U.S. 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 September 30, 2002
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
Commission file number 0-19721
THE CLASSICA GROUP, INC.
(Exact name of small business issuer as specified in its charter)
New York 13-3413467
(State or other jurisdiction (IRS Employer identification no.)
of incorporation or organization)
1835 Swarthmore Avenue, Lakewood, New Jersey 08701
(Address of principal executive offices)
(732) 363-3800
(Issuer's telephone number)
---------------------------------
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d)of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes .......No .......
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares outstanding of each of the issuer's classes of common equity as
of September 30, 2002
Title of Each Class Number of Shares Outstanding
Common Stock, $.001 par value per share 3,816,594
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheet (Unaudited)
September 30, 2002
ASSETS
------------
Current Assets:
Cash and cash equivalents $247,628
Accounts receivable 284,874
Inventories 542,974
Prepaid expenses and other current assets 114,117
--------------
Total current assets 1,189,593
Property and equipment, net 855,544
Intangible assets, net 1,465,204
Other assets 423,491
Goodwill 157,500
--------------
TOTAL ASSETS $4,091,332
==============
See notes to the consolidated financial statements (Unaudited).
2
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheet (Unaudited) (continued)
September 30, 2002
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------
LIABILITIES
-----------------
Current Liabilities:
Current portion of long-term debt $ 98,292
Accounts payable 1,361,370
Accrued expenses 52,459
--------------
Total current liabilities 1,512,121
Long-term debt, less current portion 41,241
--------------
Total liabilities 1,553,362
--------------
STOCKHOLDERS' EQUITY
----------------------------
Preferred stock
Class A participating convertible preferred shares, $1 par value,
stated at liquidation value, authorized 200 shares of which 16.5
shares are issued and outstanding. 397,898
Common stock
Par value $.001 - 25,000,000 shares authorized, 3,816,594 shares
issued and outstanding 3,816
Additional paid-in-capital 4,772,162
Accumulated deficit (2,635,906)
--------------
Total Stockholders' Equity 2,537,970
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,091,332
==============
See notes to the consolidated financial statements (Unaudited).
3
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
For the three months ended For the nine months ended
September 30, September 30,
2002 2001 2002 2001
--------------------------------------------------------
Net sales $1,509,867 $1,677,200 $ 4,759,541 $ 5,265,778
Cost of sales 1,130,492 1,183,036 3,622,523 3,823,264
--------------------------------------------------------
Gross profit 379,375 494,164 1,137,018 1,442,514
Selling, general and
administrative expenses 658,128 406,427 1,796,561 1,223,295
Income (loss)
from operations (278,753) 87,737 (659,543) 219,219
Interest expense - net 35,896 33,442 125,310 115,550
--------------------------------------------------------
Income (loss) from
continuing operations (314,649) 54,295 (784,853) 103,669
--------------------------------------------------------
Loss from discontinued
operations 0 (110,488) 0 (241,179)
--------------------------------------------------------
Net loss $ (314,649) $ (56,193) $ (784,853) $ (137,510)
========================================================
EARNINGS PER COMMON SHARE
BASIC & DILUTED
Income (loss) from
continuing operations $ (0.09) $ 0.02 $ (0.25) $ 0.05
Loss from discontinued
operations 0 (0.04) 0 (0.12)
--------------------------------------------------------
Net loss $ (0.09) $ (0.02) $ (0.25) $ (0.07)
========================================================
Weighted average shares
outstanding,
basic and diluted 3,583,778 2,419,527 3,163,274 2,067,508
See notes to the consolidated financial statements (Unaudited).
