GARY S. SAUNDERS
CHAIRMAN & CEO
EKNOWLEDGE GROUP, INC. & SUBSIDIARY
1520 WEST 6TH STREET, SUITE 101
CORONA, CALIFORNIA 92882
(NAME AND ADDRESS OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER: 000-28881
EKNOWLEDGE GROUP, INC. & SUBSIDIARY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
| NEVADA | 76-0430898 |
|
| (JURISDICTION OF INCORPORATION) | (I.R.S. EMPLOYER IDENTIFICATION NO.) |
| |
| 400 Ramona Street, SUITE 203, CORONA, CALIFORNIA | 92882 |
|
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) |
(909) 372-2800 |
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE |
AS OF MARCH 31, 2003, THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK WAS 2,063,860. AN ADDITIONAL 759,047 SHARES ARE COMMMITTED TO BE ISSUED FOR PAYMENTS RECEIVED RELATED TO FINANCING EQUITY PLACEMENTS. UPON ISSUANCE OF THOSE SHARES THE NUMBER OF SHARES OUTSTANDING AND COMMITED OF THE REGISTRANT’S COMMON STOCK AS OF JUNE 16, 2003 WOULD BE 2,822,907.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES [ ] NO [X]
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements, for the three months ended March 31, 2003 and 2002,included herein have been prepared by the Company, without audit pursuant to therules and regulations of the Securities and Exchange Commission. Certain
information and footnotes disclosure normally included in financial statementsprepared in accordance with generally accepted accounting principles have beencondensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information notmisleading.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| | | | (unaudited) | | | (audited) | |
| | | | March 31, 2003 | | | December 31, 2002 | |
| | | |
|
ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 33,231 | | $ | 12,759 | |
| | | | | | | | |
| Accounts receivable | | | - | | | 1,513 | |
| Supplies inventory | | | - | | | 3,882 | |
| | |
| |
| |
| Total current assets | | | 33,231 | | | 18,154 | |
| | | | | | | | |
| Property and equipment, less accumulated | | | | | | | |
| depreciation of $41,387 and $37,227 | | | 42,059 | | | 45,577 | |
| Intangible Assets, less accumulated | | | | | | | |
| amortization of $97,137 and $88,262 | | | 9,368 | | | 18,243 | |
| | |
| |
| |
| Total assets | | $ | 84,658 | | $ | 81,974 | |
| | |
| |
| |
| | | | | | | | �� |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | |
| | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable and accrued expenses | | $ | 244,728 | | $ | 216,781 | |
| Accrued compensation | | | 665,488 | | | 680,852 | |
| Accrued payroll taxes, penalties and interest | | | 220,335 | | | 220,335 | |
| Accrued interest | | | 36,655 | | | 29,140 | |
| Notes payable | | | 457,403 | | | 457,403 | |
| Advances from shareholders | | | 517,162 | | | 517,162 | |
| Deposits payable | | | 1,200 | | | 1,200 | |
| | |
| |
| |
| | | | | | | | |
| Total current liabilities | | | 2,142,971 | | | 2,122,873 | |
| Other liabilities | | | 2,701 | | | 2,701 | |
| | |
| |
| |
| Total liabilities | | | 2,145,672 | | | 2,125,574 | |
| | |
| |
| |
| | | | | | | | |
| Stockholders’ deficit: | | | | | | | |
| | | | | | | | |
| Preferred stock | | | - | | | - | |
| | | | | | | | |
| Common stock | | | 2,064 | | | 647 | |
| Additional paid-in capital | | | 3,505,492 | | | 3,297,504 | |
| | | | | | | | |
| Common stock subscribed, 513,047 shares | | | 23,109 | | | - | |
| Accumulated deficit | | | (5,591,679 | ) | | (5,341,751 | ) |
| | |
| |
| |
| Total stockholders’ deficit | | | (2,061,014 | ) | | (2,043,600 | ) |
| | |
| |
| |
| Total liabilities and stockholders’ deficit | | $ | 84,658 | | $ | 81,974 | |
| | |
| |
| |
The accompanying notes are an integral part of these financial statements.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31, 2003 AND 2002
| | | (Unaudited) | | | (Unaudited) | |
| | | | March 31, 2003 | | | March 31, 2002 | |
