financial		14			5
	Real Estate — Mortgages		1			1
	Installment Loans to Individuals		—			—
Total recoveries			15			6
Net charge-offs			25			104
Provision charged to expense			18			75
Allowance for credit losses at end of period		$	2,006		$	1,773
Ratio of net charge-offs during the period to loans and leases outstanding at year end			0.02	%		0.09	%

Item 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:

Michigan Heritage Bancorp, Inc. (the “Company”) was incorporated in the State of Michigan on September 22, 1989. The Company was inactive from that time until its Articles of Incorporation were amended on November 6, 1996 into its current form. The Company is a bank holding company whose primary purpose is to own and operate Michigan Heritage Bank (the “Bank”) as the Bank’s sole stockholder. Organizational and other start-up costs were funded with loans from organizers. Proceeds from the Company’s initial public offering were primarily used to capitalize the Bank which is currently headquartered in Farmington Hills, Michigan. The Company completed an initial public offering of common stock during the first quarter of 1997, realizing a total of $10.9 million (after payment of underwriters’ commissions and offering expenses). During the fourth quarter of 1999, the Company completed a rights offering to existing shareholders raising $1.3 million in additional capital after payment of offering expenses. The consolidated financial statements of the Company include its only subsidiary, the Bank. All adjustments, which in the opinion of management are necessary in order to ensure that the interim financial statements are not misleading, have been included.

The Bank provides a focused core of banking services primarily for small-to-medium-size businesses, as well as to individuals. The Bank’s lending services include commercial loans, commercial real estate, equipment leasing, and residential mortgages. The mortgage division offers a wide range of products including variable and fixed rate mortgage loans, home equity lines of credit and other forms of consumer lending. The Bank’s wholly-owned leasing subsidiary, MHB Leasing, Inc., has expanded the Bank’s capabilities in equipment leasing by providing tax-oriented true leases and other structured lease products.

For commercial customers who seek additional deposit services, the Bank offers the convenience of a “Rapid Courier Service.” This service offers prearranged pick-up times for all business banking transactions. The Bank’s commercial checking accounts also offer “Sweep” capabilities with low or no fees.

Michigan Heritage Bank’s primary goal is to provide personal service with an experienced staff using state-of-the-art technology. The Bank offers convenient account access through a telephone banking service and plans to offer internet banking in the future.

Michigan Heritage Bank is a state chartered, full-service, commercial bank, a member of both the Federal Reserve System and the Federal Home Loan Bank and its deposits are FDIC insured.

Basis of Presentation:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates and assumptions.

Critical Accounting Policy:

The accounting and reporting policies of the Corporation and its subsidiaries are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. The Company’s significant accounting policies are described in the notes to the consolidated financial statements within the annual report. Certain accounting policies require management to make significant estimates and assumptions, which have a material impact on the carrying value of certain assets and liabilities, and the Corporation considers these to be critical accounting policies. The estimates and assumptions we use are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and results of operations for the reporting periods.

The Corporation believes that the evaluation of the allowance for credit losses is a critical accounting policy that requires significant estimates and assumptions that are particularly susceptible to a significant change in the preparation of the Corporation’s financial statements. The allowance for credit losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans and leases in light of historical

experience, the nature and volume of the portfolio, underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available.

Stock Compensation Plans:

The Company has chosen to measure compensation cost for employee stock compensation plans using the intrinsic value method of accounting, whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. Stock options issued under the Company’s stock option plan have no intrinsic value at the grant date, and no compensation cost is recognized for them. The fair value-based method of accounting for employee stock compensation plans measures compensation cost at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company has provided pro forma disclosures of net income and earnings per share and other disclosures, as if the fair value-based method of accounting has been applied. The Company applies APB Opinion 25 and related Interpretations in accounting for the stock options plan. Accordingly, no compensation cost has been recognized. The Company has not elected to voluntarily expense options under SFAS 148. Had compensation cost for the Company’s stock option plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method prescribed by FAS Statement No. 123, the Company’s net income and earnings per share would have been adjusted to the pro forma amounts indicated below:

			Quarter Ended March 31
			2003			2002
Net income		As reported		$	359	$	225
		Pro forma		$	359	$	225
Earnings per share		As reported		$	0.24	$	0.15
		Pro forma		$	0.24	$	0.15
Earnings per share -		As reported		$	0.24	$	0.15
	assuming dilution	Pro forma		$	0.24	$	0.15

