UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended November 30, 2002
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANCE ACT OF 1934
For the transition period from _____________ to ________________
Commission File Number 0-22969
Paladyne Corp.
(Name of Small Business Issuer in its charter)
Delaware 59-3562953
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1650A Gum Branch Road, Jacksonville, NC 28540
(Address of Principal Executive Offices)
910-478-0097
(Issuer's Telephone Number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Checked whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding as of
December 31, 2002
Common Stock, $.001 PAR VALUE 16,709,351
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
1
TABLE OF CONTENTS
Page
----
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets - November 30, 2002
and August 31, 2002 4
Condensed Consolidated Statements of Operations -
three months ended November 30, 2002 and
November 30, 2001 5
Condensed Consolidated Statements of Cash Flows -
three months ended November 30, 2002 and November 30, 2001 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
PART I.
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Condensed Consolidated Financial Statements for the
three months ended November 30, 2002 and November 30, 2001 have been prepared by
Paladyne Corp., a Delaware corporation.
3
PALADYNE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2002 AUGUST 31, 2002
---------------
(Unaudited) (Audited)
----------- ---------
ASSETS
Current Assets:
Cash and cash equivalents ................... $ 172,043 $ --
Accounts receivable, net of allowance
for doubtful accounts of $350,000 at
November 30, 2002 and August 31, 2002 ....... 770,509 279,883
Due from related parties .................... 600,675 548,320
Prepaid expenses and other current assets ... 72,999 77,718
------------ ------------
Total Current Assets ..................... 1,616,226 905,921
Furniture and fixtures ............................ 369,028 369,028
Computers and software ............................ 1,945,749 1,943,193
Leasehold improvements ............................ 1,223,352 1,212,812
Accumulated depreciation .......................... (2,025,712) (1,777,258)
------------ ------------
Property and equipment, net .............. 1,512,417 1,747,775
Other assets ...................................... -- 425
------------ ------------
$ 3,128,643 $ 2,654,121
============ ============
LIABILITIES AND DEFICIENCY IN
STOCKHOLDERS' EQUITY
Current Liabilities:
Cash disbursed in excess of available funds . -- $ 38,856
Accounts payable and accrued expenses ....... $ 2,816,443 2,458,591
Notes payable ............................... 5,720,000 5,350,000
Accrued preferred stock dividends ........... 200,600 190,400
Current portion of capital lease obligations 780,124 749,809
------------ ------------
Total current liabilities ....... 9,517,167 8,787,656
Capital lease obligations ......................... 50,730 166,926
------------ ------------
Total liabilities ............... 9,567,897 8,954,582
COMMITMENTS AND CONTINGENCIES
DEFICIENCY IN STOCKHOLDERS' EQUITY
Preferred stock;
Series A ............................. 137 137
Series C ............................. 1,000 1,000
Common stock ............................. 16,709 16,709
Additional paid-in capital ............... 14,335,777 14,345,977
Accumulated deficit ...................... (20,792,877) (20,664,284)
------------ ------------
Total deficiency in stockholders'
equity ............................. (6,439,254) (6,300,461)
------------ ------------
$ 3,128,643 $ 2,654,121
============ ============
See accompanying notes to unaudited condensed consolidated financial statements
4
PALADYNE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
NOVEMBER, 30 NOVEMBER, 30
2002 2001
(Unaudited) (Unaudited)
----------- -----------
Total Revenues ............................. $ 2,475,050 $ 2,440,276
Cost of Revenues ........................... 1,426,876 1,316,794
------------ ------------
Gross Profit ............................... 1,048,174 1,123,482
Selling, general and administrative expenses 776,798 1,250,829
Depreciation and amortization .............. 248,454 252,446
------------ ------------
Total operating expense .................... 1,025,252 1,503,275
Income (loss) from operations .............. 22,922 (379,793)
Other income (expense):
Interest expense .................. (151,514) (173,166)
------------ ------------
Loss from operations, before
income taxes ............................ (128,592) (552,959)
Income tax benefits ........................ -- --
------------ ------------
Loss ....................................... (128,592) (552,959)
Cumulative Convertible Preferred