| | | |
| |
| Revenue | | $ | 79,377 | | $ | 119,331 | |
| | | | | | | | |
| Operating expenses | | | 301,790 | | | 244,449 | |
| | |
| |
| |
| | | | | | | | |
| Loss before other income and provision | | | | | | | |
| for income taxes | | | (222,413 | ) | | (125,118 | ) |
| Interest expense and penalty | | | ( 27,515 | ) | | - | |
| Interest income | | | - | | | 45 | |
| Other income | | | - | | | 8 | |
| | |
| |
| |
| Loss before provision for income taxes | | | (249,928 | ) | | (125,065 | ) |
| Provision for income taxes | | | - | | | - | |
| | |
| |
| |
| Net loss | | $ | $ (249,928 | ) | $ | (125,065 | ) |
| | |
| |
| |
| Weighted average shares outstanding | | | 1,330,761 | | | 317,777 | |
| | | | | | | | |
| Loss per share, basic & diluted | | $ | (0.19 | ) | $ | (0.39 | ) |
| | | | | | | | |
| | | | | | | | |
The accompanying notes are an integral part of these financial statements.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31, 2003 AND 2002
| | | (Unaudited) | | | (Unaudited ) | |
| | | | March 31, 2003 | | | March 31, 2002 | |
| | | |
| |
| Cash flows from operating activities: | | | | | | | |
| Net loss | | $ | (249,928 | ) | $ | (125,065 | ) |
| Adjustments to reconcile net loss to | | | | | | | |
| Net cash used in operating activities: | | | | | | | |
| Depreciation and amortization | | | 13,035 | | | 12,918 | |
| Shares issued for services | | | 101,242 | | | - | |
| Stock based compensation | | | - | | | 59,174 | |
| Finance costs | | | - | | | 35,217 | |
| Accounts receivable | | | 1,513 | | | - | |
| Supplies inventory | | | 3,882 | | | - | |
| Accounts payable and accrued expenses | | | 27,947 | | | (56,348 | ) |
| Accrued compensation | | | 92,800 | | | - | |
| Accrued interest | | | 7,515 | | | - | |
| | |
| |
| |
| Net cash used in operating activities | | | ( 1,994 | ) | | ( 74,104 | ) |
| | |
| |
| |
| Cash flows from investing activities: | | | | | | | |
| Property and equipment | | | (643 | ) | | - | |
| | |
| |
| |
| Net cash used by investing activities | | | (643 | ) | | - | |
| | |
| |
| |
| Cash flows from financing activities: | | | | | | | |
| Net proceeds from common stock subscribed | | | 23,109 | | | 114,098 | |
| | |
| |
| |
| Net cash provided by financing activities | | | 23,109 | | | 114,098 | |
| | |
| |
| |
| Net increase in cash | | | 20,472 | | | 39,994 | |
| | | | | | | | |
| Cash, beginning of period | | | 12,759 | | | 22,744 | |
| | |
| |
| |
| Cash, end of period | | $ | 33,231 | | $ | 62,738 | |
| | |
| |
| |
| Cash paid for interest | | $ | - | | $ | - | |
| | | |
| | |
| |
| Cash paid for income taxes | | $ | - | | $ | - | |
| | | |
| | |
| |
The accompanying notes are an integral part of these financial statements.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED STATEMENTS
MARCH 31, 2003 AND 2002
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
eKnowledge Group, Inc. (the "Company") provides educational training courses over the internet and through other media sources. The Company was incorporated in the State of Nevada on June 1, 1999 and conducts its operations from facilities located in Corona, California.
INTERIM FINANCIAL INFORMATION
The accompanying unaudited interim financial statements have been prepared by the Company in accordance with generally accepted accounting principles pursuant to Regulation S-B of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these interim financial statements should be read in conjunction with the Company's financial statements and related notes as contained in Form 10-KSB for the year ended December 31, 2002. In the opinion of management, the interim financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The res ults of operations for the three months ended March 31, 2003 are not necessarily indicative of results of operations to be expected for the full year.
