POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY
VALID OMB CONTROL NUMBER.
MB APPROVAL
OMB Number: 3235-0416
Expires: April 30,2003
Estimated average burden
hours per response: 32.00
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
VHS NETWORK, INC.
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
--------------
[ ] 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.
-----------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0656668
------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
305-1400 Dixie Road
Mississauga, Ontario, Canada L4W1E3
------------------------------------
(Address of principal executive offices)
905-891-1442
---------------------------------------------
(Issuer's telephone number)
APPICABLE 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: March 31, 2003 37,354,268
----------
1
ITEM 1. FINANCIAL STATEMENTS
VHS Networks, Inc.
FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD
ENDED MARCH 31, 2003
CONTENTS
--------
Balance Sheet .......................................................... 3
Statement of Shareholders' Deficit ..................................... 4
Statement of Earnings .................................................. 5
Statement of Cash Flows ................................................ 6
Notes to Financial Statements .......................................... 7
2
VHS Network Inc.
Consolidated Balance Sheets
(prepared by management)
As at
March 31 December 31
2003 2002
----------- -----------
(unaudited) (year end,
audited)
----------- -----------
Assets $ -- $ --
=========== ===========
Liabilities and shareholders' equity
Liabilities
Bank indebtedness 116 116
Accounts Payable and accrued charges 246,639 246,639
----------- -----------
Total Current Liabilities 246,755 246,755
----------- -----------
Notes Payable, Related Party 182,027 182,027
Advances from, Related Party (note 5) 614,365 583,765
Reserve for Loss Contingencies (note 6) 350,000 350,000
----------- -----------
Total Long Term Liabilities 1,146,392 1,115,792
----------- -----------
Total Liabilities $ 1,393,147 $ 1,362,547
=========== ===========
Shareholders Equity
Common Stock: $0.001at Par Value
Authorized: 100,000,000 shares
Issued and outstanding:
March 31, 2002 - 37,354,268 37,344 --
December 31, 2002 - 37,354,268 -- 37,344
Preferred Stock:
Authorized: 25,000,000 shares
Issued and outstanding: none
Additional Paid in Capital 3,847,462 3,847,462
Accumulated Deficit (5,277,953) (5,247,353)
----------- -----------
Total Shareholders Equity (1,393,147) (1,362,547)
----------- -----------
Total Liabilities and shareholders' equity $ -- $ --
=========== ===========
The accompanying notes are an integral part of these financial statements
3
VHS Network Inc.
Consolidated Statements of Operations
For The Three Months Ended March 31, 2003 and 2002
(prepared by management)
For the Three Months ended
March 31 March 31
2002 2001
------------ ------------
(unaudited) (unaudited)
Income:
Sales $ -- $ 19,997
Cost of Goods Sold -- 3,543
------------ ------------
Gross Margin -- 16,454
Operating Expenses:
Agency Fees 600 3,761
Consulting Fees -- 51,211
General and Administrative -- 36,849
Management Fees 30,000 60,000
Professional Fees -- 6,988
Inventory Allowance -- 16,093
------------ ------------
Total Operating Expenses 30,600 174,902
------------ ------------
Operating Loss (30,600) (158,448)
Other (income) and Expenses
Directors Fees -- 48,000
Interest Expense -- 1,857
Exchange (Gain) Loss -- --
------------ ------------
Total Other income and expenses -- 49,857
Net Loss Before Taxes (30,600) (208,305)
Income Taxes -- --
Net Loss $ (30,600) $ (208,305)
Net Loss
Per common share-Basic $ (0.001) $ (0.008)
============ ============
Weighted Average number
of common shares- Basic 37,354,268 25,330,268
============ ============
Net Loss per common
share - diluted $ (0.001) $ (0.008)
============ ============
Weighted Average number
of common shares Diluted 40,354,268 27,080,268
============ ============
The accompanying notes are an integral part of these financial statements
4
VHS Network Inc.
Consolidated Statements of Shareholders' Deficit
For The Three Months Ended March 31, 2003
(prepared by management)
Additional
Common Stock Paid-In Accumulated
Shares Par Value Capital Deficit
----------- ----------- ----------- -----------
Deficit - December 31, 2001 22,785,268 $ 22,784 $ 3,637,208 $(4,544,521)
Payment of director fees 1,250,000 1,250 46,750 --
Payment of consulting services 1,295,000 1,295 51,504 --
Acquisition of China eMall
Class "B" shares 4,015,000 4,015 -- --
Partial settlement of GroupMark debt 8,000,000 8,000 112,000 (702,832)
----------- ----------- ----------- -----------
Deficit - December 31, 2002 37,345,268 $ 37,344 $ 3,847,462 $(5,247,353)
Net loss for the three month period -- -- -- (30,600)
----------- ----------- ----------- -----------
Deficit - March 31, 2003 37,345,268 $ 37,344 $ 3,847,462 $(5,277,953)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
5
VHS Network Inc.
