SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2003
OR
( ) 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: 000-28915
Sonoran Energy, Inc.
(Exact name of registrant as specified in its charter)
Washington, United States
(State or other jurisdiction of incorporation or organization)
13-4093341
(I.R.S. Employer ID Number)
11300 W. Olympic Blvd., Suite 800, Los Angeles, California 90064
(Address of principal executive offices) (Zip code)
(866) 599-7676
(Registrant's telephone number, including area code)
N/A
(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Class Shares outstanding at July 31, 2003
---------------------------------------------------------------
9,412,110 Shares Common Stock, no par value
0 Shares Preferred stock, no par value
Page 1
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SONORAN ENERGY, INC.
(FORMERLY SHOWSTAR ONLINE.COM, INC..)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For the Periods Ended July 31, 2003 and 2002
TABLE OF CONTENTS
PAGE
| Condensed Consolidated Balance Sheets | F-1 |
| Condensed Consolidated Statements of Operations | F-2 |
| Condensed Consolidated Statement of Changes in Shareholders' Deficit | F-3 |
| Condensed Consolidated Statements of Cash Flows | F-4 |
| Notes to Unaudited Condensed Consolidated Financial Statements | F-5 |
Page 3
SONORAN ENERGY, INC.
(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Balance Sheet
(Unaudited)
July 31, 2003
ASSETS | |
| Current assets: | |
| Cash | $ 36,635 |
| Accounts receivable | 28,060 |
| Loan receivable | 2,525 |
| Accrued interest receivable | 327 |
| Prepaid expenses | 60,000 |
| Total current assets | 127,547 |
| Restricted cash - Idle well bond (Note B) | 75,453 |
| Oil and gas properties - full cost method (Note D): | |
| Proved | 776,878 |
| Unproved | 514,908 |
| Total oil and gas properties | 1,291,786 |
| Accumulated depletion | (11,706) |
| Net oil and gas properties | 1,280,080 |
| Assets available for sale (Note C) | 309,743 |
| $ 1,792,823 | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| Current liabilities: | |
| Accounts payable | $ 536,417 |
| Accrued expenses | 250,704 |
| Loans payable | 845,000 |
| Notes payable | 75,000 |
| Accrued interest payable | 302,828 |
| Indebtedness to related parties | 11,888 |
| Total current liabilities | 2,021,837 |
| Long-term debt: | |
| Notes payable | 1,000,000 |
| Total liabilities | 3,021,837 |
| Shareholders' deficit: | |
| Preferred stock, no par value; 25,000,000 shares authorized, | |
| no shares issued and outstanding | - |
| Common stock, no par value; 75,000,000 shares authorized, | |
| 9,412,110 shares issued and outstanding | 14,719,379 |
| Additional paid-in capital | 380,000 |
| Outstanding common stock warrants - 150,000 | 7,200 |
| Cumulative translation adjustments | 13,980 |
| Accumulated deficit | (16,349,573) |
| Total shareholders' deficit | (1,229,014) |
| $ 1,792,823 | |
Page F-1
SONORAN ENERGY, INC.
(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended July 31, | |||
2003 | 2002 | ||
| Revenue | |||
| Oil and gas sales | $ 105,592 | $ - | |
| Other | 1,500 | - | |
| Total revenue | 107,092 | - | |
| Operating expenses | |||
| Oil and gas production costs | 72,174 | - | |
| Depletion | 7,478 | - | |
| Stock-based compensation: | |||
| Debt issue costs | 2,500 | - | |
| Consulting | 27,100 | 29,000 | |
| General and administrative | 80,055 | 101,695 | |
| Liability settlement gains | (526) | - | |
| Total costs and expenses | (188,781) | (130,695) | |
| Interest income | 151 | - | |
| Interest expense | (72,950) | (24,923) | |
| Loss from continuing operations before income taxes | (154,488) | (155,618) | |
| Income tax provision | - | - | |
| Net loss | $ (154,488) | $ (155,618) | |
| Net loss per common share: | |||
| Basic and diluted | $ (0.02) | $ (0.05) | |
| Weighted average common shares outstanding: | |||
| Basic and diluted | 9,081,332 | 3,028,666 | |
Page F-2
SONORAN ENERGY, INC.