NOTE 2 - CAPITAL STOCK
On January 31, 2003, the stockholders of the Company approved a reverse stock split of the Company’s Common Stock at a ratio of 1 for 100. The effective date of the reverse stock split was February 20, 2003. The reverse stock split affected all shares of common stock, the exercise price of, and the underlying number of shares for stock options and common stock warrants of the Company outstanding immediately prior to the effective date of the reverse stock split. All references in the accompanying consolidated financial statements to the number of common shares and per-share amounts have been restated to reflect the reverse stock split.
During the quarter ended March 31, 2003 the company issued 1,417,320 shares of common stock. An aggregate of 876,501 shares, valued at $101,242, were issued for consulting services. Also, 540,819 shares, valued at $108,164, were issued to reduce compensation payable. Additionally, stock subscriptions covering an aggregate of 926,380 shares for $56,277 were signed at March 31, 2003. Of this amount, $23,109, covering 513,047 shares, was collected as of March 31. An additional $22,268, covering 246,000 shares, was collected in April.
In January, 2003 the Company registered 2,500,000 shares in a Form S-8 registration statement. The stock will be used to provide compensation to consultants, contractors, and directors of the Company for services rendered or to be rendered for the benefit of the Company. The common stock is not subject to any restriction on transferability. As of March 31, 2003, 1,096,000 of these shares had been distributed.
The company has entered into various agreements with third parties to market shares of its common stock and to obtain financing. In connection with these agreements, at March 31, 2003 the company had issued a total of 218,113 shares in the names of itself and the investment bankers. The shares are either to be held as collateral or sold to investors. As of March 31, 2003, none of these shares are reflected as issued and outstanding in the financial statements.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED STATEMENTS
MARCH 31, 2003 AND 2002
(UNAUDITED)
NOTE 2 - CAPITAL STOCK (continued)
On February 1, 2002, the Company registered 35,000 shares in a Form S-8 registration statement. The stock will be used to provide compensation to consultants, contractors, and directors of the Company for services rendered or to be rendered for the benefit of the Company. The common stock is not subject to any restriction on transferability. As of March 31, 2002, 14,396 of these shares had been distributed for services valued at $59,174.
During the quarter ended March 31, 2002 the Company sold 18,904 shares for $114,098. Because the shares sold are restricted from trading for a period of time, the shares were sold at a discount. The discount is recorded as finance costs in the amount of $35,217.
NOTE 3 - NON-CASH FINANCIAL ACTIVITIES
During the quarter ended March 31, 2003, the company issued 540,819 shares, valued at $108,164, to reduce compensation payable.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
Proposed Merger
In October 2002, the Company entered into a proposed merger term sheet with a private corporation. The merger will be a stock for stock transaction. In April 2003, the company entered into a revised merger term sheet that arranged for pre-closing financing and the spin-off of assets and related liabilities and personnel considered non-core to the post-merger company. An Asset and Liability Transfer Agreement was entered into. As of December 31, 2002, the Company had received $25,000 in related financing. This balance is included in notes payable in the accompanying consolidated financial statements at March 31, 2003. Subsequent to March 31, 2003 the Company received an additional $14,500 in advances from the lender.
Management Agreement
In April 2003, the Company entered into a management services agreement for administrative, management support, commercial development, marketing research and technical services at a monthly retainer fee of $10,000 to $15,000 per month plus other compensation based on the specific services provided. The term of the agreement is 18 months plus a one year renewal.
Consulting Agreement
In February 2003, the Company entered into an agreement for public relations services in exchange for a convertible note, with a face value of $125,000 convertible into common shares of the Company and 125,000 warrants to purchase common stock with a 5 year life from execution of this agreement at an exercise price of $0.004 per share. The consulting agreement has a six month term. The services agreed to have not as yet commenced, and the note has not been issued, and the transaction has not been reflected in the financial statements.
EKNOWLEDGE GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED STATEMENTS
MARCH 31, 2003 AND 2002
(UNAUDITED)
NOTE 5 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. Since inception, the Company has incurred operating losses of $5,591,679 through March 31, 2003. Successful completion of the Company’s transition to attaining profitable operations is dependent upon obtaining financing adequate to fulfill its development and marketing activities and achieving a level of revenues adequate to support the Company’s cost structure. Management is continuing to pursue financing and investing opportunities.
