U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2002.
[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange act for
the transition period from to
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Commission File Number: 0-20316
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Avitar, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 06-1174053
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
65 Dan Road, Canton, Massachusetts 02021
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(Address of principal executive offices) (Zip Code)
(781) 821-2440
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(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [x]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:
COMMON STOCK: 44,603,647
AS OF MAY 10, 2002
Transitional Small Business Disclosure Format
(Check One): [ ] Yes ; [x] No
Page 1 of 17 pages
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION 3
Item 1 Consolidated Financial Statements
Balance Sheet 4
Statements of Operations 5
Statement of Stockholders' Equity 6
Statements of Cash Flows 7
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis or Plan of Operation 11
PART II: OTHER INFORMATION 15
Item 2 Changes in Securities and Use of Proceeds 16
Item 6 Exhibits and Reports on Form 8-K 16
SIGNATURES 17
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Avitar, Inc. and Subsidiaries
Consolidated Balance Sheet
03/31
(Unaudited)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $930,383
Accounts receivable, net 1,191,623
Inventories 264,340
Prepaid expenses and other current assets 158,787
----------------
Total current assets 2,545,133
PROPERTY AND EQUIPMENT, net 448,151
GOODWILL, net 2,294,551
OTHER ASSETS 130,329
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Total Assets $5,418,164
================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $221,424
Accounts payable 1,380,588
Accrued expenses 704,103
Current portion of long-term debt 37,359
----------------
Total current liabilities 2,343,474
LONG TERM DEBT, LESS CURRENT PORTION 34,594
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Total liabilities 2,378,068
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COMMITMENTS
STOCKHOLDERS' EQUITY:
Series A, B, C and D convertible preferred stock,
$.01 par value; authorized 5,000,000 shares;
1,729,929 shares issued and outstanding 17,299
Common Stock, $.01 par value; authorized 100,000,000
shares; 44,603,647 shares issued and outstanding 446,036
Additional paid-in capital 42,031,932
Accumulated deficit (39,394,530)
----------------
3,100,737
Less preferred stock subscription receivable (60,641)
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Total stockholders' equity 3,040,096
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Total Liabilities and Stockholders' Equity $5,418,164
================
See accompanying notes to consolidated financial statements.
Avitar, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
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THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------------------
2002 2001 2002 2001
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SALES $2,231,119 $1,229,578 $5,473,533 $2,398,914
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OPERATING EXPENSES
Cost of sales 1,509,049 803,993 3,146,890 1,688,211
Selling, general and administrative expenses 1,599,040 1,433,364 3,107,958 2,813,363
Research and development expenses 275,035 510,170 667,190 944,883
Amortization of goodwill 77,498 73,424 154,996 143,848
-------------- -------------- -------------- -------------
Total operating expenses 3,460,622 2,820,951 7,077,034 5,590,305
-------------- -------------- -------------- -------------
LOSS FROM OPERATIONS (1,229,503) (1,591,373) (1,603,501) (3,191,391)
-------------- -------------- -------------- -------------
OTHER INCOME (EXPENSE)
Interest income 0 587 0 733
Interest expense and financing costs (19,218) (15,642) (39,793) (25,575)
Other income (expense), net 3,536 (1,212) 19,703 (1,924)
-------------- -------------- -------------- -------------
Total other expense, net (15,682) (16,267) (20,090) (26,766)
-------------- -------------- -------------- -------------
NET LOSS $(1,245,185) $(1,607,640) $(1,623,591) $(3,218,157)
============== ============== ============== =============
BASIC AND DILUTED NET LOSS PER SHARE (Note 5) $(0.03) ($0.09) ($0.04) $(0.18)
============== ============== ============== =============
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING 42,638,768 32,266,751 40,706,019 31,543,808
============== ============== ============== =============
See accompanying notes to consolidated financial statements.