Recent Accounting Pronouncements:

Statement of Financial Accounting Standards No. 148, Accounting for Stock Based Compensation — Transition and Disclosure (SFAS 148), effective for fiscal years ending December 31, 2002, amends FASB Statement No. 123, Accounting for Stock-Based Compensation. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation and also requires more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The adoption of SFAS 148 will not have an impact on the Company’s financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRELIMINARY NOTE: The Company wishes to caution readers not to place undue reliance on any “forward-looking statements” contained in the following discussion and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from those anticipated or projected. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

Comparative Results for the Three Months Ended March 31, 2003 and March 31, 2002

The Company had net income of $359,000 for the quarter ending March 31, 2003 compared to $225,000 for the same quarter last year, an increase of $134,000 or 60%. Net interest income before provisions for credit losses increased by $111,000 or 7% to $1,606,000 primarily due to a reduction in interest expense of $245,000 or 19% and an increase of 20 BPS in net interest margin to 4.71% for the first quarter 2003 compared to 4.51% for the first quarter 2002. Provision for credit losses decreased by $57,000 to $18,000 and as a result, net interest income after provision for credit losses increased $168,000 or 12% to $1,588,000.

Other operating income increased by $280,000 to $385,000 due primarily to increased gains on sales of loans, leases and securities during the first quarter of 2003 compared to the same time frame in 2002.

Other operating expenses increased $249,000 to $1,445,000. Salaries and employee benefits increased by $160,000 to $790,000 due primarily to an increase in commissions on the sale of residential mortgages and the addition of 2 seasoned commercial loan officers. Occupancy expense increased $16,000 from the same quarter last year due to the renewal of the lease for the Novi, Michigan branch at a slightly higher cost and contractual adjustments in the lease for the corporate office and Farmington Hills, Michigan branch location.

Advertising expense increased by $12,000 due to ongoing efforts to increase core deposits. Professional fees were also up by $17,000 reflecting additional costs for outsourced services such as Asset Liability management, shareholder relations and legal. All other remaining expenses increased by $44,000 due mostly to increase in data processing, equipment, insurance, office supplies, and other real estate expense. The Bank experienced an increase of $68,000 in lien, recording, and other loan fees due to the increased mortgage refinance business of the Bank’s Mortgage Department.

The resulting net operating income before federal income tax was $528,000 for the first quarter 2003 compared to $329,000 for the same quarter last year. Federal income tax was $169,000 compared to a $104,000 for the same time period last year.

Basic earnings per share were $0.24 for the quarter ended March 31, 2003 compared to $0.15 per share for the same quarter last year.

Balance Sheet Change — March 31, 2003 from December 31, 2002

Total assets declined from a December balance of $152,328,000 to $144,960,000 at March 31, 2003, a reduction of $7,368,000. Gross loans and leases declined for the three month period by $7,947,000 to $110,584,000, due to a large commercial loan prematurely paying off, coupled with a decrease in new commercial loan production. Cash and cash equivalents also declined $1,726,000. Borrowed funds decreased $10,000,000 to $6,500,000 due to the Bank paying-off the Federal Home Loan Bank’s short-term variable rate advances of $6,000,000 and federal funds purchased $4,000,000. This was accomplished in early January by replacing these funds with long term fixed rate certificates of deposit at lower rates.

Loans and Leases and Allowances for Credit Losses

The categories of loans outstanding at March 31, 2003 in dollars and as a percentage of gross loans and leases are as follows:

		(000s omitted for dollars)
				Pct of total
Loan & Leases Category		Amount		Loans & Leases
Commercial and financial		$	71,907		65.0	%
Real estate-construction			10,380		9.4	%
Real estate-mortgage			13,380		12.1	%
Installment loans to individuals			237		0.2	%
Lease financing			14,680		13.3	%
	Total loans	$	110,584		100.0	%

Management believes that the $18,000 credit loss provision expensed during the first quarter of this year brought the total allowance for credit losses to an adequate level relative to the current overall quality of the loan and lease portfolio. In addition, the level of credit risk in the loan and lease portfolio has not changed proportionately with the change in mix and size of the loan and lease portfolio for the first three months of 2003.