(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Statement of Changes in Shareholders' Deficit
(Unaudited)
| Common Stock | Additional Paid-In Capital | Deficit Accumulated During Development Stage | Cumulative Translation Adjustment Other Comprehensive Loss | Total | |||||||||
| Shares | Amount | Outstanding Common Stock Options/ Warrants | |||||||||||
| Balance at April 30, 2003 | 8,854,444 | $14,589,663 | $380,000 | 7,200 | $(16,195,085) | $22,687 | $(1,195,535) | ||||||
| - | |||||||||||||
| Common stock sales | 100,000 | 20,000 | - | - | - | - | 20,000 | ||||||
| Common stock issued in exchange for | - | ||||||||||||
| consulting services | 94,000 | 27,100 | - | -- | - | - | 27,100 | ||||||
Common stock issued in exchange for | |||||||||||||
| debt issue costs | 10,000 | 2,500 | - | - | - | - | 2,500 | ||||||
Common stock cancelled | (18,800) | (13,000) | - | - | - | - | (13,000) | ||||||
Common stock issued in exchange for debt payments | 372,466 | 93,116 | - | - | - | - | 93,116 | ||||||
Comprehensive loss: Net loss, three months ended July 31, 2003 | - | - | - | - | (154,488) | - | (154,488) | ||||||
| Cumulative translation adjustment | - | - | - | - | - | (300) | (300) | ||||||
| Comprehensive loss | - | - | - | - | - | - | (163,195) | ||||||
| Balance as at July 31, 2003 | 9,412,110 | $14,719,379 | $380,000 | $7,200 | $(16,349,573) | $13,980 | (1,229,014) | ||||||
Page F-3
SONORAN ENERGY, INC.
(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended July 31, | |||
| 2003 | 2002 | ||
| Net cash provided by (Used In) Operating Activities | $ (323) | $ (78,326) | |
| Cash flows from investing activities: | |||
| Purchases of oil and gas properties | (6,954) | (95,553) | |
| Net cash used in investing activities | (6,954) | (95,553) | |
| Cash flows from financing activities: | |||
| Proceeds from advances | - | 173,188 | |
| Proceeds from the sale of common stock | 20,000 | - | |
| Net cash provided by financing activities | 20,000 | 173,188 | |
| Cumulative translation adjustment | (8,707) | - | |
| Net change in cash | 4,016 | (691) | |
| Cash, beginning of period | 32,619 | - | |
| Cash, end of period | $ 36,635 | $ (691) | |
| Supplemental disclosure of cash flow information: | |||
| Cash paid for income taxes | $ - | $ - | |
| Cash paid for interest | $ 823 | $ - | |
| Non-cash investing and financing activities: | |||
Common stock issued for payment of debt, advances and other liabilities | $ 93,116 | $ 458,203 | |
| Common stock issued for acquisition of oil and gas properties | $ - | $ 350,000 | |
| Common stock issued for services | $ 29,600 | $ 28,125 | |
Page F-4
SONORAN ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2003
NOTE A: General Information
The accompanying unaudited condensed consolidated financial statements of Sonoran Energy, Inc. as of and for the three months ended July 31, 2003 and July 31, 2002 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair presentation of the results of the interim period have been included. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended April 30, 2003 included in the Company's report in Form 10 KSB as filed with the Securities and Exchange Commission.
Change in Business Plan
In June 2002, the Company changed its business plan and ceased its Internet portal web site operations. The Company has now transitioned into the oil and gas industry. The Company's primary objective is to identify, acquire and develop working interest percentages in smaller, underdeveloped oil and gas projects located in California that do not meet the requirements of the larger producers and developers.
NOTE B. Restricted Cash - Letter of Credit
The Company was required to post an Idle Well Bond with the Government prior to beginning operations on the oil well leases. The funds are being held in an investment certificate, by the bank, which bears interest currently at .8 %.
NOTE C. Assets Available For Sale
As of July 31, 2003, the Company owed First Nevisian (FN) $843,000 and $245,142 in related accrued interest. In addition, FN holds property and equipment owned by the Company with a book value of approximately $309,743. The two parties are still in negotiations on a settlement agreement whereby FN would reduce the balance of principal and interest owed on the loans in exchange for the Company's property and equipment held by FN. The net realizable value of the property and equipment held by FN is included in the accompanying consolidated financial statements as "assets available for sale".
Depreciation
The Company had not recorded any depreciation in this quarter as no operating benefit has accrued during the period.
NOTE D. Oil and Gas Property Leases
The Company follows the full cost method of accounting for its oil and gas activity. Accordingly, all costs associated with the acquisition, exploration and development of oil and gas properties are capitalized within the appropriate cost center. Any internal costs that are capitalized are limited to those costs that can be directly identified with acquisition, exploration, and development activities undertaken by the Company for its own account, and do not include any costs related to production, general corporate overhead, or similar activities.