4
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 2002 and 2001
September 30,
------------------------
2002 2001
Cash flows from operating activities:
Net income (loss) continuing operations $ (784,853) $ 103,669
(Loss) from discontinued operations - (241,179)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 242,975 172,254
(Increase) decrease in accounts receivable (129,482) 137,478
(Increase) in inventories (96,321) (100,463)
(Increase) decrease in prepaid expenses and
other assets (57,053) 97,497
(Increase) in other assets (17,935) (32,598)
Increase (Decrease) in accounts payable
and accrued expenses 67,446 (231,863)
------------------------
Net cash (used in) operating activities (775,223) (95,205)
------------------------
Cash flows used in investing activities:
Purchase of fixed assets (120,898) (97,213)
Increase in intangible assets - (39,286)
Decrease in net assets discontinued operations - (20,968)
------------------------
Net cash (used in) investing activities (120,898) (157,467)
------------------------
Cash flows from financing activities:
Repayment of long-term debt (54,628) (51,627)
Proceeds from Issuance of capital stock 1,097,380 438,750
------------------------
Net cash provided by financing activities 1,042,752 387,123
------------------------
Net increase in cash and cash equivalents 146,631 134,451
Cash-discontinued operations - (6,389)
Cash and cash equivalents at beginning of period 100,997 31,104
------------------------
Cash and cash equivalents at end of period
continuing operations $ 247,628 $ 159,166
========================
Supplemental disclosure of cash flows information:
Interest paid $ 125,310 $ 115,550
========================
See notes to the consolidated financial statements (Unaudited).
5
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 --ORGANIZATION AND BASIS OF PRESENTATION
The Classica Group, Inc. (the "Company") is a holding company and
through its Cucina Classica Italiana, Inc. ("CCI") subsidiary is a national
distributor of specialty cheeses and Italian meat products. The Company's
Classica Microwave Technologies, Inc. ("CMT") subsidiary provides solutions to
serious bacterial problems facing the food industry in addition to providing an
innovative microwave based processing system designed to maximize productivity
while reducing operating costs in food processing. A majority of the Company's
customers are food retailers and distributors.
The unaudited consolidated financial statements included herein have
been prepared by the Company in accordance with the same accounting principles
followed in the presentation of the Company's annual financial statements for
the year ended December 31, 2001 pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, all
adjustments that are of a normal and recurring nature and are necessary to
fairly present the financial position, results of operations, and cash flows of
the Company have been made on a consistent basis. This report should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-KSB Annual Report for the year ended December 31, 2001.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany balances
are eliminated.
Income taxes for the interim period are based on the estimated
effective tax rate expected to be applicable for the full fiscal year. The
Company has recorded a full valuation allowance related to the deferred tax
asset at September 30, 2002.
NOTE 2 -PER SHARE DATA
The per share data has been calculated using the weighted average
number of Common Shares outstanding during each period presented on both a basic
and diluted basis in accordance with SFAS 128. Outstanding options and warrants
have been excluded from the computation due to their antidilutive effect.
6
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 3 - Property and equipment
Property and equipment are carried at cost, less accumulated
depreciation and amortization computed on a straight-line basis over the lesser
of the estimated useful lives of the assets (generally three to ten years for
furniture, and equipment and the lease term for leasehold improvements).
Property and equipment consists of the following at September 30, 2002:
Furniture & equipment $ 1,657,504
Leasehold improvements 105,837
-------------
Total cost 1,763,341
Less accumulated depreciation and amortization (907,797)
-------------
$ 855,544
=============
NOTE 4 - Intangible Assets
Patents are amortized over their estimated useful lives, approximately
15 years. Intangible assets are reviewed for impairment whenever events or
circumstances indicate impairment might exist or at least annually. The Company
assesses the recoverability of its assets by comparing projected undiscounted
cash flows associated with those assets against their respective carrying
amounts. Impairment, if any, is based on the excess of the carrying amount over
the fair value of those assets.
Intangible assets consist of the following at September 30, 2002:
Importing licenses $ 39,285
Patents 1,552,328
----------------
1,591,613
Accumulated amortization (126,409)
----------------
Intangible assets, net $ 1,465,204
================
NOTE 5 - Goodwill
The Company adopted SFAS No. 142 at the beginning of 2002 for goodwill
recognized in the Balance Sheet as of January 1, 2002. This standard changed the
accounting for goodwill from an amortization method to an impairment-only
approach and introduced a new model for determining impairment changes.
The new impairment model requires performance of a two-step test for
operations that have goodwill assigned to them. First, it requires the
comparison of the book value of net assets to the fair value of the related
operation. Fair values are estimated using discounted cash flows, subject to
adjustment based upon the Company's market capitalization at the date of
evaluation. If fair value is determined to be less than book, a second step is
required to be performed to compute the amount of the impairment. At September
30, 2002 the fair value of the operation exceeded the book value and,
accordingly, no impairment was indicated.
