Professionals Direct (PFLD) 10QSB 2002 Q3 Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-QSB


[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission File Number:000-49786

PROFESSIONALS DIRECT, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)

Michigan (State or Other Jurisdiction of Incorporation or Organization)	38-3324634 (I.R.S. Employer Identification No.)
161 Ottawa Ave., N.W., Suite 607 Grand Rapids, Michigan 49503 (Address of Principal Executive Offices)	(616) 456-8899 (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   X       No    .

There were 333,500 shares of Common Stock outstanding as of September 30, 2002.

Transitional Small Business Disclosure Format (check one):  Yes           No    X    .

PROFESSIONALS DIRECT, INC.
INDEX

PART I.	FINANCIAL INFORMATION	Page No.
	Item 1.  Financial Statements
	Condensed Consolidated Balance Sheet -
	September 30, 2002 (Unaudited)	3
	Condensed Consolidated Statements of Income and Comprehensive
	Income - Three and Nine Months Ended September 30, 2002 (Unaudited) and
	September 30, 2001 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows -
	Nine Months Ended September 30, 2002 (Unaudited) and
	September 30, 2001 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
	Item 2.  Management's Discussion and Analysis or Plan of Operation	8
	Item 3.  Controls and Procedures	11
PART II.	OTHER INFORMATION
	Item 6.  Exhibits and Reports on Form 8-K	12
SIGNATURES

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PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

PROFESSIONALS DIRECT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

September 30,		2002
Assets
Investments available for sale, at fair value:
Fixed maturities	$	17,671,776
Equity securities		48,125
Total investments available for sale		17,719,901
Other invested assets, at estimated fair value		273,497
Total investments		17,993,398
Cash and cash equivalents		3,038,419
Receivables:
Amounts due from reinsurers		1,922,393
Other		1,534,189
Net deferred federal income taxes		738,395
Other assets		2,549,260
	$	27,776,054
Liabilities and Shareholders' Equity
Liabilities
Loss and loss adjustment expense reserves	$	9,023,126
Unearned premiums		5,216,440
Surplus certificates		2,531,000
Accrued interest		1,205,363
Other liabilities		2,220,990
Total Liabilities		20,196,919
Shareholders' Equity
Preferred stock, no par (500,000 shares authorized, no shares issued)
Common stock, no par (5,000,000 shares authorized, 333,500 shares           issued and outstanding)		3,205,952
Retained Earnings		3,858,462
Accumulated other comprehensive income		514,721
Total Shareholders' Equity		7,579,135
	$	27,776,054

See accompanying notes to condensed consolidated financial statements.

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PROFESSIONALS DIRECT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2001			2002			2001
Revenues
Net premiums earned	$	1,703,922		$	1,407,019		$	4,710,726		$	4,186,169
Fees and commissions earned (net)		37,303			181,426			317,418			573,948
Net investment income		236,751			873,911			589,721			1,361,302
Finance and other income earned		29,572			41,674			85,312			101,248
Total revenues		2,007,548			2,504,030			5,703,177			6,222,667
Expenses
Losses and loss adjustment expenses incurred		921,781			467,189			2,940,349			1,337,107
Operating and administrative		989,894			1,145,236			2,639,083			3,207,509
Interest		49,476			(117,507	)		143,235			52,446
Total expenses		1,961,151			1,494,918			5,722,667			4,597,062
Income (loss) before federal income tax      expense and policyholder dividend		46,397			1,009,112			(19,490	)		1,625,606
Policyholder dividend		73,586			79,782			316,087			79,782
Income (loss) before federal income tax       expense		(27,189	)		929,330			(335,577	)		1,545,824
Federal Income Tax Expense (benefit)		11,680			516,214			(99,936	)		685,243
Net Income (loss)		(38,869	)		413,116			(235,641	)		860,581
Other Comprehensive Income (Loss) (Net      of tax (benefit) of $190,154, $(160,980),      $272,484 and $(96,987), respectively)		369,122			(312,491	)		528,939			(188,269	)
Comprehensive Income	$	330,253		$	100,625		$	293,298		$	672,312
Per share of common stock:
Basic net income (loss) per share	$	(0.12	)	$	1.24		$	(0.71	)	$	N/A
Basic comprehensive income per share		0.99			0.30			0.88			N/A

See accompanying notes to condensed consolidated financial statements.