NOTE 6 – SUBSEQUENT EVENTS
Loan Payable
At March 31, 2003, the Company had received $25,000 pursuant to a $250,000 secured note. Subsequent to March 31, 2003, the Company received an additional $14,500 from the lender, through the date of this filing.
The Company is in technical default on the note. On June 16, 2003 the note holder served a notice of default on the Company. The default notice indicates that the amount due under the note is approximately $65,000, including default penalties and interest. An accrual of $20,000 in penalty and fees has been recorded at March 31.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operationsshould be read in conjunction with our Consolidated FinancialStatements and related Notes thereto included elsewhere in this Report. Thediscussion in this report contains forward-looking statements that involve risksand uncertainties. Our actual results may differ significantly from the resultsdiscussed in the forward-looking statements. For a more detailed report on the risks associated with investing in the company, see our Report 10-KSB/A for year ended December 31, 2002.
OVERVIEW
EKNOWLEDGE IS A PROVIDER OF E-LEARNING PRODUCTS, SERVICES, AND JOINT VENTURES delivering interactive multimedia training and education programs over the Internet or on CD-ROM. The company utilizes cutting edge technology by incorporating streaming video into many eKnowledge designed programs.
THE EKNOWLEDGE PRODUCTS consist of e-learning programs that are available for purchase by organizations or individuals. Products are created by either the eKnowledge content development department, or in a joint venture with other organizations that have subject matter experts. Joint venture products are resold by organizations on a revenue share basis. The eKnowledge products are in the areas of Government, Corporate and Professional Training, Academic Programs, and Standardized Test Preparations.
THE EKNOWLEDGE SERVICES consist of taking other organizations' training, education, marketing, and other programs and custom building them for delivery over the Internet or on CD-ROM. By determining the organization's objectives and how the program will be accessed, eKnowledge custom designs the program to include the features that will achieve the program objectives while providing the users with the best available method of delivery.
For a more detailed overview see our Report on Form 10-KSB/A for the year ended December 31, 2002.
In October 2002 the company entered into a Merger Term Sheet with American Affinity Partners, Inc. (AAP) AAP is a provider of software solutions and services to human resource departments in various vertical markets servicing such industries as auto, diesel repair, aircraft repair and maintenance and related industries. AAP has a suite of solutions and proprietary delivery mechanisms for its benefit programs including products specifically tailored for the PEO industry. At this point in the company's growth the merger is attractive to the company as AAP is positioned to leverage their client base.
At March 31, 2003, the Company had received $25,000 pursuant to a $250,000 secured note related to the merger. Subsequent to March 31, 2003, the Company received an additional $14,500 from the lender, through the date of this filing.
The Company is in technical default on the note. On June 16, 2003 the note holder served a notice of default on the Company. The default notice indicates that the amount due under the note is approximately $65,000, including default penalties and interest. An accrual of $20,000 in penalty and fees has been recorded at March 31.
The Company is not profitable and faced with finding the funding necessary to finish multiple projects in the form of Public Sector Training, Pavilion, Mazda and other smaller e-learning projects, to work towards due diligence and the evaluation of merging with AAP, and exploring ways to restructure and improve the viability and value of the company.
On April 1, 2003 the company entered into a revised merger term sheet with AAP that arranged for pre-closing financing and the spin-off of assets and related liabilities and personnel considered non-core to the post-merger company. Restructuring began immediately and an Asset and Liability Transfer Agreement was entered into.
On April 9, 2003 the Company entered into a management advisory services agreement with The Amara Group, Inc. ("Amara"). Under the terms of the agreement, Amara shall advise the Company on the restructuring and recapitalization of the Company including integration planning of the merger with American Affinity Partners, Inc.
On June 5, 2003 the Company, and Gary Saunders, our Chief Executive Officer, returned a signed and notorized Offer of Settlement to consent to the entry of an Order by the Securities and Exchange Commission imposing the following remedial sanction: The Company and Gary Saunders shall cease and desist from committing or causing any violations and any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
There are no proceedings by the Commission against the Company or Saunders. This offer was made in anticipation of public administrative and cease-and-desist proceedings.