7
THE CLASSICA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Note 6 -- SEGMENT REPORTING
Industry segment information at September 30, 2002 and 2001 is
summarized as follows:
Total Revenue Operating Profits (Loss)
---------------------------- ---------------------------
2002 2001 2002 2001
---------------------------- ---------------------------
CCI $ 4,717,054 $ 5,212,759 $ 216,139 $ 473,995
CMT 30,114 - (414,720) (37,333)
---------------------------- ---------------------------
Total Segment 4,747,168 5,212,759 (198,581) 436,662
Eliminations and
other Corporate
income(expenses) 12,373 53,019 (460,962) (217,443)
---------------------------- ---------------------------
Consolidated $ 4,759,541 $ 5,265,778 (659,543) 219,219
============================
Interest expense 125,310 115,550
---------------------------
Income (loss) from continuing operations $ (784,853) $ 103,669
===========================
Depreciation and
Capital Expenditures Amortization Expense Identifiable Assets
2002 2001 2002 2001 2002 2001
-----------------------------------------------------------------
CCI $ 6,135 $ 61,516 $ 123,189 $ 148,510 $ 1,129,309 $1,589,948
CMT 114,763 35,797 40,915 - 895,114 201,568
Corporate - - 78,871 23,774 2,066,909 2,397,120
Discontinued Op. - - - - - 658,578
-----------------------------------------------------------------
Consolidated $ 120,898 $ 97,313 $ 242,975 $ 172,284 $ 4,091,332 $4,847,214
=================================================================
NOTE 7 - Discontinued Operations
December 28, 2000 the company adopted a formal plan to discontinue the
operations of its Deli King, Inc. ("Deli King") mobile catering subsidiary and
to dispose of the assets of the business segment. The operations of Deli King
ceased on March 9, 2001.
Operating results of Deli King for the nine months ended September 30,
2001 are shown separately in the accompanying income statement.
Net sales of Deli King for the nine months ended September 30, 2001
were $361,157. This amount is not included in net sales in the accompanying
financial statements.
At December 31, 2001, all of the assets of Deli King, Inc. had been
disposed of or deemed to be worthless. In February 2002, Deli King, Inc. filed
for liquidation under Chapter VII in the U.S. Bankruptcy Court for the District
of New Jersey. Management believes that there are no material present or future
liabilities on the part of the Company for matters relating to Deli King, Inc.
8
Item 2. Management's Discussion and Analysis
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the Consolidated Unaudited
Financial Statements and related notes, which are contained herein.
Results of Operations for the Three Months Ended September 30, 2002 and 2001
Net sales for the three months ended September 30, 2002 were $1,509,867
compared with $1,677,200 in 2001, a decrease of $ 167,333, or 10.0%. This
decrease is the result of the loss of a major customer for its private label dry
grated and shredded cheese products during the first quarter of 2002. Attempts
to obtain replacement volume for this segment of the operation have been
unsuccessful. Also, beginning January 2, 2002 CCI began bringing the mascarpone
product from Italy by air rather than by steamship in an effort to increase
sales as the result of an increase in shelf life of 21 days when received by its
customers. A substantial increase in sales was experienced in the first quarter
of 2002 which now appears to have been the result of CCI's customers building
inventory. In the second quarter of 2002 sales of the mascarpone product
declined an amount approximately equal to the first quarter increase. Management
determined that the increase in shelf life has not had the desired effect on
mascarpone sales and the air freight program was discontinued at June 30, 2002.
In the third quarter of 2002 sales of the mascarpone product were approximately
equal to 2001 levels.
The Company generated gross profit of $ 379,375 or 25.1% of net sales
in 2002 versus $494,164 or 29.5% of net sales in 2001. The decrease in gross
profit margin was the result of CCI's loss of gross margin on the mascarpone
product as the result of an approximate 10% increase in the cost of its imported
products as the result of the increase in the value of the Euro currency against
the United States Dollar during the quarter. Management is instituting a price
increase for the imported products in the fourth quarter of 2002 in order to
offset this increased cost.
Selling, general and administrative expenses were $658,128 in 2002
versus $406,427 in 2001. This represents an increase of $251,701 an increase of
61.9%, of which $309,914 represents start-up costs of the CMT subsidiary as
compared to $5,732 in those costs for the same period in 2001.