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PROFESSIONALS DIRECT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30, 2002			September 30, 2001
Operating Activities
Net income (loss)	$	(235,641	)	$	860,581
Adjustments to reconcile net income to net cash from operating           activities:
Deferred federal income tax expense (benefit)		(38,180	)		573,801
Realized losses (gains)		3,366			(604,439	)
Depreciation and amortization		216,526			192,524
Changes in operating assets and liabilities:
Amounts due from reinsurers		799,700			1,217,513
Other receivables		(503,479	)		198,663
Other assets		(873,216	)		206,897
Loss and loss adjustment expense reserves		(565,691	)		(1,009,151	)
Unearned premiums		1,879,322			299,785
Accrued interest		105,187			(619,358	)
Other liabilities		203,118			(603,916	)
Net cash from operating activities		991,012			712,900
Investing Activities
Cost of fixed maturities acquired		(16,532,565	)		(602,531	)
Proceeds from sales or maturities of fixed maturities		963,677			12,197,753
Proceeds from sale of intangibles		-			59,628
Cost of property and equipment acquired		(5,646	)		(132,074	)
Cost of intangible assets acquired		(315,432	)		(15,286	)
Net cash from (for) investing activities		(15,889,966	)		11,507,490
Financing Activities
Net borrowings (repayments) under line of credit		288,830			(145,182	)
Principal payments on note payable		-			(339,296	)
Common stock issued for cash		-			1,391,952
Net cash from financing activities		288,830			907,474
Net Increase (Decrease) in Cash and Cash Equivalents		(14,610,124	)		13,127,864
Cash and Cash Equivalents, beginning of period		17,648,543			1,136,718
Cash and Cash Equivalents, end of period	$	3,038,419		$	14,264,582
Supplemental Disclosures of Cash Flow Information
Federal income tax payments	$	70,000		$	183,058
Interest payments		41,640			671,805
Noncash Transactions:
Surplus certificates exchanged for common stock	$	-		$	1,814,000

See accompanying notes to condensed consolidated financial statements.

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PROFESSIONALS DIRECT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.          Basis of Presentation

          The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Professionals Direct Insurance Company, a property and casualty insurance company providing professional liability insurance to attorneys; Professionals Direct Employer Organization, Inc., a Michigan professional employer organization; Professionals Direct Finance, Inc., a premium finance company and Professionals Direct Insurance Services, Inc., a company providing underwriting, claims, accounting, information technology services and selling professionals liability and other insurance. The consolidated financial statements also include the accounts of Lawyers Direct Risk Purchasing Group, a non-profit corporation, formed by the Company during 2002 to facilitate the purchase of liability insurance by certain of the Company's insureds. Because the Company controls this entity, its activity has been included in the consolidated financial state ments.

          The condensed consolidated financial statements and notes for the three and nine-month periods ended September 30, 2002 and 2001 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) that are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year.

2.          Demutualization of the Company

          Effective July 1, 2001, the Company took part in a corporate restructuring in which the previous holding company, Michigan Lawyers Mutual Insurance Company demutualized and converted from a mutual insurance company to a Michigan domiciled stock property and casualty insurance company. As part of the demutualization, the organization was restructured and the names of the entities were changed. Prior to the restructuring, the Company was a wholly-owned subsidiary of Michigan Lawyers Mutual Insurance Company. As part of the restructuring, the Mutual was renamed Professionals Direct Insurance Company and became a wholly-owned subsidiary of the Company.

          In conjunction with the demutualization, Professionals Direct, Inc. completed its initial public offering of stock through a subscription and best efforts offering. Net proceeds from the offering were $3,205,952 in which 333,500 shares of stock were issued and remain outstanding.

