UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
VHS NETWORK, INC.
FORM 10-QSB
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[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 EXCHANGE ACT For the
transition period from _________________ to _________________
Commission file number
333-412162
VHS NETWORK, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0656668
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(State or other jurisdiction of IRS Employer
incorporation or organization) Identification No.)
305-1400 Dixie Road, Mississauga, Ontario, Canada L4W1E3
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(Address of principal executive offices)
(905) 891-1442
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(Issuer's telephone number)
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 l2, 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
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
September 30, 2002: 37,354,268
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x ]
1
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
VHS NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
2
VHS Network Inc.
Consolidated Balance Sheets
(prepared by management)
As at As at
September 30 December 31
2002 2001
----------- -----------
(unaudited) (year end, audited)
Assets
Cash $ -- $ 1,157
Accounts Receivable 1,257 17,793
Inventory 99,600 96,304
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Total Current Assets 100,857 115,254
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Property and Equipment
Furniture and Equipment 35,520 35,520
Accumulated Depreciation (18,661) (8,779)
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Total Property and Equipment 16,859 26,741
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Intangible Assets, net 100,580 139,850
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Total Assets $ 218,296 $ 281,845
=========== ===========
Liabilities and shareholders' equity
Liabilities
Bank Loan Payable 60,390 88,736
Accounts Payable 154,859 115,476
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Total Current Liabilities 215,249 204,212
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Accounts Payable, related party 583,931 430,135
Notes Payable, related party 182,027 182,027
Reserve for Loss Contingencies 350,000 350,000
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Total Long Term Liabilities 1,115,958 962,162
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Total Liabilities $ 1,331,207 $ 1,166,374
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Shareholders Equity
Common Stock: $0.001at Par Value
Authorized: 100,000,000 shares
Issued and outstanding:
September 30 2002 - 37,354,268 29,345 --
December 31, 2001 - 27,785,268 -- 22,784
Preferred Stock:
Authorized: 25,000,000 shares
Issued and outstanding: none
Additional Paid in Capital 3,884,068 3,637,208
Accumulated Deficit (5,026,324) (4,544,521)
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Total Shareholders Equity (1,112,911) (884,529)
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Total Liabilities and shareholders' equity $ 218,296 $ 281,845
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3
VHS Network Inc.
Consolidated Statements of Operations
For The Three Months Ended September 30, 2002 and 2001
(prepared by management)
For the Three Months ended
September 30 September 30
2002 2001
------------ ------------
(unaudited) (unaudited)
Income:
Sales $ -- $ 36,212
Cost of Goods Sold -- 21,717
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Gross Margin -- 14,495
Operating Expenses:
Agency Fees 4,300 3,042
Consulting Fees -- 1,449
General and Administrative 17,270 3,951
Management Fees 89,616 --
Professional Fees 6,250 23,991
Depreciation and Amortization 29,764 3,578
Inventory Allowance -- 30,000
Other -- 174
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Total Operating Expenses 147,200 66,185
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Operating Loss (147,200) (51,690)
Other (income) and Expenses
Directors Fees
Interest Expense
Exchange (Gain) Loss --
------------ ------------
Total Other income and expenses -- --
Net Loss Before Taxes (147,200) (51,690)
Income Taxes -- --
Net Loss $ (147,200) $ (51,690)
Net Loss
Per common share-Basic $ (0.004) $ (0.003)
============ ============
Weighted Average number
of common shares- Basic 37,354,268 19,560,268
============ ============
Net Loss per common
share - diluted $ (0.004) $ (0.003)
============ ============
Weighted Average number
of common shares Diluted 37,354,268 19,560,268
============ ============
4
VHS Network Inc.