Stock Dividend Requirement ........ (10,200) (10,200)
------------ ------------
Loss attributable to common stockholders ... $ (138,792) $ (563,159)
============ ============
Weighted average common shares outstanding:
Basic .................... 16,709,351 16,709,351
Diluted .................. 16,709,351 16,709,351
Earnings (loss) per share:
Basic .................... $ (.01) $ (.03)
Diluted .................. $ (.01) $ (.03)
See accompanying notes to unaudited condensed consolidated financial statements
5
PALADYNE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
NOVEMBER, 30 NOVEMBER, 30
2002 2001
(Unaudited) (Unaudited)
----------- -----------
Cash flows used in operating activities ............. $ (99,405) $ (13,225)
Cash flows provided by (used in) investing activities (12,671) (292,892)
Cash flows provided by financing activities ......... 284,119 435,963
--------- ---------
Net increase (decrease) in cash and
cash equivalents ................................. 172,043 129,846
Cash and cash equivalents at beginning of period .... -- 158,225
--------- ---------
Cash and cash equivalents at end of period .......... $ 172,043 $ 288,071
========= =========
Supplemental Cash Flow Information:
Cash paid for interest ..................... $ 151,514 $ 173,166
Non cash investing and financing activities:
Accrual of preferred stock dividend ........ 10,200 10,200
Preferred shares issued in exchange
for debt ................................ 300,000
See accompanying notes to unaudited condensed consolidated financial statements
6
PALADYNE CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. BASIS OF PRESENTATION
General
- -------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Accordingly, the results from operations for the three-month period ended
November 30,2002 are not necessarily indicative of the results that may be
expected for the year ended August 31, 2002. The unaudited consolidated
financial statements should be read in conjunction with the consolidated
August 31, 2002 financial statements and footnotes thereto included in the
Company's SEC Form 10-KSB.
Business and Basis of Presentation
- ----------------------------------
Paladyne Corp. (the "Company") through a wholly-owned subsidiary, e-commerce
support centers, inc., provides customer relationship management (CRM) solutions
at its customer contact center in Jacksonville, NC. The consolidated financial
statements include the accounts of the Company, and its wholly owned subsidiary,
e-commerce support centers inc. All significant inter-company transactions and
balances have been eliminated.
Reclassification
- ----------------
Certain reclassifications have been made to conform to prior periods' data to
the current presentation. These reclassifications had no effect on reported
losses.
NOTE 2. SERIES A DIVIDEND
The holders of the Company's Series A cumulative convertible preferred stock are
entitled to receive, out of the net profits of the Company, annual dividends at
the rate of $.2975 per share. If the net profits of the Company are not
sufficient to pay the preferred dividend, then any unpaid portion of the
dividend will be included in accrued expenses. The Company had accrued
cumulative preferred stock dividends of $200,600 and $190,400 at November 30,
2002 and August 31, 2002, respectively.
NOTE 3. STOCKHOLDERS' DEFICIT
On September 24, 2001, the Board of Directors authorized a private placement of
up to 600,000 units priced at $5.00 per unit, with a unit consisting of three
shares of the Company's Series C 8% Cumulative Convertible Preferred Stock. Each
Series C Preferred share is convertible into 10 shares of the Company's Common
Stock at $3.00 per share. Net proceeds from this private placement as of
August 31, 2002 were $1,518,130, which is net of offering expenses of $148,705.
This resulted in the issuance of 1,000,101 shares of Series C Preferred Stock.
7
NOTE 4. NOTES PAYABLE
Notes Payable at November 30, 2002 and August 31, 2002 are as follows:
November 30, August 31,
------------ ----------
2002 2002
---- ----
Note payable in quarterly installments of $377,000,
including interest at 10% per annum, secured by property and $3,500,000 $ 3,500,000
equipment. This note was subsequently converted to equity. Note
payable in two installments of $750,000, plus interest at 10% per
annum, secured by property and equipment. The first installment
is due after completion of a $3,000,000 equity or convertible
debt offering by the Company and the remaining installment
payment due the later of six months after the first installment
payment is made and after three consecutive months of
positive cash flow from operations (as defined). This note was 1,500,000 1,500,000
subsequently converted to equity.