Avitar, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Six Months Ended March 31, 2002
(Unaudited)
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Preferred Stock Common Stock
Shares Amount Shares Amount
- ----------------------------------------------------------------- ------------ ------------- -------------
Balance at September 30, 2001 2,203,690 $22,036 36,564,342 $365,643
Issuance of common stock for services 42,169 422
Sale of common stock and warrants 0 0.0 1,909,684 19,097
Exercise of stock options and warrants 0 0.0 2,319,734 23,197
Conversion of Series B, C and Series D
preferred stock into common stock (495,859) (4,958) 3,767,718 37,677
Payment of preferred stock dividend, Series
B preferred stock 22,098 221 0 0
Net loss 0 0 0 0
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Balance at March 31, 2002 1,729,929 $17,299 44,603,647 $446,036
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Avitar, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Six Months Ended March 31, 2002
(Unaudited)
(continued)
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Preferred
Stock
Additional Accumulated Subscription
paid-in capital deficit Receivable
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Balance at September 30, 2001 $39,338,443 ($37,592,117) ($60,641)
Issuance of common stock for services 26,478
Sale of common stock and warrants 1,286,903 0 0
Exercise of stock options and warrants 1,234,226 0 0
Conversion of Series B, C and Series D
preferred stock into common stock (32,719) 0 0
Payment of preferred stock dividend, Series
B preferred stock 178,601 (178,822) 0
Net loss 0 (1,623,591) 0
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Balance at March 31, 2002 $42,031,932 ($39,394,530) ($60,641)
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See accompanying notes to consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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SIX MONTHS ENDED MARCH 31,
------------------------------------
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,623,591) $(3,218,157)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 107,729 74,947
Amortization of goodwill 154,996 143,848
Gain from sale of equity investment and equipment (18,943) 0
Payment of common stock for services 26,900 0
Provision for losses on accounts receivable 12,132 (62,875)
Changes in operating assets and liabilities:
Accounts receivable 113,003 (89,079)
Inventories (19,982) 192,522
Prepaid expenses and other current assets 1,535 (21,487)
Other assets 18,227 101,256
Accounts payable and accrued expenses (181,558) 65,351
Deferred revenue (385,000) 0
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Net cash used in operating activities (1,794,552) (2,813,674)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (114,043) (31,599)
Acquisition of BJR Security, Inc. 0 (50,000)
Proceeds from sale of equity investment 24,391 0
Proceeds from sale of equipment 7,500 0
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Net cash used in investing activities (82,152) (81,599)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock, preferred stock and warrants 1,306,000 3,036,297
Exercise of warrants and stock options 1,257,423 17,625
Stock subscription receivable 35,000 42,228
Proceeds from (repayment of) notes payable and long-term debt (36,745) 29,010
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Net cash provided by financing activities 2,561,678 3,125,160
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NET INCREASE IN CASH AND CASH EQUIVALENTS 684,974 229,887
CASH AND CASH EQUIVALENTS, beginning of the period 245,409 82,313
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CASH AND CASH EQUIVALENTS, end of the period $930,383 $312,200
=========== =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period:
Income taxes $5,308 $0
Interest $12,734 $21,331
See accompanying notes to consolidated financial statements.
AVITAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
Avitar, Inc. ("Avitar" or the "Company"), through its wholly-owned
subsidiaries, Avitar Technologies Inc. ("ATI"), United States Drug Testing
Laboratories, Inc. ("USDTL") and BJR Security, Inc. designs, develops,
manufactures, markets and provides diagnostic test products and services as
well as contraband detection and education services. Avitar sells these
products and services to large medical supply companies, employers,
diagnostic distributors, schools and governmental agencies. During Fiscal
Year 2001 and the first half of Fiscal Year 2002, the Company continued the
development and marketing of ORALscreen(TM), innovative point of care oral
fluid drugs of abuse tests that use the Company's foam as the means for
collecting the oral fluid sample.
The accompanying consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles
for interim financial reporting, the instructions to Form 10-QSB and
Regulation S-B (including Item 310(b) thereof). Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
the Company's management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended March
31, 2002 are not necessarily indicative of the results that may be expected
for the full fiscal year ending September 30, 2002. The accompanying
consolidated financial statements should be read in conjunction with the
audited financial statements of the Company for the fiscal year ended
September 30, 2001.