Consolidated Statements of Operations
For The Nine Months Ended September 30, 2002 and 2001
(prepared by management)
For the Nine Months ended
September 30 September 30
2002 2001
------------ ------------
(unaudited) (unaudited)
Income:
Sales $ 34,276 $ 246,311
Cost of Goods Sold 8,589 214,389
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Gross Margin 25,687 31,922
Operating Expenses:
Agency Fees 8,492 7,712
Consulting Fees 55,927 5,310
General and Administrative 77,358 21,172
Management Fees 224,645 150,000
Professional Fees 25,839 55,145
Depreciation and Amortization 62,822 10,734
Inventory Allowance -- 30,000
Other -- 536
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Total Operating Expenses 455,083 280,609
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Operating Loss (429,396) (248,687)
Other (income) and Expenses
Directors Fees 48,000 --
Interest Expense 1,857 --
Exchange (Gain) Loss 2,986 2,986
------------ ------------
Total Other income and expenses 52,843 2,986
Net Loss Before Taxes (482,239) (251,673)
Income Taxes --
Net Loss (482,239) (251,673)
Net Loss
Per common share-Basic $ (0.013) $ (0.013)
============ ============
Weighted Average number
of common shares- Basic 37,354,268 19,560,268
============ ============
Net Loss per common
share - diluted $ (0.013) $ (0.013)
============ ============
Weighted Average number
of common shares Diluted 37,354,268 19,560,268
============ ============
5
VHS Network Inc.
Consolidated Statements of Cashflows
For The Nine Months Ended September 30, 2002 and 2001
(prepared by management)
For the Nine Months ended
September 30 September 30
2002 2001
--------- ---------
(unaudited) (unaudited)
Net Income (Loss) $(482,239) $(251,673)
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating activities:
Issuance of Common Stock for directors fees 48,000 --
Issuance of Common Stock for Expenses and Debt 132,800 --
Inventory Valuation allowance -- 30,000
Amortization of Intangible assets 52,940 6,000
Depreciation 9,882 4,734
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(238,617) (210,939)
Cash Flow From Operating Activities:
Changes in assets and Liabilities
Receivables 16,536 (1,419)
Inventory (3,296) (6,459)
Prepaids and Deposits -- 9,272
Bank Loan (28,346) --
Accounts Payable 39,383 --
--------- ---------
Cash Flow used in operating activities: (214,340) (209,545)
Cash flow from investing activities -- --
Net cash used in investing activities -- --
Cash Flow From Financing Activities:
Management fees payable, related party 153,796 150,000
Advances from related party 59,387 78,557
Payments on advances from related party -- (37,371)
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Net Cash Generated by Financing activities 213,183 191,186
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(decrease) Increase in cash and cash Equivalents (1,157) (18,359)
Balance at beginning period 1,157 25,205
--------- ---------
Balance at end of period $ -- $ 6,846
========= =========
Supplimentry Disclosure:
Cash Paid for Interest $ 1,857 --
Conversion of payables into common Stock $ 132,800 --
Common stock issued for services and expenses $ 48,000 --
6
Company History
VHS Network, Inc. (the "Company" or "VHSN") was incorporated in the State of
Florida on December 18, 1995, as Ronden Vending Corp. On December 24, 1996, the
Company incorporated a wholly owned subsidiary called Ronden Acquisition, Inc. a
Florida corporation. Ronden Acquisition Inc., then merged with Video Home
Shopping, Inc. (a Tennessee corporation), and Ronden Acquisition, Inc., was the
surviving Florida Corporation. In 1996, Video Home Shopping, Inc. was a network
marketing and distribution company which offered a wide range of products and
services to consumers through the medium of video tape. After the merger,
however, the Company decided not to continue with the network marketing and
distribution operations of Video Home Shopping, Inc. of Tennessee.
On January 9,1997, articles of merger were filed for the Company as the
surviving corporation of a merger between the Company and its wholly owned
subsidiary, Ronden Acquisitions, Inc. This completed the forward triangular
merger between Video Home Shopping, Inc. Ronden Acquisitions, Inc. and the
Company.