Income from continuing operations for the three months ended September
30, 2002 was a loss of ($314,649) versus income of $54,295 in 2001. This
represents a reduction of $368,944 due to the factors discussed above.
9
Interest expense was $35,896 and $33,442 for the three months ended
September 30, 2002 and 2001 respectively.
The Company reported no provision for Federal income taxes for the
three months ended September 30, 2002 and 2001, as the Company had net losses
for both periods.
Results of Operations for the Nine Months Ended September 30, 2002 and 2001
Net sales for the nine months ended September 30, 2002 were $ 4,759,541
compared with $5,265,778 in 2001, a decrease of $ 505,237, or 9.6%. This
decrease is the result in part of a decrease in the sale of the imported
Galbani(R) mascarpone product during the second quarter of 2002. Beginning
January 2, 2002 CCI began bringing the mascarpone product from Italy by air
rather than by steamship in an effort to increase sales as the result of an
increase in shelf life of 21 days when received by its customers. A substantial
increase in sales was experienced in the first quarter of 2002 which now appears
to have been the result of CCI's customers building inventory. In the second
quarter of 2002 sales of the mascarpone product declined an amount approximately
equal to the first quarter increase. Management determined that the increase in
shelf life has not had the desired effect on mascarpone sales and the air
freight program was discontinued at June 30, 2002. In the third quarter of 2002
sales of the mascarpone product were approximately equal to 2001 levels. In
addition, CCI lost a major customer for its private label dry grated and
shredded cheese products during the first quarter of 2002 and attempts to obtain
replacement volume for that segment of its operation have been unsuccessful.
The Company generated gross profit of $1,137,018 or 23.9% of net sales
in 2002 versus $1,442,514 or 27.4% of net sales in 2001. The decrease in gross
profit margin was the result of CCI's loss of gross margin on the mascarpone
product as the result of the significantly higher freight costs resulting from
bringing the product in by air during the first six months of 2002. In addition,
CCI experienced an approximate 10% increase in the cost of its imported products
as the result of the increase in the value of the Euro currency against the
United States Dollar during the second quarter of 2002. Management is
instituting a price increase for the imported products in the fourth quarter of
2002 in order to offset this increased cost.
Selling, general and administrative expenses were $1,796,561 in 2002
versus $1,223,295 in 2001. This represents an increase of $573,266, an increase
of 46.9%, of which $444,834 represents start-up costs of the CMT subsidiary as
compared to $37,333 in those costs for the same period in 2001.
Income from continuing operations for the nine months ended September
30, 2002 was a loss of ($784,853) versus income of $103,669 in 2001. This
represents a reduction of $888,522 due to the factors discussed above.
10
Interest expense was $125,310 and $115,550 for the nine months ended
September 30, 2002 and 2001 respectively. The increase is the result of a
short-term financing arrangement with one of CCI's vendors.
The Company reported no provision for Federal income taxes for the nine
months ended September 30, 2002 and 2001, as the Company had net losses for both
periods.
11
Liquidity and Capital Resources
The Company's sources of capital include, but are not limited to, the
issuance of public or private debt, bank borrowings, capital leases and the
issuance of equity securities.
At September 30, 2002, the Company had a net worth of $2,537,970
compared to $3,091,367 at September 30, 2001. The Company has limited
requirements for capital expenditures in the immediate future, except
for the start-up of the new
CMT subsidiary for which the Company is planning a private placement.
CCI's factoring arrangement with GMAC Commercial Credit, LLC has
adequate availability to provide working capital to support sales growth in that
division.
The Company utilizes capital leases for the acquisition of operating
assets at its subsidiaries when appropriate. At September 30, 2002, the Company
had capital leases with an unamortized balance of $139,533.
Management believes that the Company has sufficient working capital to
meet the needs of its current level of operations, with the exception of the
requirements of CMT.
Seasonality
The Company's businesses are subject to the effects of seasonality.
Consequently, the operating results for the nine months ended September 30, 2002
are not necessarily indicative of results to be expected for the entire year.
Anticipated Future Growth
CMT has a unique patented and proprietary expertise in microwave
processing applications. While the technology has been in use in Europe and in
Japan, with more than 200 successful installations, it is virtually unknown
beyond those markets.