Note payable to Bank in monthly installments of interest only at
the Bank's prime lending rate plus 1%, secured by accounts
receivable. This note is currently in default and is currently in
litigation. 350,000 350,000
Note payable to an individual and a company bearing interest at
prime plus 4%, secured by all the assets of the Company and
repayable on February 28, 2003 370,000 -
----------- -----------
5,720,000 5,350,000
Less: current portion (5,720,000) (5,350,000)
----------- -----------
$ -- $ --
=========== ===========
NOTE 5. CONTINGENCY
Litigation
- ----------
The Company is engaged in proceedings in the Circuit Court of the 18th Judicial
District, Seminole County, Florida, with SunTrust bank concerning a $350,000
line of credit that is in default. In September 2002, the bank filed a summary
judgment motion, seeking $360,000 in full restitution of the money owed to it.
The Company is currently in negotiations with the bank regarding repayment of
this money.
The Company is subject to other legal proceedings and claims, which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters will not have material adverse effect on its financial position, results
of operations or liquidity.
NOTE 6. SUBSEQUENT EVENTS
On December 10, 2002, the Company and Gibralter Publishing, Inc. entered into an
agreement to exchange the $5,000,000 in notes payable to Gibralter for 1,000,000
shares of newly issued Series D Preferred Shares and 10,000,000 warrants for
purchase of common shares of the Company. In addition, on December 4, 2002, the
Company's Board of Directors approved the sale of newly issued common stock to
an investment group for $750,000. The sale of the common stock is subject to
shareholder approval.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
- --------
Since the February 2001 merger with e-commerce support centers, inc. ("ecom"),
Paladyne Corp. (the "Company") has provided CRM-based customer and tech support,
and outbound telemarketing for business-to-business and business-to-customer
needs.
The Company's unaudited condensed consolidated financial statements are
presented on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. As with any
new venture, concerns must be considered in light of the normal problems,
expenses and complications encountered by entrance into established markets and
the competitive environment in which the Company operates. The unaudited
condensed consolidated financial statements do not include, nor does management
feel it necessary, any adjustments to reflect any possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern. The Company's independent accountant's report
contained a going concern qualification for the year ended August 31, 2002.
The Company maintains substantial business relationships with Gibralter
Publishing, Inc. ("Gibralter"), from which it has acquired or leased a
substantial portion of the ecom assets in exchange for the installment notes.
Gibralter continues to be the Company's principal customer, accounting for
approximately 43% of the revenues for the three-month period ended November 30,
2002.
During the three months ended November 30, 2002, the Company has continued to
reduce or eliminate non-critical expenses and operations. Certain personnel
continue to defer all or a portion of their compensation
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth the percentage relationship to the total revenues
of principal items contained in the Company's Unaudited Condensed Consolidated
Statements of Operations for the three months ended November 30, 2002 and
November 30, 2001, respectively. The percentages discussed throughout this
analysis are stated on an approximate basis.
Three months Ended
November 30,
2002 2001
-------------------
(UNAUDITED)
Total revenues ........ 100% 100%
Cost of revenues ...... 57.7% 53.9%
----- -----
Gross profit .......... 42.3% 46.1%
Operating expenses .... 41.4% 61.6%
----- -----
Operating income (loss) .9% (15.5%)
Interest expense ...... 6.1% 7.1%
----- -----
Net loss .............. (5.2%) (22.6%)
----- -----
----- -----
9
COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 2002 TO THE THREE MONTHS ENDED
- --------------------------------------------------------------------------------
NOVEMBER 30, 2001
- -----------------
Revenue for the three months ended November 30, 2002 and 2001 were $2,475,050,
and $2,440,276, respectively; this represents an increase of 1.4% in sales. All
of these revenues were derived entirely from the Company's CRM-based customer
and tech support, and outbound telemarketing for business-to-business to
business-to-customer operations. This slight increase is attributable to
increased traditional outbound calling contracts and a reduction in revenue from
the Company's inbound or non-traditional outbound contracts. Two customers,
Gibralter Publishing, Inc. and Lowes Home Improvement accounted for a decline of
$105,208 and $408,291, respectively during the three-month period ended
November 30, 2002 compared to the same period in 2001.