All capitalized costs within a cost center are depleted on the units-of-production method based on estimated proved reserves attributable to the oil and gas properties owned by the Company.
For each cost center, capitalized costs less accumulated depletion and related deferred income taxes, may not exceed the cost center ceiling. Any excess is charged to expense during the period in which the excess occurs. The cost center ceiling is equal to the sum of:
(a) The present value of estimated future net revenues from proved oil and gas reserves, less estimated future expenditures to be incurred in developing the proved reserves computed using a 10 percent discount factor; (b) the cost of properties not being amortized; (c) the lower of cost or fair market value of unproven properties included in the costs being amortized; and (d) income tax effects related to the differences between the book and tax basis of the properties.
If a significant portion of the Company's oil and gas interests are sold, a gain or loss would be recognized; otherwise, proceeds from sales are applied as a reduction of oil and gas properties. The Company did not sell any of its oil and gas properties during the quarter ended July 31, 2003.
The Company recorded $7,478 in Depletion expense for the quarter. There was no expense in the first quarter of 2002 as we had no resource operations at that time.
Page F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and Section 27A of the Securities Act of 1933, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "expects" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. These forward-looking statements should be read in conjunction with the Company's disclosures included in their Form 10-KSB for the fiscal year ended April 30, 2003.
Sonoran Energy, Inc. (the "Company", "Sonoran" and sometimes "we," "us," "our" and derivatives of such words), formerly named Showstar Online.com Inc., was incorporated on July 14, 1995 in the State of Colorado as Cerotex Holdings, Inc. Prior to June 2002 the company had developed software and an art site on the Internet. The project had to be discontinued due to lack of funding. On June 3, 2002 the Company changed its name to Sonoran Energy, Inc. and began the acquisition of undervalued oil and gas properties.
General
Results from the first quarter were highlighted by an increase in the price per barrel received at the Company's oil production operations in June and July. While prices stayed at the year-end price of $21/bbl in May, they rose to $24-25/bbl in June and $25-26/bbl in July. Since our operating partners took over the operation of the Company's oil projects , they have met anticipated production levels at Keystone and have been able to effect a 15% increase in the Merzonian project. The Emjayco Glide project required considerable work to get it back into production and we were successful in getting some production in April and then about 50% of expected production in May and June as the Company's operating partner continued to upgrade the site and work on a damaged oil tank. After two attempts at repairs and considerable lost production, the decision was made to replace the tank which temporarily curtailed production on the property. The tank replacement was completed in July and production started up in August.
Sonoran Energy's holdings in its three gas properties also benefited from price increases in the quarter, receiving $5.01/mcf in May and $5.33 in June. The higher prices were offset by slightly lower than expected production on the Denverton and Malton-Black properties. Production on the Maine Prairie Gas Field property was temporarily shut down in May following the closure of a low pressure line. In June a two stage compressor was brought in to allow production into a high pressure line. Production remained low and a three stage compressor was brought in to replace the single and two stage compressors. By July production on the Maine Prairie Gas Field was back to expected levels. The Company received and paid cash calls for the reworking of two wells operated by Aspen Exploration and the one well operated by Gotland Oil. The impact of the successful reworking of the wells will show up in our second quarter results.
The Company and it's operating partners have been able to work through the issues that have arisen over the past six months setting the stage for profitable operations for the balance of the year. Management looks forward to continued growth through development of our new reserves on the Glide and Deer Creek properties as well as through additional acquisitions that meet our criteria.
Page 4
Analysis of Operations
Results of Operations for the First Quarter Ended July 31, 2003 compared to the First Quarter Ended July 31, 2002:
REVENUES
Revenue was $107,092 in July 31, 2003 and $0 in July 31, 2002. As the Company changed its business plan early in June 2002 to enter the oil and gas industry there were no revenue generating operations in the first quarter of last year. The factors impacting revenue for July 31, 2003 are discussed above in the general comments.
OPERATING EXPENSES
Operating expense was $72,174 in July 31, 2003 and $0 in July 31, 2002. The operating expense was a little higher than expected due to repairs as discussed in the general comments above.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by approximately 21 % for the quarter ended July 31, 2003, when compared with the same period for 2002. Stock based compensation increased slightly during the quarter as the Company was able to pay for the listed services with stock rather than cash.