CMT plans to penetrate these new markets and generate revenues from 2
distinct sources:
>> Sales of Microwave heat processing systems.
>> Sales of Technical Services.
In order to facilitate sales of the company's Microwave systems, a
major campaign of communications and education will be undertaken among future
users, government regulatory agencies and food industry professionals -
globally.
12
The objectives of this campaign are:
>> To introduce the company and the benefits of its systems to the
universe of future potential users
>> To gain for these technologies a high level of recognition and
acceptance.
Concurrent with the communications and education campaign, the company
will establish its direct sales force in the USA, and a network of exclusive
agents worldwide to identify, negotiate and sell its equipment to clients on a
global basis.
The second revenue channel is from Technical Services. The company will
provide potential clients with access to its laboratories in the USA and Italy,
for the purpose of developing and customizing new processing applications. While
some of these services are provided free of charge as part of the marketing
efforts, other more comprehensive research and development services will be
marketed and offered to clients for fees.
The company uses its laboratories and technical staff to continuously
improve current systems, and develop next generation systems.
Beyond the efforts to sell systems to food manufacturers, the company
will market itself and its capabilities through partnerships with engineering
design companies, and with manufacturers of complimentary equipment, to provide
future clients with "Total Delivered Solutions".
CCI is continually seeking to expand its product line by either
producing or importing new products. In 2002 CCI has undertaken a marketing
project to determine if there is a market for Galbani's short shelf life
products, such as fresh mozzarella, in the United States. In addition, with a
view toward decreasing its dependence on the food service industry, CCI has been
studying the packaging of its products to make them consumer friendly for the
retail market.
13
Forward Looking Statements
The matters discussed in this Item 2 may contain forward-looking statements that
involve risk and uncertainties. The forward-looking statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Actual results may differ materially due to a variety of factors,
including without limitation the presence of competitors with broader product
lines and greater financial resources; intellectual property rights and
litigation, needs of liquidity; and the other risks detailed from time to time
in the Company's reports filed with the Securities and Exchange Commission.
14
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The Company's principal executive officer and its principal financial officer,
based on their evaluation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14(c)) as of a date within 90 days prior
to the filing of this Quarterly Report on Form 10-QSB, have concluded that the
Company's disclosure controls and procedures are adequate and effective for the
purposes set forth in the definition in Exchange Act rules..
(b) Changes in internal controls.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect the Company's internal controls
subsequent to the date of their evaluation.
15
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
(99.1) Certification of Chief Executive Officer pursuant to
Section 906 of Sarbanes-Oxley Act of 2002.
Filed herewith.
(99.2) Certification of Chief Financial Officer pursuant to
Section 906 of Sarbanes-Oxley Act of 2002.
Filed herewith.
(b) Reports on Form 8-K:
None
16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf the
undersigned thereunto duly authorized
THE CLASSICA GROUP, INC.
------------------------
(Registrant)
Date: November 14, 2002 By: /s/ Scott G. Halperin
---------------------
Scott G. Halperin
Chairman
Chief Executive Officer
Date: November 14, 2002 By: /s/ Bernard F. Lillis, Jr.
--------------------------
Bernard F. Lillis, Jr.
Chief Financial Officer
Principal Accounting Officer
Treasurer
17
THE CLASSICA GROUP, INC.
CERTIFICATION PURSUANT TO
RULE 13-A-14 OF THE SECURITIES ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Scott G. Halperin, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of The Classica Group,
Inc.;
2. Based upon my knowledge, this quarterly report does not contain any untrue
statement of 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 period 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 the 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 upon
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 weakness in internal control; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there are 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/ Scott G. Halperin
Scott G. Halperin
Chief Executive Officer
18
THE CLASSICA GROUP, INC.
CERTIFICATION PURSUANT TO
RULE 13-A-14 OF THE SECURITIES ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Bernard F. Lillis, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of The Classica Group,
Inc.;
2. Based upon my knowledge, this quarterly report does not contain any untrue
statement of 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 period 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 the 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 upon
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 weakness in internal control; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there are 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/ Bernard F. Lillis, Jr.
- --------------------------
Bernard F. Lillis, Jr.
Chief Financial Officer
19