The Company's consolidated financial statements have been presented on
the basis that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. The Company has suffered recurring losses from operations and has
working capital of $201,659 as of March 31, 2002. The Company raised net
proceeds aggregating approximately $5,288,000 during the fiscal year ended
September 30, 2001 from the sale of stock and the exercise of options and
warrants. During the six months ended March 31, 2002, the Company raised
approximately $2,563,000 from the sale of stock and the exercise of options
and warrants. Based upon cash flow projections, the Company believes the
anticipated cash flow from operations and proceeds from future equity
financings will be sufficient to finance the Company's operating needs
until the operations achieve profitability. There can be no assurances that
forecasted results will be achieved or that additional financing will be
obtained. The financial statements do not include any adjustments relating
to the recoverability and classification of asset amounts or the amounts
and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
2. INVENTORIES
At March 31, 2002, inventories consist of the following:
Raw Materials $159,583
Work-in-Process 73,140
Finished Goods 31,617
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Total $264,340
========
3. MAJOR CUSTOMERS
Customers in excess of 10% of total sales are:
Three Months Ended March 31, Six Months Ended March 31,
--------------------------------- ------------------------------
2002 2001 2002 2001
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Customer A $339,630 $184,051 * $309,999
Customer B * 200,290 $1,977,910 200,290
Customer C 250,000 * * 112,500
Customer D * * * 106,310
* Customer was not in excess of 10% of total sales.
4. COMMON STOCK, PREFERRED STOCK AND WARRANTS
During the six-month period ended March 31, 2002, the Company received
approximately $1,257,000 from the exercise of stock options and warrants to
purchase 2,319,734 shares of the Company's common stock. In connection with
the exercise of certain warrants, the Company issued to the holders
warrants to purchase 1,750,070 shares of the Company's common stock at an
exercise price of $.68 for a term of three years. Also during the six
months ended March 31, 2002, the Company sold 1,909,684 shares of the
Company's common stock and received proceeds of approximately $1,306,000.
In connection with the sale of the common stock, the Company issued to the
holders of the common stock warrants to purchase 1,909,684 shares of the
Company's common stock at exercise prices of $.68 to $1.60 per share for
terms of three to five years.
For the six months ended March 31, 2002 holders of the Series B, C and
D convertible preferred stock converted 495,859 shares of their preferred
stock into 3,767,718 shares of the Company's common stock. Preferred stock
dividends related to the Series B convertible preferred stock for the six
months ended March 31, 2002 amounted to $178,822. As of March 31, 2001, the
total amount of unpaid and undeclared dividends was $252,750.
5. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per share:
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- -----------------------------
2002 2001 2002 2001
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Net loss $(1,245,185) $(1,607,640) $(1,623,591) $(3,218,157)
Less:
Preferred Stock Dividends ( 92,475) ( 90,716) ( 186,091) ( 185,760)
Value of warrants issued in
connection with Series C and
Series D preferred stock sales ( - ) ( 575,000) ( - ) ( 575,000)
Original discount related to
Series D preferred stock sales ( - ) ( 485,000) - ( 485,000)
------------ ------------ ------------ -------------
Loss available to common
stockholders used in basic and
diluted EPS before cumulative
accounting change (1,337,660) (2,758,356) (1,809,682) (4,463,917)
Cumulative effect of change in
accounting for original discount
related to prior years' preferred
stock issuances - - - (1,078,205)
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Net loss available to common
Stockholders used in basic and
diluted EPS $(1,337,660) $(2,758,356) $(1,809,682) $(5,542,122)
============= ============ ============ ============
Weighted average number of
common shares outstanding 42,638,768 32,266,751 40,706,019 31,543,808
============= ============ ============ ===========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes thereto appearing
elsewhere in this report. This report may contain forward-looking statements.
For a description of risks and uncertainties relating to such forward-looking
statements, see the Forward-Looking Statements and Associated Risks section
later in this Item.
RESULTS OF OPERATIONS
Revenues
Sales for the three months ended March 31, 2002 increased $1,001,541, or
approximately 81%, to $2,231,119 from $1,229,578 for the corresponding period of
the prior year. For the six months ended March 31, 2002, sales increased
$3,074,619, or approximately 128%, to $5,473,533 from $2,398,914. The change for
the three and six months ended March 31, 2002 primarily reflects the increase in
sales of its ORALscreen(TM) products which included sales to one major customer
of $200,000 and $1,978,000, respectively.
Operating Expenses
Cost of sales for the three months ended March 31, 2002 were approximately
68% of sales which compares to the cost of sales of 65% for the three months
ended March 31, 2001. For the six months ended March 31, 2002, the cost of sales
were 57% compared to 70% of sales for the same period of Fiscal 2001. The
increase in cost of sales for the three months ended March 31, 2002 reflected a
shift in the product mix to lower margin products. However, the improvement for
the six months ended March 31, 2002 was primarily due to the increase in sales
described above and the overall shift in the product mix to the higher margin
ORALscreen products.