Consolidated Statements of Cashflows
For The Three Months Ended March 31, 2003 and 2002
(prepared by management)
For the Three Months ended
March 31 March 31
2003 2002
--------- ---------
(unaudited) (unaudited)
Net Income (Loss) $ (30,600) $(208,305)
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 -- 52,800
Amortization of Intangible assets -- 12,800
Depreciation -- 3,294
--------- ---------
(30,600) (91,411)
Cash Flow From Operating Activities:
Changes in assets and Liabilities
Receivables -- 16,451
Inventory -- (3,296)
Bank Loan -- (5,770)
Accounts Payable 600 8,408
--------- ---------
Cash Flow used in operating activities: 600 15,793
Cash flow from investing activities -- --
Net cash used in investing activities
--------- ---------
Cash Flow From Financing Activities:
Management fees payable, related party 30,000 75,151
--------- ---------
Net Cash Generated by Financing activities 30,000 75,151
--------- ---------
(decrease) Increase in cash and cash Equivalents -- (467)
Balance at beginning period (116) 1,157
--------- ---------
Balance at end of period $ (116) $ 690
========= =========
Supplementry Disclosure:
Cash Paid for Interest -- $ 1,857
Conversion of payables into common Stock -- $ 132,800
Common stock issued for services and expenses -- $ 48,000
The accompanying notes are an integral part of these financial statements
6
VHS NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
March 31,2003
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, Canada 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.
1. OPERATIONS
OPERATIONS
The Company is continuing to reposition itself to identify 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.
2. 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.
Basis of Presentation
- ---------------------
These financial statements have been prepared in accordance with United States
of America generally accepted accounting principles with the assumption that the
Company will be able to realize its assets and discharge its liabilities in the
normal course of business.
7
The Company has suffered operating losses during the current year and has a
negative working capital and a net capital deficiency that raises doubt as to
its ability to continue as a going concern. Management expects that the Company
will be in a position to obtain the working capital financing required to
support its business operations. The Company's continued existence as a going
concern is dependent upon its ability to attain and maintain profitable
operations and to obtain the necessary financing..
Principals Of Consolidation
- ---------------------------
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
- -------------------------
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 March 31,2003 were nil.
Inventories
- -----------
Inventories are stated at the lower of cost (first in, first out method) or
market.
Property And Equipment
- ----------------------
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. 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.
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
8
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.
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
- --------------------
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.
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.
Advertising Costs
- -----------------
The Company expenses advertising costs as they are incurred. The Company did not
incur any advertising costs for the three-month period ending March 31, 2003 and
for the year ending December 31, 2002
9
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.
Reclassifications
- -----------------
Certain amounts in the 2002 financial statements have been reclassified to
conform to the 2003 presentation
Recently Issued Accounting Pronouncements
- -----------------------------------------
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 Company unsuccessfully
offered these prints for sale through its own web site and other internet web
sites. As the prints did not sell, the company wrote off the inventory at year
end.
4. INCOME TAXES
No provision for federal and state taxes has been recorded for the three month
periods ended March 31, 2003 and 2002, and the year ended December 31, 2002,
since the Company incurred net operating losses for these periods.
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 month period ending March 31 2003
and 2002, the company incurred management fees of $30,000 and $60,000,
respectively.
Notes payables due to related parties are payable to a private company which are
owned by a shareholder who is an officer and director of the Company. The
amounts payable are non-interest bearing and have no specified terms of
repayment.
10
Amounts due Groupmark pursuant to this management service agreement and other
borrowings as of March 31, 2002 and December 31, 2002 are $614,365 and $583,765
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
- -----
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
- --------------------------------------------------
The Company has recorded a $350,000 liability for loss contingencies. This
reserve was established as a result of a potential liability of the Company to
the Internal Revenue Service (IRS) as a result of actions by the former
principal of Video Home Shopping Inc., which has lead to an investigation by the
IRS. The Company has contacted the IRS for information and has no indication
that the investigation concerns the Company directly. Management, nevertheless,
believes that said IRS investigation may relate, in part, to unpaid Federal
Withholding taxes Social Security and Medicare taxes, employer's taxes, and
other payroll taxes and out of prudence, the Company has elected to provide a
reserve of $350,000 to provide for the possibility of such liability to the IRS.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
- -------
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. These interim financial statements do not contain all disclosures
required under generally accepted accounting principles for annual financial
statements and should therefore be read in conjunction with the most recent
annual financial statements. The significant accounting policies follow that of
the most recently reported annual financial statements.
VHSN's goals and objectives are centered on the ability to identify market
opportunities in the United States, Canada and abroad in internet and
interactive media e-commerce and smartCARD loyalty marketing. 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.
Operations
- ----------
Results For Three Months Ended March 31, 2003
- ---------------------------------------------
For the three months ended March 31, 2003 we had no revenues compared to $19,997
for the same period in 2002.
