SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended November 30, 2002
Commission File No. 0-5940
TEMTEX INDUSTRIES, INC.
-----------------------
(Exact name of Registrant as specified in its Charter)
Delaware 75-1321869
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1190 W. Oleander Avenue, Perris, CA 92571
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
909/657-7311
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(Registrant's telephone number including area code)
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 such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
----- -----
The Registrant had 3,444,641 shares of common stock, par value
$.20 per share, outstanding as of the close of the period covered
by this report.
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months Ended
November 30
---------------------------
2002 2001
------------ ------------
(Unaudited)
(in thousands except share
and per share data)
<s> <c> <c>
Net sales $ 6,209 $ 5,677
Cost of goods sold 5,384 4,987
------------ ------------
825 690
Cost and expenses:
Selling, general and administrative 1,419 1,392
Interest 139 145
Other expense 138 28
------------ ------------
1,696 1,565
------------ ------------
NET LOSS $ (871) $ (875)
============ ============
Basic and diluted loss per common share: $ (0.25) $ (0.25)
============ ============
Basic and diluted weighted average common
shares outstanding 3,444,641 3,444,641
============ ============
See notes to condensed consolidated financial statements
-2-
TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
November 30, August 31,
2002 2002
------------ ------------
(Unaudited)
(in thousands except share
and per share data)
<s> <c> <c>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 322 $ 918
Accounts receivable, less allowance for doubtful
accounts of $277 at November 30, 2002 and $236
at August 31, 2002 2,891 2,386
Inventories, net 2,009 2,146
Prepaid expenses and other assets 185 139
------------ ------------
TOTAL CURRENT ASSETS 5,407 5,589
OTHER ASSETS 90 97
PROPERTY, PLANT AND EQUIPMENT
Buildings and improvements 2,615 2,615
Machinery, equipment, furniture and fixtures 18,871 18,890
Leasehold improvements 1,319 1,318
------------ ------------
22,805 22,823
Less allowances for depreciation and amortization 20,003 19,947
------------ ------------
2,802 2,876
------------ ------------
TOTAL ASSETS $ 8,299 $ 8,562
============ ============
-3-
TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
November 30, August 31,
2002 2002
------------ ------------
(Unaudited)
(in thousands except share
and per share data)
<s> <c> <c>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 2,180 $ 1,974
Accounts payable 2,882 2,296
Accrued expenses 1,071 1,233
Income taxes payable 20 20
Current maturities of indebtedness to related parties 22 20
Current maturities of long-term obligations 39 49
------------ ------------
TOTAL CURRENT LIABILITIES 6,214 5,592
INDEBTEDNESS TO RELATED PARTIES,
less current maturities 2,834 2,834
LONG-TERM OBLIGATIONS,
less current maturities 431 445
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock - $1 par value; 1,000,000
shares authorized, none issued -- --
Common stock - $.20 par value; 10,000,000 shares
authorized,5,286,125 shares issued 720 720
Additional capital 9,301 9,301
Accum lated deficit (10,762) (9,891)
------------ ------------
(741) 130
Less:
Treasury stock:
At cost - 153,696 shares 439 439
At no cost - 1,687,788 shares -- --
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,180) (309)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 8, 299 $ 8,562
============ ============
-4-
TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months Ended
November 30
---------------------------
2002 2001
------------ ------------
(Unaudited)
(in thousands except share
and per share data)
<s> <c> <c>
OPERATING ACTIVITIES
Net loss $ (871) $ (875)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 172 238
Provision for doubtful accounts 42 25
Changes in operating assets and liabilities:
Accounts receivable (547) 302
Inventories 137 1,177
Prepaid expenses and other assets (39) (32)
Accounts payable and accrued expenses 424 (327)
Income taxes payable/recoverable -- (2)
------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (682) 506
INVESTING ACTIVITIES
Purchases of property, plant and equipment (96) (41)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (96) (41)
FINANCING ACTIVITIES
Proceeds from revolving line of credit and long-term obligations 206 --
Principal payments on revolving line of credit, long-term
obligations and indebtedness to related parties (24) (479)
------------ ------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 182 (479)
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (596) (14)
Cash and cash equivalents at beginning of period 918 169
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 322 $ 155
============ ============
See notes to condensed consolidated financial statements.