Selling, general and administrative expenses for the three months ended
March 31, 2002 increased $165,576, or approximately 12%, to $1,599,040 from
$1,433,364 for the corresponding period of the prior year. For the six months
ended March 31, 2002, selling, general and administrative expenses increased
$294,595 or approximately 10%, to $3,107,958 from $2,813,363 for the six months
ended March 31, 2001. The increase for the three and six months ended March 31,
2002 reflected the expanded sales, marketing and administrative efforts
associated with the Company's OralScreen and HairScreen products and expenses
from BJR of approximately $40,000 and $104,000, respectively.
Expenses for research and development for the three months ended March 31,
2002 amounted to $275,035 compared to $510,170 for the corresponding period of
the prior year. For the six months ended March 31, 2002, expenses for research
and development were $667,190 versus $944,883 for the six months ended March 31,
2001. The change for the three and six months ended March 31,2002 was primarily
attributable to the decrease in development fees and expenses paid to outside
entities for research and development activities related to the Company's
OralScreen products and oral fluid disease testing applications.
For the three months and six months ended March 31, 2002, amortization of
goodwill which resulted from the Company's acquisition of BJR and USDTL was
$77,498 and $154,996, respectively, compared to $73,424 and $143,848,
respectively, for the three and six ended March 31, 2001. The change reflects
the goodwill amortization related to acquisition of BJR on March 1, 2001.
Other Income and Expense
No interest income was earned for the three and six months ended March 31,
2002 compared to $587 and $733, respectively for the same periods of Fiscal
2001. The decrease resulted primarily from the reduced interest earned on cash
management accounts.
Interest expense and financing costs were $19,218 for the three months
ended March 31, 2002 compared to $15,642 incurred during the three months ended
March 31, 2001. For the six months ended March 31, 2002, interest expense and
financing costs were $39,793 versus $25,575 for the same period in the prior
year. The change for the three and six months ended March 31, 2002 primarily
reflects increased interest expense on bank advances related to financing of
accounts receivable and loans from private parties.
For the three months ended March 31, 2002, other income amounted to $3,536
as compared to other expense of $1,212 for the three months ended March 31,
2001. Other income for the six months ended March 31, 2002 was $19,703 versus
other expense of $1,924 for the corresponding period of the prior year. The
change for the three months ended March 31, 2002 is mainly a result of the gain
from the sale of an item of equipment. For the six months ended March 31, 2002,
the change also reflects the gain from the sale of a small equity investment
held by the Company in addition to the equipment sale gain.
Net Loss
Primarily as a result of the factors described above, the Company had a net
loss of $1,245,185, $ .03 per basic and diluted share, for the quarter ended
March 31, 2002, as compared to a net loss of $1,607,640, $ .09 per basic and
diluted share, for the quarter ended March 31, 2001. For the six months ended
March 31, 2002, the Company had a net loss of $1,623,591, $.04 per basic and
diluted share, versus a net loss of $3,218,157, $.18 per basic and diluted
share, for the six months ended March 31, 2001.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 2002 and September 30, 2001 the Company had working capital
(deficiency) of $201,659 and ($958,293), respectively, and cash and cash
equivalents of $930,383 and $245,409, respectively. Net cash used in operating
activities during the six months ended March 31, 2002 amounted to $1,794,552
resulting primarily from a net loss of $1,623,591, a gain from the sale on an
equity investment and equipment of $18,943, an increase in inventories of
$19,982, a decrease in accounts payable and accrued expenses of $181,558 and a
decrease in deferred income of $385,000; partially offset by depreciation and
amortization of $107,729, amortization of goodwill of $154,996, a payment of
common stock for services of $26,900, an increase in the provision for losses on
accounts receivable of $12,132, a decrease in accounts receivable of $113,003, a
decrease in prepaid expenses and other current assets of $1,535 and a decrease
in other assets of $18,227. Net cash provided by financing and investing
activities during the six months ended March 31, 2002 amounted to $2,479,526
which included proceeds from the sale of an equity investment and equipment of
$31,891, proceeds from the sale of common stock and warrants of $1,306,000,
proceeds from the exercise of warrants and stock options of $1,257,423, and a
decrease in stock subscription receivable of $35,000; offset in part by the
repayment of notes payable and long term debt of $36,745 and purchases of
property and equipment of $114,043.