On January 9, 1997, articles of amendment were filed to change the name of the
Company from Ronden Vending Corp. to VHS Network, Inc. On April 9, 1997, the
Company incorporated VHS Acquisitions, Inc. as a wholly owned subsidiary.
In April 1997, the Company was restructured by way of a reverse take-over
involving its wholly owned subsidiary, VHS Acquisitions, Inc. a Florida company,
and VHS Network, Inc., a Manitoba and Canadian controlled private corporation.
On April 12, 2000, the Company acquired all of the outstanding common shares of
China- eMall Corporation, an Ontario private company. This represents a 100%
voting interest in China-eMall Corporation.
On December 1, 2001 the Company acquired all the outstanding common shares of
TrueNet Enterprise Inc., an Ontario private company.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
THESE CONSOLIDATED FINANCIAL STATEMENTS ARE PREPARED IN ACCORDANCE WITH
ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES. THE FOLLOWING IS
A SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES FOLLOWED IN THE PREPARATION OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
7
1. OPERATIONS
OPERATIONS
The Company is continuing to reposition itself to identify technologies and
market opportunities in the United States, Canada, China and abroad in Internet
and electronic commerce interactive media, and SmartCard loyalty marketing. The
Company will operate and/or develop these lines as well as seek other joint
ventures and alliances with third parties.
PRINCIPALS OF CONSOLIDATION
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The consolidated financial statements include the accounts of the company and
all of its subsidiary companies. Intercompany accounts and transactions have
been eliminated on consolidation.
These consolidated financial statements reflect all adjustments, which are, in
the opinion of management, necessary for a fair presentation of the results for
the interim periods.
CASH AND CASH EQUIVALENTS
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Cash and cash equivalents consist of cash on hand and cash deposited with
financial institutions, including money market accounts, and commercial paper
purchased with an original maturity of three months or less.
CONCENTRATION OF CASH
- --------------------------------------------------------------------------------
The company at times maintains cash balances in accounts that are not fully
federally insured. Uninsured balances as of September 30, 2002 were nil.
INVENTORIES
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Inventories are stated at the lower of cost (first in, first out method) or
market.
PROPERTY AND EQUIPMENT
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Property and equipment are stated at cost or, in the case of leased assets under
capital leases, at the present value of the future lease payments at inception
of the lease. Major improvements that materially extend the useful life of
property are capitalized. Depreciation is calculated on a straight-line basis
over the estimated useful lives of various assets, which range from thee to
seven years. Leasehold improvements and leased assets under capital leases are
amortized over the life of the asset or the period of the respective lease using
the straight-line method, whichever is the shortest. Expenditures for repairs
and maintenance are changed to expense as incurred.
Depreciation expense for the three-month ended September 30, 2002, was $3,294
and for the year ended December 31, 2001, was $ 14,883.
STOCK- BASED COMPENSATION
- --------------------------------------------------------------------------------
The company accounts for its stock-based compensation plan based on Accounting
Principles Board ("APB") Opinion No. 25. In October 1995, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 123, "Accounting for
Stock-Based Compensation." The Company has determined that it will not change to
the fair value method and will continue to use APB Opinion No. 25 for
measurement and recognition of any expense related to employee stock based
transactions.
INCOME TAXES
- --------------------------------------------------------------------------------
The company accounts for the income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes". Income taxes are provided for the tax effects of
transactions reported in the consolidated financial statements and consist of
deferred tax assets and liabilities for financial and income tax reporting. The
deferred tax assets and liabilities represent the future tax return consequences
of those differences, which will be either taxable or deductible when the assets
and liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income.
8
2. SUMMARY OF SIGNIFICANT POLICIES (continued)
Foreign Currency Translation
- --------------------------------------------------------------------------------
Transactions are translated into the functional currency at the exchange rates
in effect at the time the transactions occur. Exchange gains and losses arising
on translation are included in the operating results for the year.
REVENUE
- --------------------------------------------------------------------------------
Sales are recorded for products upon shipment of product to customers and
transfer of title under standard commercial terms.