-5-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying unaudited condensed
consolidated financial statements include the accounts of Temtex
Industries, Inc. (the Company) and its wholly owned subsidiaries.
All significant intercompany accounts and transactions have been
eliminated.
The condensed financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-
month period ended November 30, 2002 are not necessarily
indicative of the results that may be expected for the year
ending August 31, 2003. The financial statements should be read
in conjunction with the audited financial statements and notes
thereto included in the Company's annual report on Form 10-K for
the year ended August 31, 2002.
Certain prior period amounts have been reclassified to conform with
the current period's presentation.
The accompanying unaudited consolidated financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. As shown in the consolidated
financial statements for the year ended August 31, 2002 as filed
in the Company's Annual Report on Form 10-K, the Company incurred
significant losses from continuing operations during the previous
two years ended August 31, 2002. In addition, considering
borrowing limitations under the Company's existing credit
agreement, the Company was only able to borrow an additional
$222,000 under its credit agreement at November 30, 2002. These
factors, among others, indicate that the Company may be unable to
continue as a going concern.
Management recognizes that the Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash
flow to allow it to satisfy its obligations on a timely basis.
The generation of sufficient cash flow is dependent on the
Company's ability to reduce overhead costs and to continue to
reduce inventories. Consequently, if the Company is not able to
achieve its initiatives or if the Company is unable to obtain
additional financing as needed, it is likely that the Company
would be required to cease operations altogether.
NOTE B--INCOME TAXES
For the periods ended November 30, 2002 and 2001, no state and
federal income tax benefit has been recorded as the Company has
recorded a valuation allowance to fully reserve the net operating
loss carryforwards since the realization of these assets is
uncertain.
The Company has federal net operating loss carryforwards of
approximately $15,000,000, which begin to expire in the year
2021.
-6-
NOTE C--LOSS PER COMMON SHARE
Basic loss per common share is based upon the weighted average
number of shares of common stock outstanding during the period.
Diluted loss per share is based upon the weighted average number
of shares of common stock and common stock equivalents
outstanding during the period unless the effect of the common stock
equivalents would be antidilutive. Common stock equivalents
include options granted to key employees and outside directors as
well as warrants issued in connection with the subordinated
convertible notes. The number of common stock equivalents was
based on the number of shares issuable on the exercise of options
reduced by the number of shares that are assumed to have been
purchased at the average price of the common stock during the
period with the proceeds from the exercise of the options.
All options and warrants outstanding were not included in the
calculation of losses per share as they were not dilutive.
NOTE D--INVENTORIES
Inventories are summarized below (in thousands):
November 30, 2002 August 31, 2002
----------------- ---------------
Finished goods $ 789 $ 740
Work in process 268 332
Raw materials and supplies 1,584 1,704
------- -------
$ 2,641 $ 2,776
------- -------
Excess and obsolete reserves (632) (630)
------- -------
Total Inventories, Net $ 2,009 $ 2,146
======= =======
NOTE E--NOTES PAYABLE AND LONG-TERM DEBT
In September 2000, the Company entered into a three-year credit
agreement with Frost Capital Group whereby the Company may borrow
a maximum of $4,000,000 under a revolving credit facility. The
amount available under the facility is subject to limitations
based on specified percentages of the Company's eligible
outstanding receivables and inventories. The outstanding
principal bears interest at an annual rate of 1.25% above the
specified bank's prime commercial interest rate. Interest is
payable monthly and is added to the outstanding loan balance.