3.          Earnings per Share

          Basic earnings per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding for the period (333,500 for the three months and nine months ended September 30, 2002 and three months ended September 30, 2001). There are no stock options or other dilutive instruments outstanding. Therefore, diluted earnings per share is equal to basic earnings per share.

4.          Subsequent Events

          Effective October 3, 2002, the Company purchased the renewal rights to direct written business of Interlex Insurance Company. In exchange for a cash payment of $441,428, the Company acquired certain renewal rights of the lawyers professional liability policies of Interlex effective December 1, 2002. Interlex wrote policies on a direct basis in Missouri and Kansas and through agents in Florida

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and Kansas. The Company is negotiating to purchase certain of the remaining renewal rights in Kansas and to appoint agents in Florida.

          Subsequent to September 30, 2002, the Company realized a gain on the sale of bonds from its investment portfolio of approximately $725,000. Proceeds from the disposition were reinvested at current rates.

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Item 2.  Management's Discussion and Analysis or Plan of Operation

The following discussion is designed to provide a review of the consolidated financial condition and results of operations of Professionals Direct, Inc. (the "Company"). This discussion should be read in conjunction with the consolidated financial statements and related notes.

Forward-Looking Statements:

This discussion and analysis of financial condition and results of operations, and other sections of this report, contain forward-looking statements, including, but not limited to, statements relating to the Company's business objectives and strategy. Such forward-looking statements are based on current expectations, management beliefs, certain assumptions made by the Company's management, and estimates and projections about the Company's industry. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "judgment," "objective," "plans," "predicts," "projects," "seeks," variations of such words and similar expressions are intended to identify such forward-looking statements. Determination of loss and loss adjustment expense reserves and amounts due from reinsurers are based substantially on estimates and the amounts so determined are inherently forward-looking.

Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict with respect to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may differ materially from those expressed, forecasted, or contemplated by any such forward-looking statements. Other factors, some of which are listed below, also influence the results of operations, financial condition and business of the Company and its subsidiaries:

• future economic conditions and the legal and regulatory environment in the markets served by the Company's subsidiaries;

• re-insurance market conditions, including changes in pricing and availability of re-insurance;

• financial market conditions, including, but not limited to, changes in interest rates and the values of investments;

• inflation;

• credit worthiness of the issuers of investment securities, reinsurers and others with whom the Company and its subsidiaries do business;

• estimates of loss reserves and trends in losses and loss adjustment expenses;

• changing competition;

• the company's ability to execute its business plan;

• the company's ability to enter new markets successfully and capitalize on growth opportunities; and

• changes in the laws, rules and regulations governing insurance holding companies and insurance companies, as well as applicable tax and accounting matters.

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Changes in any of these factors, or others, could have an adverse affect on the business, results of operations, or business of the Company or its subsidiaries. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Results of Operations (000 omitted):

         Net premiums earned. Net premiums earned continued to increase from comparable periods in the prior year. For the quarter ended September 30, 2002, net premiums earned were $1,704, an increase of $297, or 21%, compared to the third quarter of 2001. For the first nine months of 2002, net premiums earned increased a total of $525, or 13%, compared to the same period in 2001. Earned premiums increase or decrease at a slower rate than written premiums because revenue from policies written is earned over the term of the policy, typically twelve months. As a result, increases in written premium have exceeded increases in net premiums earned. Written premium has been increasing as a result of the Company's expansion outside of Michigan, new business in Michigan and a general price increase. For the nine months ended September 30, 2002, total written premium was $7,591 compared to $5,658 for the same period last year, an increase of 34%. During the nine months ended Septe mber 30, 2002, premiums written in Ohio, Indiana, Pennsylvania, Kansas, Utah and Arizona totaled $1,160. During the same period in 2001, premium was primarily written in Michigan. The balance of the increase in written premium is attributable to the Michigan market where the Company has been successful in soliciting new business and in obtaining price increases from existing business. The result is a 14% increase in Michigan premium written as compared to the same period last year.