COMPREHENSIVE INCOME
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In 1999, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components in a fell set of financial statements.
Comprehensive income is presented in the consolidated statements of
shareholders' equity and comprehensive income, and consists of net income and
unrealized gains (losses) on available for sale marketable securities; foreign
currency translation adjustments and changes in market value of future contracts
that qualify as a hedge; and negative equity adjustments recognized in
accordance with SFAS 87. SFAS No. 130 requires only additional disclosures in
the consolidated financial statements and does not affect the Company's
financial position or results of operations. The elements of comprehensive
income for the three-month, six-month and nine-month periods ended September 30,
2002, and 2001 and the year ended December 31, 2001 were minimal.
Income (loss) per common share
- --------------------------------------------------------------------------------
Income (loss) per common share is computed on the weighted average number of
common or common and common equivalent shares outstanding during each year.
Basic Earnings-Per-Share ("EPS") is computed as net income (loss) applicable to
common stockholders' divided by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur from common shares issue able through stock options, warrants, and
other convertible securities when the effect would be dilutive. The Company had
no dilutive securities.
Long-lived assets
- --------------------------------------------------------------------------------
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
the Company reviews the carrying value of its long-lived assets and identifiable
intangibles for possible impairment whenever events or changes in circumstances
indicate the carrying amount of assets to be held and used may not be
recoverable.
USE OF ESTIMATES
- --------------------------------------------------------------------------------
The preparation of the financial statements in conformity with generally
accepted accounting principles necessarily requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could significantly differ from those estimates.
9
ADVERTISING COSTS
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The Company expenses advertising costs as they are incurred. The Company did not
incur any advertising costs for the three-month and nine-month periods ending
September 30, 2002 and for the year ending December 31, 2001 SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION
- --------------------------------------------------------------------------------
The Company follows SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information." SFAS No. 131 requires that public business enterprise
report financial and descriptive information about it's reportable operating
segments on the basis that is used internally for evaluating segment performance
and deciding how to allocate resources to segments. Currently, the Company
operates in only one segment.
Intangibles
- --------------------------------------------------------------------------------
Intangible assets are recorded at cost. Capitalized web-site development costs
associated with eh purchase of China eMall are amortized on straight-line basis
over a period of 3 years.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SAFS No. 133 requires recognition of all
derivative financial instruments as either assets or liabilities in consolidated
balance sheets at fair value and determines the method(s) of gain/loss
recognition. The FASB issued SFAS No. 137, "Deferral of the Effective Date of
FASB statement No.133" in June 1999 to defer the effective date of SFAS No. 133
to fiscal years beginning after June 15, 2000. The Company does not have
derivative instruments and does not conduct hedging activities.
3. INVENTORIES
On April 29, 1998, the Company acquired approximately 32,000 sets of printed art
reproductions. Each set consists of four full-color prints from "The Andover
Series" by artist Jim Perleberg. Each image has a title narrative printed in the
margin and is re-signed, in the plate, by the artist. The management of the
Company has evaluated the market value of the prints and determined that the
market value of the prints is not below their acquisition cost. The prints are
by a noted artist, and the original Andover Series S/N Limited Edition
lithographs were fully sold.
The company acquired these sets of prints in exchange for 1,399,992 shares of
its common stock valued at 139,999. The Company will be offering these prints
for sale through it's own web site and other Internet web sites. The Company has
recorded a valuation allowance of 28,000 in 2000 to reflect the fair value of
the inventory.
4. INCOME TAXES
No provision for federal and state taxes has been recorded for the three and
nine month periods ended September 30, 2002 and 2001, and the year ended
December 31, 2001, since the Company incurred net operating losses for these
periods.