INTEREST EXPENSE
Interest expense was $72,950 in July 31, 2003 and $24,923 in July 31, 2002. The increase in expense is due primarily to the Note Payable issued in connection with the acquisition of property in December 2002.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization was $7,478 for the quarter ended July 31, 2003 reflecting the cost associated with the first quarters operation from the oil and gas leases which were not part of the Company in 2002.
OTHER INCOME (EXPENSE)
The liability settlement gains arise from the Company being able to settle longer term debt from expense incurred prior to its entry into the oil and gas industry.
The Company believes that its existing current assets and the amount of cash it anticipates it will generate from current operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for the fiscal year ended April 30, 2004. The Company expects to increase its capital expenditures during the current fiscal year to increase its current oil and gas production capacities through acquisitions and on-site development in current holdings. The Company will need to continue to attract additional financing in order to move forward with these efforts.
The Company is not a party to off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts. In addition, the Company has no financial guarantees, debt or lease agreements or other arrangements that could trigger a requirement for an early payment or that could change the value of the Company's assets. Management continues to examine various alternatives for increasing capital resources including, among other things, participation with industry and/or private partners and specific rework of existing properties to enhance production and expansion of its sales of crude oil and natural gas in California.
Foreign Currency Exposure
Sonoran is not exposed to fluctuations in foreign currencies relative to the U.S. dollar at this time but, as Sonoran expands its operations, it may begin to collect revenues from customers in currencies other than the U.S. dollar. Sonoran does not currently engage in any hedging activities.
Item 3. Controls and Procedures.
The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on an evaluation conducted within 90 days prior to the filing date of this quarterly report on Form 10-QSB, that the Company's disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether:
(i) this quarterly report on Form 10-QSB contains any untrue statement of a material fact or omits 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 on Form 10-QSB, and
(ii) the financial statements, and other financial information included in this quarterly report on Form 10-QSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report on Form 10-QSB.
There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer's and Chief Financial Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.
Page 5
PART II - OTHER INFORMATION
Item 1. Legal information
No response required
Item 2. Changes in securities
Stock issues are reported on the Change in Equity Statement filed with this report
Item 3. Defaults Upon Senior Securities:
No response required
Item 4. Submission of Matters to a Vote of Security Holders
No response required
Item 5. Other Information
No response required
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
99.1 - Certifications Pursuant to Section 906 of the Sarbannes-Oxley Act of 2002 and Certification pursuant to Section 302 of the Sarbannes-Oxley Act of 2002
b) Reports on Form 8-K:
None
Page 6
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SONORAN ENERGY, INC.
(Registrant)
Dated: September 12, 2003 By: /s/ J. Punzo J. Punzo
President, and Chief Executive Officer
Dated: September 12, 2003 By: /s/ Russ Costin
Russ Costin
Chief Financial Officer
Page 7
Exhibit 99.1
CERTIFICATION 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 Sonoran Energy, Inc. on Form 10-QSB for the period ending July 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Punzo, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ John Punzo
John Punzo
Chief Executive Officer & President
September 12, 2003
CERTIFICATION 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 Sonoran Energy, Inc. on Form 10-QSB for the period ending July 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Russ Costin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Russ Costin
Russ Costin
Chief Financial Officer
September 12, 2003
| Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, John Punzo provides the following certification. I, John Punzo, President and Chief Executive Officer of Sonoran Energy, Inc.(the "Company"), certify that: | |
| 1. | I have reviewed this quarterly report on Form 10-QSB of the Company; |
| 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 Company as of, and for, the periods presented in this quarterly report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to me by others, particularly during the period in which this quarterly report is being prepared; |
| 5. | I have disclosed, based on my most recent evaluation, to the Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company'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 Company's internal controls; and |
| 6. | 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 my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
| Date: September 12, 2003 | /s/ John Punzo |
| John Punzo, President and CEO | |
|
Page 8
| Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, Russ Costin provides the following certification. I, Russ Costin, Chief Financial Officer of Sonoran Energy, Inc.(the "Company"), certify that: | |
| 1. | I have reviewed this quarterly report on Form 10-QSB of the Company; |
| 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 Company as of, and for, the periods presented in this quarterly report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to me by others, particularly during the period in which this quarterly report is being prepared; |
| 5. | I have disclosed, based on my most recent evaluation, to the Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company'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 Company's internal controls; and |
| 6. | 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 my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
| |
Dated: September 12, 2003 /s/ Russ Costin Russ Costin, Chief Financial Officer
Page 9 | |