          The Company continues to obtain licenses to sell insurance and conduct premium finance operations in states other than Michigan. During the third quarter of 2002, the Company obtained insurance licenses in Colorado, Florida, Iowa, Kentucky, Missouri, New Mexico, South Dakota, Tennessee and Washington and, as of the date of this filing, is licensed in twenty states with applications pending in various other states. The Company expects to continue to expand operations beyond Michigan and Ohio during the remainder of 2002 and anticipates that revenue volumes will continue to increase as the Company selectively enters these new markets and begins to conduct business.

         Other revenues. Other revenues account for 15% of total revenues for the third quarter of 2002 compared to 44% in 2001. The primary causes of this decline are:

• Generally, fee and commission income have decreased because changes in the terms of current reinsurance treaties have reduced ceding and profit commissions. In the third quarter of 2002, fee and commission income were further reduced by changes in estimated contingent profit commissions.

• Net investment income in the third quarter is significantly less than the same period in the prior year because net investment income during the third quarter of 2001 included realized gains of $622. Those gains resulted from the Company's decision to realize the significant appreciation in its bond portfolio. Excluding realized gains, investment income for the current quarter is down slightly over the same period a year ago.

         Losses and loss adjustment expenses. For the nine months ended September 30, 2002, the loss ratio of 62% has not been impacted by loss development attributable to prior years. In contrast, the nine months ended September 30, 2001 loss ratio of 32% included the effects of $1,789 in favorable loss development from prior years.

          Loss and loss adjustment expense are based on management's best estimate of the ultimate losses on claims reported for each year. Estimating loss reserves involves significant uncertainty. Professional liability claims generally, and lawyers professional liability claims in particular, involve a relatively long period of time between the initial report of a claim and its resolution and final determination of the total

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incurred loss. The current year estimate of losses is based on losses made and reported during the current fiscal year as well as development on prior year losses, using claims frequency, past loss experience and trending analysis as a partial basis for the estimate. However, quarterly intervals provide a limited sample of claims and a short investigation period from which to assess and evaluate the reported claims. Claim frequency may vary from one calendar quarter to another and the severity of the reported claims in a given quarter may not be known for a considerable period of time after the date of the report. Consequently, the loss estimates for any calendar quarter are subject to significant fluctuation and variability. As the year progresses, the reported claims can be more fully investigated and assessed and greater certainty in the loss estimates may be realized.

         Operating and administrative expenses. Third quarter and year-to-date operating and administrative expenses decreased $155 and $568 respectively from 2001. This decrease resulted primarily from the non-recurrence of costs associated with the demutualization of the Company in 2001.

         Interest expense. Interest expense year-to-date is $91 higher than the prior year. However, in 2001, certain surplus certificate holders, who converted their certificates to stock, forgave accrued interest on their converted certificates. This forgiveness in the third quarter of 2001 resulted in negative interest expense in that quarter and abnormally low interest expense for that year. However, future interest expense will be lower than it was in years prior to 2001 and would have been in 2001, absent the aforementioned forgiveness, because of the conversion. At September 30, 2002 there are 2,531 certificates outstanding as contrasted to 4,345 outstanding at June 30, 2001.

         Policyholder dividend. The Company paid a policyholder dividend to eligible policyholders who met specific criteria in accordance with the terms of the demutualization. The dividend payments commenced in August of 2001. During the third quarter of 2002, PDIC paid a policyholder dividend of $74 to eligible policyholders. The dividend program has now been completed and no further dividends will be accrued or paid.

         Income taxes. The effective federal income tax rate varies from the expected statutory rate of 34% largely because of the impact of the exclusion of interest from tax-exempt bonds.

Financial Condition, Liquidity, and Capital Resources (000 omitted):

          The primary sources of the Company's liquidity, on both a short-term and long-term basis, are funds provided by insurance premiums collected, net investment income, recoveries from reinsurance, and proceeds from the maturity or sale of invested assets. The primary uses of cash, on both a short-term and long-term basis, are losses, loss adjustment expenses, operating expenses, reinsurance premiums, and taxes.