As of March 31, 2003 there were $2,016,000 in non-accruing loans. There were 4 loans totaling $35,000 charged off against reserves during the first three months of 2003. There were $2,157,000 in accruing loans past due 30 days or more: $863,000 past due 30 to 59 days, $84,000 past due 60 to 89 days and $1,210,000 past due 90 days or more. Management fully expects that diligent management of these loans will minimize delinquencies.

Total credit loss reserves of $2,006,000 at March 31, 2003 were 1.81% of total loans and leases, which included $735,000 in specific allowances. The following highlights the allocations of allowances for loan losses as of March 31, 2003.

		(000s omitted for dollars)
			Credit loss		Loan & Lease		Percent of credit
			allowance		amounts		loss allowance
			amount		outstanding		to loan & lease amounts
Domestic:
	Commercial and financial		$	1,325	$	71,907		1.84	%
	Real estate-construction			135		10,380		1.30	%
	Real estate-mortgage			115		13,380		0.86	%
	Installment loans to individuals			3		237		1.27	%
	Lease financing			106		14,680		0.72	%
Foreign				—		—		—
Off-balance sheet items and unallocated				322		—		n/a
Total			$	2,006	$	110,584		1.81	%

Liquidity and Capital Resources

Michigan Heritage Bank’s current cash projections as of March 31, 2003 indicate adequate cash balances. The Bank has additional line of credit facilities with national lending institutions to add funding capacity. Bank management has also established a network of banks that can be used to sell or participate in a portion of the Bank’s loan portfolio. These techniques allow the Bank to service its business relationships and generate fee and servicing revenue.

The Company’s liquidity remained adequate during the three-month period ended March 31, 2003. Michigan Heritage Bancorp had $9,260,000 in cash and cash equivalents as of March 31, 2003. The Bank has proven its ability to attract deposits and build a stable deposit base from which to fund loans. In addition, as of March 31, 2003, the Bank had $6,500,000 in notes payable to the Federal Home Loan Bank at a weighted average rate of 4.21%.

During the first quarter of 2002 Michigan Heritage Bancorp obtained a $3,000,000 Capital Note loan from a large Midwestern financial institution. This facility provides additional financing that can be down streamed to the Bank as capital. This capital will allow the Bank to continue its growth while not diluting existing shareholders value. As of March 31, 2003 Michigan Heritage Bancorp has borrowed a total of $200,000 leaving $2,800,000 available for future use.

Michigan Heritage Bank is subject to various regulatory capital requirements. To be considered adequately-capitalized or well-capitalized, Michigan Heritage Bank must maintain a Tier 1 leverage capital ratio of 4.0% and 5.0%, respectively. The Bank’s Tier 1 leverage capital ratios were 9.90% and 9.51% at March 31, 2003 and December 31, 2002, respectively. Michigan Heritage Bank plans to remain well-capitalized on an ongoing basis.

Item 3. Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be disclosed in the Company’s periodic SEC reports. There have been no significant changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

PART II—OTHER INFORMATION

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Certification from CEO and acting CFO required by Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 99.1
Exhibit 99.2

(b)  Reports on Form 8-K

No reports on Form 8-K have been filed during the quarter for which this report is filed.

[Signatures on next page]

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MICHIGAN HERITAGE BANCORP, INC.
By:	/s/ Anthony S. Albanese Anthony S. Albanese President, Chief Operating Officer, and Acting Chief Financial Officer

	And:	/s/ Richard Zamojski Richard Zamojski Chairman and Chief Executive Officer
DATED: May 13, 2003

CERTIFICATIONS

     I, Anthony S. Albanese, certify that:

     1. I have reviewed this quarterly report on Form 10-QSB of Michigan Heritage Bancorp, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

     (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

     (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 13th, 2003 /s/ Anthony S. Albanese
Anthony S. Albanese
President, Chief Operating Officer, and
Acting Chief Financial Officer

CERTIFICATIONS

     I, Richard Zamojski, certify that:

     1. I have reviewed this quarterly report on Form 10-QSB of Michigan Heritage Bancorp, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

     (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

     (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 13th, 2003 /s/ Richard Zamojski
Richard Zamojski
Chairman and Chief Executive Officer

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
99.1	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
99.2	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002