On July 19, 2002, the Company entered into an amendment to the
revolving facility which, among other things, (1) permitted the
issuance of $1.5 million long term obligations, (2) subordinated
the bank's lien on the Company's inventory so as to permit the
pledge of that inventory to the holder of the Secured Note, and
(3) eliminated inventory as part of the borrowing base.
The revolving credit facility does not require the maintenance of
any financial ratios but does contain both affirmative and
negative covenants. As of the date of this filing, the Company is
in compliance with all of the loan covenants, with the exception
of a provision requiring timely filing of an officer's
certificate. Frost Capital Group has waived any defaults related
to this issue.
-7-
The credit facility is secured by all assets of the Company and
its subsidiary, Temco Fireplace Products. At November 30, 2002
there was approximately $2,180,000 outstanding under the credit
facility, leaving $222,000 available.
Effective July 19, 2002, a group of four private investors led by
William Y. Tauscher, loaned the Company an aggregate $750,000
pursuant to Subordinated Convertible Notes due July 19, 2007. The
Convertible Notes bear interest at the rate of 6% per annum (9%
after a default) which is payable monthly commencing September 1,
2002. The outstanding principal under the Convertible Notes is
due on July 19, 2007, or earlier upon an event of default.
Further, to the extent the Company engages in certain
transactions resulting in the sale of the business prior to the
maturity date, the holders of the Convertible Notes maintain the
right, at their election, to accelerate the payment of the debt
to the effective date of such transaction. Commencing July 19,
2003, the Convertible Notes are convertible, at the option of the
holders thereof, into shares of common stock at an initial
conversion price of $0.60 per share. As a result, the
Convertible Notes would collectively convert into 1,250,000
shares or, approximately 26.6% of the shares outstanding,
assuming only the conversion of the Convertible Notes. The
Convertible Notes are convertible prior to July 19, 2003 upon an
event of default at the election of the holders. Lastly, to the
extent the holders of the Convertible Notes do not voluntarily
elect to receive the prepayment of the notes in connection with
certain sale events, the Convertible Notes will automatically
convert upon the occurrence of such event at the then existing
conversion price. The Convertible Notes are unsecured
obligations and are fully subordinated to the Company's
indebtedness to Frost Capital Group under the revolving credit
facility and to the Company's indebtedness to James Upfield as
discussed below. In connection with the sale of the Convertible
Notes, the Company issued to the purchasers of the Convertible
Notes four common stock purchase warrants exercisable for an
aggregate of 250,000 shares of common stock. The warrants may be
exercised for a period of five years at a per share purchase
price of $0.60. The warrants were allocated a value of $47,500 at
issuance. Such amount reduced the face amount of the Subordinated
Convertible Notes and will be accreted to interest expense over
the life of the notes.
Also on July 19, 2002, James E. Upfield loaned the Company
$750,000 pursuant to a Secured Term Note due July 19, 2005. This
Term Note bears interest at the rate of 6% per annum (9% after a
default) which is payable monthly commencing September 1, 2002.
The outstanding principal balance of the Term Note is due on July
19, 2005 or earlier upon an event of default. The Term Note
issued to Mr. Upfield is secured by a first priority security
interest in the Company's inventory and a second priority
security interest in equipment (with the superior lien remaining
pledged under the credit facility with Frost Capital Group).
NOTE F--COMMITMENTS AND CONTINGENCIES
Due to the complexity of the Company's operations, disagreements
occasionally occur.
In the opinion of management, the Company's ultimate loss from
such disagreements and potential resulting legal action, if any,
will not be significant.
During 2002, the Company entered into an agreement with William
Tauscher (now the Chairman of the Company) to provide consulting
services. As a result of such agreement, the Company recorded
$142,406 in expenses for the 2002 fiscal year, $78,228 of which
remains outstanding and is included in accounts payable as of
November 30, 2002.
-8-
NOTE G-- FOREIGN OPERATIONS
At November 30, 2002, assets of approximately $719,000 were
located at the Company's manufacturing facility in Mexico.