          The Company's net cash flow from operations was $991 for the first nine months of 2002, compared to net cash flow from operations of $713 for the first nine months of 2001. The increase in cash from operating activities largely resulted from collections of increased premiums written discussed earlier. The Company generated negative cash flow from investing activities of $15,890 during the first nine months of 2002. This was the result of the reinvestment of cash that was received when the Company sold most of its bond portfolio in the latter part of 2001. Cash received from financing activities for the nine months of 2002 was $289, resulting from net borrowing under the Company's lines of credit. In the same period last year, the Company completed its stock offering utilizing some of the cash received to pay off its outstanding bank debt.

          At September 30, 2002, the Company had cash and cash equivalents of $3,038. Management expects that this cash and that which will be generated from operations will be sufficient to meet cash flow needs for 2002.

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          Based on historical trends, market conditions and our business plans, we believe that our existing resources and sources of funds will be sufficient to meet our short-term and long-term liquidity needs over the next year and beyond. Because economic, market and regulatory conditions may change, however, there can be no assurance that our funds will be sufficient to meet these liquidity needs. In addition, competition, pricing, the frequency and severity of losses and interest rates could significantly affect the Company's short-term and long-term liquidity needs.

Critical Accounting Estimates and Judgments

          The consolidated financial statements include certain amounts, based upon informed estimates and judgments made by management, for transactions not yet complete or for which the ultimate resolution is not certain. Such estimates and judgments affect the reported amounts in the financial statements. Although management believes that they are making the best decisions based upon information then available, it is possible that as conditions and experience develop, these estimates may change and may be materially different from originally reported in the financial statements. The Company's reserves for unpaid loss and loss adjustment expenses represent the most critical estimate present within the financial statements.

Item 3. Controls and Procedures

Within 90 days prior to the date of filing this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Vice President of Finance, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on and as of the time of such evaluation, the Company's management, including the Chief Executive Officer and Vice President of Finance, concluded that the Company's disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filing with the Securities and Exchange Commission. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the time of such evaluation.

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PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits.  The following documents are filed as exhibits to this report on Form 10-QSB:

Exhibit No.	Document
3.1	Amended and Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Registration Statement on Form 10-SB filed on July 8, 2002. Here incorporated by reference.
3.2	Amended and Restated Bylaws. Previously filed as an exhibit to the Company's Registration Statement on Form 10-SB filed on July 8, 2002. Here incorporated by reference.

(b) Reports on Form 8-K.  The following report on Form 8-K was filed during the period covered by this report:

Date	Items Reported	Financial Statements
October 8, 2002	Items 7 & 9	None

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SIGNATURES

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

Date:  November 14, 2002	PROFESSIONALS DIRECT, INC. s/Stephen M. Tuuk Stephen M. Tuuk, President and Chief Executive Officer (authorized to sign on behalf of company)
	s/Stephen M. Westfield Stephen M. Westfield, Vice President of Finance (principal financial and accounting officer)

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CERTIFICATIONS

          I, Stephen M. Tuuk, certify that:

          1.           I have reviewed this quarterly report on Form 10-QSB of Professionals Direct, 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 officer 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 officer 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:

                    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 officer 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:  November 14, 2002 /s/Stephen M. Tuuk President and
Chief Executive Officer

          I, Stephen M. Westfield, certify that:

          1.           I have reviewed this quarterly report on Form 10-QSB of Professionals Direct, 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 officer 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 officer 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:

                    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 officer 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:  November 14, 2002 /s/Stephen M. Westfield Vice President of Finance
(principal financial and accounting officer)

EXHIBIT INDEX

Exhibit No.	Document
3.1	Amended and Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Registration Statement on Form 10-SB filed on July 8, 2002. Here incorporated by reference.
3.2	Amended and Restated Bylaws. Previously filed as an exhibit to the Company's Registration Statement on Form 10-SB filed on July 8, 2002. Here incorporated by reference.