Operating Expenses for the three months ending March 31, 2003 were $30,600 as
compared to Operating Expense of $174,902 for the three months ended March 31,
2002. All non-essential expenses have been eliminated in an effort to reduce
operating losses
11
Amounts due to GroupMark Canada Limited as at March 31, 2003 were $614,365 and a
note payable of $ 182,027, for a total of $796,392. This compares with advances
of $583,765 and a note payable of $182,027 for a total of $765,792. for the
corresponding period in 2002.
Liquidity And Capital Resources
- -------------------------------
Revenues for the three month period ended March 31, 2003 were $NIL as a result
of no activity in the company's internet and technologies ventures. The ability
of VHSN to continue as a going concern is dependent on its ability to increase
sales, obtain capital funding and seek other joint ventures and alliances with
third parties.
Changes In Financial Position
- -----------------------------
Total liabilities increased to $1,393,147 on March 31, 2003 from $1,362,547 on
December 31,2003 as management sought new joint ventures and alliances with
third parties. Shareholders' equity decreased from ($1,362,547) on December
31,2002 to ($1,393,147) during the first quarter of 2003.
ITEM 3. CONTROLS & PROCEEDURES
Evaluation Of Disclosure Controls And Proceedures
- -------------------------------------------------
The Company maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and other
disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. Within 90 days prior to the filing of this
report, the Company's Chief Executive Officer and principal financial officer
have evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures with the assistance and participation of
other members of management. Based upon that evaluation, the Company's Chief
Executive Officer and principal financial officer concluded that the Company's
disclosure controls and procedures are effective for gathering, analyzing and
disclosing the information the Company is required to disclose in the reports it
files under the Securities Exchange Act of 1934 within the time periods
specified in the SEC's rules and forms.
Changes In Internal Controls
- ----------------------------
The company has not made any significant changes to its internal controls
subsequent to the Evaluation Date. The company has not identified any
significant deficiencies or material weaknesses or other factors that could
significantly affect these controls, and therefore, no corrective action was
taken.
12
PART 11
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
NONE
ITEM 2. CHANGES IN SECURITIES
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.
Exhibits
2.1* Agreement and Plan of Reorganization between VHS Network, Inc. and
Exodus Acquisition Corporation, dated May 6, 2000.
3.1* Articles of Incorporation for VHS Network, Inc.
3.2* Articles of Merger for VHS Network, Inc.
3.3* Articles of Amendment for VHS Network, Inc.
3.4* By-Laws of VHS Network, Inc.
4.1* Specimen Stock Certificate.
10.1* Share Exchange Agreement made April 15, 2000 among VHS Network, Inc.,
China eMall Corporation, Gang Chai, Qin Lu Chai, Uphill Capital Inc.,
Charles He, Qing Wang, and Forte Management Corporation.
10.2* License Agreement between Groupmark Canada Limited, and VHS Network,
Inc. dated January 1, 2000.
10.3* Management Services Agreement between VHS Network, Inc. and Groupmark
Canada Limited, dated April 1997.
10.4* Agreement and Plan of Merger dated as of December 26, 1996 made among
Ronden Vending Corporation and Ronden Acquisition, Inc., Video Home
Shopping, Inc. (A Tennessee Corporation), Progressive Media Group, Inc.
and Pamela Wilkerson.
13
10.5* Agreement and Plan of Merger dated as of December 30, 1996 between
Ronden Vending Corporation and Ronden Acquisition, Inc.
10.6* Agreement and Plan of Reorganization dated April 10, 1997 among VHS
Network, Inc. and VHS Acquisition, Inc. and VHS Network (Canada) Inc.*
10.8** Form of Acquisition Agreement between the Company and TruNet Enterprise
Inc.
99.1 Certifications Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002
o Previously filed as an exhibit to the Company's Registration
Statement on Form SB2 filed with the Commission and incorporated
by reference herein.
** Filed as exhibit 10.8 to the Company's form 10K-SB filed with the
Commission on April 16, 2002 and incorporated by reference herein.
Reports On Form 8-K
- -------------------
On February 4, 2002, the Company filed a Current Report on Form 8-K with the
Commission disclosing the Company's change of accountants
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.
/s/ Elwin Cathcart
------------------
Elwin Cathcart, Chief Executive Officer
(Principle Accounting Officer, and Principle
Executive officer)
Date May 30, 2003
(Signature)*
/s/ Elwin Cathcart
------------------
Date _______________________________
(Signature)*
/s/ Elwin Cathcart
------------------
*Print the name and title of each signing officer under his signature.
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 for the quarter ended
March 31, 2003;
2. Based on my knowledge, this quarterly report does not include any untrue
statement of 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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
annual 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
annual report (the "Evaluation Date"); and
c. presented in this annual 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
annual 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: MAY 31, 2003
/s/ Elwin Cathcart
------------------------------------
Elwin Cathcart
Principal Executive Officer
and Principal Financial Officer
17