-9-
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
The following discussion and analysis should be read in
conjunction with the financial statements and notes thereto
included as Part 1, Item 1 of this report. This document
contains "forward-looking statements" made under the "safe
harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on the
beliefs of our management as well as assumptions made by, and
information currently available, to our management.
These statements include without limitation, the following:
* statements regarding our anticipated future capital
requirements and the sufficiency of the working capital
currently available to us;
* statements regarding our plans to expand our market share
for our products and enhanced inventory turnover;
* statements regarding our plan to achieve targeted inventory
reductions;
* statements regarding our consolidation strategy;
* statements regarding the objectives of our management; and
* other statements which speak to projections of future
conditions or our anticipated performance, including
statements which contain the words "anticipate," "believe,"
"expect" and words or phrases of similar import, as they
relate to us or our management.
You should be aware that these forward-looking statements are
subject to certain risks, uncertainties and assumptions
including, without limitation:
* our ability to generate sufficient cash flow to allow us to
continue as a going concern;
* our ability to meet our near term cash requirements;
* our ability to achieve certain efficiencies in our sales,
purchasing and manufacturing processes; and
* our ability to overcome numerous other significant risks and
difficulties including, but not limited to, those factors
set forth in subsequently filed reports with the U. S.
Securities and Exchange Commission.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to have been correct.
Should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those
described herein. Except as required by federal securities laws,
we undertake no obligation to publicly update or revise any
written or oral forward-looking statements, whether as a result
of new information, future events, changed circumstances or any
other reason after the date of this report. All subsequent
written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the applicable cautionary statements.
-10-
We are a producer of metal fireplace products used in the
residential and commercial building and the remodeling markets.
We manufacture our fireplace products at our plants in
Manchester, Tennessee; Perris, California; and through Temcomex
Manufacturing Products (Mexico) and distribute them through Temco
Fireplace Products, Inc., (both of which are our wholly owned
subsidiaries). Our fireplace products are sold nationwide to a
network of contractors, distributors and retailers.
Net Sales
- ---------
Net sales of fireplace products increased $532,000, approximately
9%, in the first quarter of fiscal 2003 compared to the first
quarter of fiscal 2002. The increase in sales was mainly due to
an overall increase in quantity of fireplaces delivered for the
period.
Gross Profit
- ------------
Gross profit increased to $825,000 from $690,000 or approximately
19% in the first quarter of fiscal 2003 compared to the first
quarter of fiscal 2002. The increase in gross profit was the
direct result of the increase in sales between the quarters, and
partially due to slightly improved margin percentages.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses increased $27,000 or
approximately 2% in the first quarter of fiscal 2003 compared to
the first quarter of fiscal 2002. This marginal increase is due,
in part, to increased administrative costs associated with
implementing our consolidation plan, partially offset by
reductions in certain administrative and overhead costs.
Interest Expense
- ----------------
Net interest expense decreased $6,000 between the comparative
first quarters. This decrease is attributable, in part, to more
favorable interest rates on recent company borrowings, although
the amount of such borrowings has increased for the recent
period.
Other Expense
- -------------
Other expense in fiscal 2003 includes a restructuring charge of
$130,000 representing the Company's estimate of the costs
incurred at November 30, 2002 related to the manufacturing
consolidation and centralization initiatives that are currently
underway. Such costs include travel, physical moving of equipment
and employee severeance and stay-pay agreements.
Income Taxes
- ------------
The Company has not recorded a benefit for income taxes on its
operating losses in either of the comparison quarters. The
Company, before considering the valuation allowance, has net
deferred tax assets resulting primarily from net operating
losses. Therefore, the Company has chosen to establish a
valuation allowance to reserve the entire amount until such time
that reassessment indicates that it is more likely than not that
the benefits will be realized primarily through future taxable
income.