Since October 2001, the Company received proceeds of approximately
$1,306,000 from the sale of 1,909,684 shares of the Company's common stock and
warrants to purchase 1,909,684 shares of the Company's common stock at exercise
prices of $.68 -$1.60 per share for a period of three to five years. Also during
this period, the Company received approximately $1,257,000 from the exercise of
stock options and warrants to purchase 2,319,734 shares of the Company's common
stock. In connection with the exercise of certain warrants, the Company issued
to the holders warrants to purchase 1,750,070 shares of the Company's common
stock at an exercise price of $.68 for a term of three years. The Company plans
to raise up to $10,000,000 from the sales of equity and/or debt securities. The
Company plans to use the proceeds from these financings to provide working
capital and capital equipment funding to operate the Company, to expand the
Company's business, to further develop and enhance the ORALscreen and HAIRscreen
drug screening systems and to pursue the development of in-vitro oral fluid
diagnostic testing products. However, there can be no assurance that these
financings will be achieved.
For the balance of fiscal year 2002, the Company's cash requirements are
expected to include primarily the funding of operating losses, the payment of
outstanding accounts payable, the repayment of certain notes payable, the
funding of operating capital to grow the Company's drugs of abuse testing
products and services, and the continued funding for the development of in-vitro
oral fluid diagnostic testing products.
Operating revenues of the Company grew significantly in the first half of
Fiscal 2002 and are expected to grow during the remainder of Fiscal 2002 as the
Company expands its shipments of new and enhanced ORALscreen products and grows
the business of USDTL and BJR. Based on current sales, expense and cash flow
projections, the Company believes that the current level of cash and cash
equivalents on hand and most importantly, a portion of the anticipated net
proceeds from the financing mentioned above would be sufficient to fund
operations until the Company achieves profitability. There can be no assurance
that the Company will consummate the above-mentioned financing, or that any or
all of the net proceeds sought thereby will be obtained. Once the Company
achieves profitability, the longer-term cash requirements of the Company to fund
operating activities, purchase capital equipment, expand the existing business
and develop new products are expected to be met by the anticipated cash flow
from operations and proceeds from the financings described above. However,
because there can be no assurances that sales will materialize as forecasted,
management will continue to closely monitor and attempt to control costs and
will continue to actively seek the needed additional capital.
As a result of the Company's recurring losses from operations and working
capital deficit, the report of its independent certified public accountants
relating to the financial statements for Fiscal 2001 contains an explanatory
paragraph stating substantial doubt about the Company's ability to continue as a
going concern. Such report states that the ultimate outcome of this matter could
not be determined as the date of such report (November 20, 2001). The Company's
plans to address the situation are presented above. However, there are no
assurances that these endeavors will be successful or sufficient.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
Except for the historical information contained herein, the matters set
forth herein are "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We intend that
such forward-looking statements be subject to the safe harbors created thereby.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievement expressed or implied by such forward-looking statements. Such
factors include, but are not limited to the following: product demand and market
acceptance risks, the effect of economic conditions, results of pending or
future litigation, the impact of competitive products and pricing, product
development and commercialization, technological difficulties, government
regulatory environment and actions, trade environment, capacity and supply
constraints or difficulties, the result of financing efforts, actual purchases
under agreements and the effect of the Company's accounting policies.
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the quarter ended March 31, 2002, the Company sold to private
investors 935,294 shares of the Company's common stock and received cash
proceeds of approximately $645,000. In connection with the sale of this common
stock, the Company issued to the holders of the common stock warrants to
purchase 935,294 shares of the Company's common stock at an exercise price of
$.85 per share for a term of five years. Also during this quarter, the Company
issued to private investors 1,750,070 shares of the Company's common stock upon
the exercise of their warrants and received cash proceeds of approximately
$1,190,000. In connection with the exercise of these warrants, the Company
issued to the holders warrants to purchase 1,750,070 shares of the Company's
common stock at an exercise price of $.68 per share for three years. The
exemption for registration of these securities is based upon Section 4(2) of the
Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
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.
AVITAR, INC.
(Registrant)
Dated: May 14, 2002 /S/ Peter P. Phildius
-----------------------------------
Peter P. Phildius
Chairman and Chief
Executive Officer
(Principal Executive Officer)
Dated: May 14, 2002 /S/ J.C. Leatherman, Jr.
---------------------------
J.C. Leatherman, Jr.
Chief Financial Officer
(Principal Accounting and
Financial Officer)