10
5. RELATED PARTY TRANSACTIONS
Groupmark Canada Limited
- --------------------------------------------------------------------------------
In 1997, the Company entered into a management service with Groupmark Canada
Limited ("Groupmark"), of which the Chairman and Chief Executive Officer of the
Company is the sole shareholder. Under this agreement, Groupmark provides the
Company all management, daily administrative functions, financial and business
advisory services. Groupmark was also contracted to assist in the technological
development of the "SmartCARD." Contractually, charges for these services are
not to exceed $56,000 per month. For the three and nine-months ending September
30, 2002, the company incurred management fees of $89,616 and $224,645,
respectively. For the three and six-months ending September 30, 2001 the Company
incurred $NIL, and $150,000 respectively.
Amounts due Groupmark pursuant to this management service agreement and other
borrowings as of September 30, 2002 and December 31, 2001 are $583,931 and
$430,13562 respectively. Groupmark has the option to accept payment by way of
the company's common stock at fair market value in lieu of cash.
6. COMMITMENTS AND CONTINGENCIES
Legal
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The Company is not currently aware of any legal proceeding or claims that the
Company believes will have individually or in the aggregate, a material adverse
effect on the Company's financial position or results of operations.
Video Home Shopping, Inc., a Tennessee Corporation
Management believes that the contingency that has been carried by the company
for the last several years is no longer a concern. It therefore intends to
discontinue to carry this contingency at yearend.
Going Concern Uncertainties
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The accompanying financial statements have been prepared in conformity with
generally accepted accounting principals, which contemplate continuation of the
Company as a going concern. However, the Company has experienced recurring
operating losses and negative cash flows from operations. The Company's
continued existence is dependant upon its ability to increase operating revenues
and/or raise additional equity financing.
In view of these matters, management believes that actions presently being taken
to expand the Company's operations and to continue its web-site development
activity provide the opportunity for the Company to return to profitability. The
continued focus on strategic technological investments will improve the
Company's cash flow, profitability, and ability to raise additional capital so
that it can meet its strategic objectives.
Management is currently in the process of negotiating additional equity
financing with potential investors. The financial statements do not include any
adjustments that might result fro the outcome of this uncertainty.
11
7. INTANGIBLE ASSETS
Intangible assets at $ 127,050 consist of the following:
Domain Name $ 24,000
Software $ 129,520
Less: Accumulated Amortization $ (52,940)
- --------------------------------------------------------------------------------
$ 100,580
Amortization expense for the nine-months ended September 2002 was $52940
Amortization expense for the nine months ended September 2001 was $6,000.00 and
for the year ended December 31, 2001 was $ 13,760
8. REGISTRATION STATEMENT
There were no registration statements submitted during this reporting period.
9. PLAN OF REORGANIZATION
On May 6, 2001, the Company entered into an agreement and plan of reorganization
(the "Agreement") with Branson Holdings Inc. ("Branson") to acquire all the
issued and outstanding shares of Branson. The agreement provides that all the
shareholders of Branson shall exchange all of the outstanding shares of common
stock of Branson, constituting a total of 10,072 shares, for a total of
10,072,000 common shares of VHSN and Branson shall thereafter operate as a
wholly-owned subsidiary of VHSN. One of these conditions precedent to closing is
that the board of directors of VHSN, must prior to the issuance of the
10,072,000 common shares, authorize and effect a reverse stock split of 20 to 1
of the Company's total issued and outstanding shares to bring the total issued
and outstanding shares of VHSN equal to 978,013 from 19,560,268. On completion
of the transaction and after giving effect to the issuance of 10,072,000 there
would be 11,050,013 common shares of VHSN outstanding on a non-diluted basis.
The Agreement further provides that, on closing, the board of directors of VHSN
will be reduced to 3 and 2 nominees for Branson will be added to make a total
number of directors 5.
The management of the Company has discontinued negotiations with Branson and has
terminated any further discussions.
Item 2. Management's Discussion and Analysis or Plan of Operation.