-11-
Liquidity and Capital Resources
- -------------------------------
Net cash used in operating activities was $682,000 for the first
three months of 2003 compared to net cash provided of $506,000
for the first three months of 2002. The change in cash flow from
operations between periods was primarily due to the reduced level
of inventory reductions achieved in 2003. The Company planned a
temporary inventory buildup during October and November 2003 to
facilitate the move of certain manufacturing operations to Mexico.
Capital expenditures for the first three months of 2003 were $96,000.
The majority of expenditures were for tooling, replacement items and
major repairs to manufacturing equipment.
Revolving Credit Facility. In September 2000, we entered into a
three-year credit agreement with Frost Capital Group whereby we
may borrow a maximum of $4,000,000 under a revolving credit
facility. The amount available under the facility is subject to
limitations based on specified percentages of our eligible
outstanding receivables and inventory. The outstanding principal
bears interest at an annual rate of 1.25% above the specified
bank's prime commercial interest rate. Interest is payable
monthly and is added to the outstanding loan balance. On July 19,
2002, we entered into an amendment to the revolving facility
which, among other things, (1) permitted the financing
transaction involving James Upfield and the William Tauscher
group, (2) subordinated the bank's lien on our inventory so as to
permit the pledge of that inventory to Mr. Upfield to secure our
obligations under a secured term note issued to Mr. Upfield on
July 19, 2002, and (3) eliminated inventory as part of the
borrowing base. The revolving credit facility does not require
the maintenance of any financial ratios but does contain both
affirmative and negative covenants. As of the date of this filing,
we are in compliance with all of the loan covenants, with the exception
of a provision regarding timely filing of an officer's certificate.
Frost Capital Group has waived any defaults related to this issue.
The credit facility is secured by all of our assets and our
subsidiary, Temco Fireplace Products, Inc., subject to a prior lien
of Mr. Upfield. At November 30, 2002 there was approximately
$2,180,000 outstanding, leaving approximately $222,000 available
under the credit facility.
Going Concern Issues. The accompanying consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the
consolidated financial statements for the year ended August 31,
2002 as filed in the Company's Annual Report on Form 10-K, we
incurred significant losses from continuing operations during the
previous two years ended August 31, 2002. In addition,
considering borrowing limitations under our existing credit
agreement, we continue to borrow near the maximum amount under
our credit agreement and the lender has, consistent with its
rights under the applicable loan documents, further decreased our
available borrowing base. In an attempt to remedy the serious
deficiencies inherent in our cash position, we consummated,
effective July 19, 2002, a financing transaction involving James
E. Upfield, our former Chairman of the Board and a holder of
approximately 39% of our outstanding common stock, and a group of
investors led by William Y. Tauscher, our current Chairman of the
Board. The investment group led by Mr. Tauscher loaned us an
aggregate $750,000 in exchange for subordinated convertible notes
due July 19, 2007 and warrants for the purchase of 250,000 shares
of our common stock. Contemporaneously with this transaction,
Mr. Upfield loaned us an additional $750,000 in exchange for a
secured term note due July 19, 2005.
-12-
Although these transactions provided us with $1,500,000 in
additional working capital, our management recognizes that our
continuation as a going concern is dependent upon our ability to
generate sufficient cash flow to allow us to satisfy our
obligations on a timely basis. As of November 30, 2002, we had a
working capital deficit in the amount of $807,000. Our cash and
cash equivalents have significantly decreased over the first
quarter of this current fiscal year by $596,000 to $322,000 at
November 30, 2002. Unless we are successful in our attempts to
improve our operating performance, such as our recent
consolidation efforts to streamline operations, reduce costs and
generate consistent profits, additional outside financing may be
required. We anticipate that such additional financing will be
difficult to obtain on acceptable terms, if at all.
Consequently, if we fail to improve our operating performance or
if we are unable to obtain additional financing as needed, it is
likely that we would be required to cease operations altogether.
Management Initiatives. The lack of adequate cash resources
has become an increasingly difficult problem for our management.