The offer is based upon the following: Between January 2 and March 11, 2002 Saunders reviewed three press releases, which were disseminated by eKnowledge and an entity owned by a third party. Saunders also caused the releases to be posted on eKnowledge’s Internet website. The releases contained false and misleading statements concerning: (1) financing commitments made to eKnowledge by the entity owned by the third party; (2) revenue projections derived from an agreement with a related entity; (3) the financial experience of the third party; and (4) the assets of the entity owned by the third party. At a minimum, Saunders acted recklessly with regard to making these statements. eknowledge, through the conduct of Saunders, also acted recklessly at a minimum.
As a result of the conduct described above, Saunders and eKnowledge violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
As of the date of this filing the Commission has not returned the Offer of Settlement.
RESULTS OF OPERATIONS
Three months ended March 31, 2003 compared to the three months ended March 31, 2002.
NET INCOME (LOSS);REVENUES; and OPERATING EXPENSES Net loss for the three months ended March 31, 2003 was approximately $249,928, compared to a loss of approximately $125,065, for the three months ended March 31, 2002. This increase over the previous year was primarily the result of the company realizing less revenues and greater operating expenses than the prior period. Additional expense results from the accrual of $20,000 of default penalties.
Revenues for three months ended March 31, 2003 were $79,377 compared to $119,331 for three months ended March 31, 2002. This decrease in revenue is due to lessened sales into the e-learning market and less sales of our products and services. The net loss for the three months ended March 31, 2003 was greater than the three months ended March 31, 2002 due to increased Operating Expenses for the three months ended March 31, 2003 the Operating Expenses were approximately, $301,790 compared to the three months ended March 31, 2002 of approximately $244,449. Increase in operating expenses were due to increases in personnel and production costs.
LIQUIDITY AND CAPITAL RESOURCES. We had a cash balance of $33,231 as of March 31, 2003 and $62,738 as of March 31, 2002. We believe that the cash balance of $33,231, makes it necessary to raise additional funds to meet our anticipated cash and operating needs. We are in current discussions with various potential investors and a merger candidate. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. If current cash that may be generated from operations are insufficient to satisfy our liquidity requirements, we may seek to sell additional equity. Such a sale could result in additional dilution to our stockholders. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. There can be no assurance that we will be su ccessful in raising capital through private placements or otherwise. Even if we are successful in obtaining additional capital through the sources specified, there can be no assurances that any such financing would be available in a timely manner or on terms acceptable to us and our current shareholders, Additional equity financing could be dilutive to our then existing shareholders, and any debt financing could involve restrictive covenants with respect to future capital raising activities and other financial and operational matters.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, thisForm 10-Q Report for the Quarter ended March 31, 2003, has been signed
below bythe following person on behalf of the Registrant and in the capacity and on thedate indicated.
/s/ Gary S. Saunders /s/Scott Hildebrandt
Gary S. Saunders Scott Hildebrandt
/s/Wayne Saunders
Wayne Saunders
EXHIBIT A
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of eKnowledge Group, Inc. (the Company)on Form 10-QSB for the period ending March 31, 2003 as filed with theSecurities and Exchange Commission on the date hereof (the Report), I, GarySaunders Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to thebest of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all materialrespects, the financial condition and result of operations of theCompany.
IN WITNESS WHEREOF, the undersigned has executed this certification as of the
DATED: June 16, 2003
/s/Gary Saunders
Gary Saunders
Chief Executive Officer
CERTIFICATIONS PURSUANT TO SECTION 302
I, Gary Saunderscertifythat:
1.I have reviewed this quarterly report on Form10-QSBof eKnowledge Group, Inc.
2. Based on my knowledge, this quarterly report does not contain any untruestatement 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 statementswere made, not misleading with respect to the period covered by this quarterlyreport;
3.Based on my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;
4.The registrant's other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, ismade known to us byothers within those entities, particularly during the period in which thisquarterly report is being prepared;
b) evaluated theeffectiveness of the registrant's disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterlyreport (the"Evaluation Date"); and
c) presented inthis quarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of theEvaluationDate;
5.The registrant's other certifying officers and I have disclosed, based on ourmost recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalentfunctions):
a) all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant's ability to record, process, summarize andreport financial data and have identified for the registrant's auditors anymaterial weaknesses in internal controls; and
b) any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant's internal controls; and
6.The registrant's other certifying officers and I have indicated in thisquarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
June, 16, 2003
By:
/s/Gary Saunders
Gary Saunders