GENERAL
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The information in this section should be read together with the consolidated,
unaudited, interim financial statements that are included elsewhere in this Form
10-QSB. VHSN's goals and objectives are centered on the ability to identify
technologies and market opportunities in the United States, Canada and abroad in
internet and interactive media e-commerce and smartCARD loyalty marketing. To
achieve its goals, VHSN is developing its supplier base and its web site,
www.china-emall.com so that it will be in a position to attract purchasers of
its products and develop its revenues. It is at the same time investigating
companies from which it can acquire technology with proven financial
performance, where joint ventures or acquisitions may also be possible.
- --------------------------------------------------------------------------------
Results for three months ended September 30,2002
For the three months ended September 30, 2002 we had no revenues compared to
$36,212 for the same period in 2001.
12
Operating Expenses for the three months ending September 30, 2002 were $147,200
as compared to Operating Expense of $66,185 for the three months ended June
30,2001. Although there has been an increase in sales and marketing effort,
sales have not materialized
Amounts due to Groupmark Canada Limited as at September 30,2002 were $583,931
and a note payable of $182,027. This for a total of $765,958.
Results for the nine months ended September 30, 2002.
We had sales in North America of finished goods, which we sourced in China, and
North America. We did, however, develop some sales sourced in Canada as well.
Revenues for the period were $34,276, this is compared to $246,311 in sales for
the same period September 30,2001, a reduction of $212,035 in sales.
Operating expenses for the nine months ended September 30,2002 were $455,083 as
compared to $280,609 for the nine months ended September 30,2001. The increased
expense reflects increased sales and marketing effort, which has unfortunately
not generated appropriate sales
LIQUIDITY AND CAPITAL RESOURCES
Revenues were considerably lower during this period and the company experienced
a loss of $482,239 from operations, as compared to $251,673 for the nine month
period ended September 30,2002. We anticipate that we will be able to
significantly reduce this operating loss over the corresponding period in the
next fiscal year as the company establishes itself in the market.
The ability of VHSN to continue as a going concern is dependent upon its ability
to increase sales and obtain capital funding as needed to fund its operations.
CHANGES IN FINANCIAL POSITION
There have been 9,569,000 share issuance of stock during this fiscal period.
Total assets of $218,296 on September 30,2002 compared with total assets of
$281,845 on December 31,2001. Total liabilities increased to $1,331,207 on
September 30,2002 from $1,166374 on December 31,2002 as increased effort was put
into sales and marketing activity. Shareholders' equity decreased from
($884,529) on December 31,2001 to ($1,112,911) during the third quarter of 2002.
FUTURE PROSPECTS
The company has not made any significant progress in the nine months of this
fiscal year. During this period we have experienced several cancellations of
contracts with clients for our products and services. This will result in
reduced revenues for the company in the future. Our forecasts for future sale
are in line with this reality and our budgets, as a result will reflect this
reality.
The general downturn in the economy, and the requisite reluctance of merchants
to carry excess inventories are a concern for all e-commerce companies. We,
however, believe that this may assist in our ability to deliver products to our
markets on an "as needed" basis.
We are experiencing an increase in the use of our internet site due to a
reluctance of our potential and current customers to travel great distances to
trade shows and foreign countries.
We continue to focus on increasing our operational efficiencies in order to
minimize our deficit.
13
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
The Registrant issued a total of 8,000,000 common shares during the period ended
September 30, 2002 for cancellation of debt of 8,000,000.
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.
None.
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VHS NETWORK, INC.
(Registrant)
Date: November 19, 2002 /s/ Elwin Cathcart
------------------------------------
Elwin Cathcart
Principal Executive Officer
and Principal Financial Officer
15
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATIONS
I, Elwin Cathcart Principal Executive Officer of the Registrant, and as
Principal Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of for the period ended
September 30, 2002;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material face necessary to make
the statement 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 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 our conclusions about the
effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;
16
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
functions):
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: November 19, 2002.
/s/ Elwin Cathcart
------------------------------------
Elwin Cathcart
Principal Executive Officer
and Principal Financial Officer
17