Specifically:
* we are managing our cash on a day-to-day basis;
* the inability to obtain raw materials and other
materials from vendors and suppliers has, on occasion,
resulted in significant plant slow-downs, thereby
decreasing production and jeopardizing client
relationships; and
* Frost Capital Group, the lender on our revolving credit
facility, has continued to reduce our eligible accounts
receivable, thereby further restricting the amount of
cash we can borrow to finance our operations.
Generation of sufficient cash flow is dependent on our ability to
reduce overhead costs, and to continue to reduce inventories. We
are continuing to perform a detailed review of each sales
territory to determine what actions should be taken to increase
our market share in that region. We are also evaluating other
methods of controlling inventory levels, including the possible
purchase of computer software to more effectively control the
purchasing and production processes. We expect to be able to
achieve these initiatives without materially disrupting product
shipments to current customers. In addition, our management has
taken and is taking certain consolidation measures that are
designed to streamline our operations, reduce costs, and improve
our efficiencies. These consolidation measures have included the
relocation of our corporate headquarters to Perris, California,
and the relocation of a significant amount of equipment and
manufacturing operations from our Manchester, Tennessee location
to our Mexicali, Mexico manufacturing facility. No assurances can
be given that these or other measures we may take will be
sufficient to provide sufficient cash resource for our continued
operations or to allow us to continue as a going concern.
Item 3: Quantitative and Qualitative Disclosures About Market
Risk
- -------------------------------------------------------------
We do not engage in market risk sensitive instruments and do not
purchase hedging instruments or "other than trading" instruments
that are likely to expose us to market risk, whether interest
rate, foreign currency exchange, commodity price or equity price
risk. We have not purchased options or entered into swaps or
forward or futures contracts. Our primary market risk exposure
is that of interest rate risk on borrowings that we may have
under some future credit facility.
-13-
Item 4: Controls and Procedures
- -------------------------------
Within the ninety days prior to the filing date of this Form 10-
Q, we carried out an evaluation under the supervision and with
the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures as defined in Rule 13a-14 of the
Securities Exchange Act of 1934. Based upon that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded
that our disclosure controls and procedures are effective in
timely alerting them to material information relating to our
company (including our consolidated subsidiaries) required to be
included in this Quarterly Report on Form 10-Q. There have been
no significant changes in our internal controls or in other
factors which could significantly affect internal controls
subsequent to the date we carried out our evaluation.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings.
- -------------------------
None
Item 2: Changes in Securities and Use of Proceeds.
- -------------------------------------------------
None
Item 3: Defaults Upon Senior Securities.
- ---------------------------------------
None
Item 4: Submission of Matters to a Vote of Security Holders.
- -----------------------------------------------------------
None
Item 5: Other Information
- -------------------------
None
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a). Exhibits
--------
Exhibit
No. Description
--------- -----------
99.1 Section 906 Certification.
(b). Reports on Form 8-K
-------------------
On October 11, 2002, we filed a Report on Form 8-K disclosing the
relocation of our principal executive offices from Dallas, Texas
to Perris, California.
-14-
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TEMTEX INDUSTRIES, INC.
DATE: January 14, 2003 BY:/s/RICHARD N. ANDERSON
----------------- ----------------------------
Richard N. Anderson
President and Chief Executive Officer
DATE: January 14, 2003 BY:/s/JOHN F. GURROLA
----------------- ----------------------------
John F. Gurrola
Chief Financial Officer and
Secretary
-15-
CERTIFICATIONS
I, Richard Anderson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Temtex
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: January 14, 2003
/s/ RICHARD N. ANDERSON
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Richard N. Anderson
President and Chief Executive Officer
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CERTIFICATIONS
I, John Gurrola, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Temtex
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: January 14, 2003
/s/ JOHN F. GURROLA
- -------------------------------------
John F. Gurrola
Chief Financial Officer and Secretary
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