Cost of revenues of $1,426,876 and $1,316,794, respectively for the three months
ended November 30, 2002 and 2001 were 57.7% and 53.9% of revenue for the
periods. The increase in cost of sales of $110,082 or 8.3% from 2001 to 2002 is
attributable to slightly higher supervisory costs associated with contracts that
comprise revenue during the three months ended November 30, 2002 compared to
2001. Gross profit was $1,048,174 and $1,123,482, respectively for the three
months ended November 30,2002 and 2001 and was 42.3% and 46.1% of revenue for
the periods. The decrease in gross profit percentage is due to the slightly
higher costs associated with the 2002 revenue.
Operating expenses, including depreciation and amortization, have decreased as a
percentage of revenue from 61.6% for the three months ended November 30, 2001 to
41.4% for the three months ended November 30, 2002. This decrease as a
percentage of revenue is due primarily to the significant reduction in all areas
of the Company's general and administrative costs. These reductions were
necessitated by the Company's continued operating losses. The reduction in
depreciation and amortization expenses was only $3,992 or less than 1% of
revenue for the three months ended November 30,2002.
Interest expense, as percentage of revenue, decreased from 7.1% to 6.1% during
the three months ended November 30,2001 as compared to the three months ended
November 30,2002. The decrease from $173,166 to $151,514 is due to continued
reduction in the interest expense related to the Company's capital leases.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company is not generating any cash from operations and it has no cash
resources. The Company is in default on the $350,000 loan agreement with a bank
and has been unable to meet its obligations under the $5,000,000 notes to
Gibralter Publishing, Inc. The payments on various capital leases are also in
arrears. This situation and the anticipated need for working capital for the
Company to increase its marketing and revenue base has resulted in the Board of
Directors taking certain actions intended to stabilize the Company and provide
it with a chance to succeed in the future. On December 10, 2002, the Company and
Gibralter Publishing, Inc. agreed to exchange the $5,000,000 in notes for
1,000,000 shares of Series D Preferred shares and 10,000,000 warrants for
purchase of common shares of the Company.
On December 4, 2002, the Board of Directors has also approved the proposed
transaction with WAG Holdings, LLC, Glen H. Hammer and A. Randall Barkowitz
("Investor Group") that will add sufficient capital to help relieve the
Company's short-term cash flow crisis. The Board anticipates that the Investor
Group will be able to locate sufficient additional funding to address the
Company's longer-term financial needs, although there can be no assurance that
such funding will be obtained. This transaction provides that in exchange for
$750,000 the Investor Group will receive 70% of the Company's fully diluted post
transaction common stock. Although not required, the Company is seeking the
approval of the transaction by the Company's shareholders at a Special Meeting
to be held February 4, 2003. As a condition to the consummation of the proposed
transaction, the Company intends to effect a 1-for-10 reverse stock split, the
approval for which will be sought at the same Special Meeting of Shareholders.
The Company's independent certified public accountants have stated in their
report included in the Company's August 31, 2002 Form 10-KSB, that the Company
has incurred operating losses in the last two years, and that the Company is
dependent upon management's ability to develop profitable operations. These
factors among others may raise substantial doubt about the Company's ability to
continue as a going concern.
10
The Company's principal cash requirements are for selling, general and
administrative expenses, employee costs, funding of accounts receivable and
capital expenditures. During the three month period ended November 30, 2002, the
Company obtained $370,000 in loans from individuals who were principals in the
proposed transaction described above.
The Company's primary sources of cash prior to the three month period ended
November 30, 2002 have been from a private placement of the Company's Series C
Preferred Stock and sale of Subordinated Convertible Debentures that accounted
for $1,518,130 and $300,000 of net proceeds in the fiscal year 2002 and 2001,
respectively.
Cash used in operating activities was $99,405 for the three months ended
November 30, 2002. This was due primarily as a result of operating losses,
caused by the revenue levels that are at less than a breakeven volume.
Increasing revenues or further cost cutting will be required in the future. The
Company invested $12,671 in computers and leasehold improvements during this
period. The Company met its cash requirements during the three months ended
November 30, 2002 through the receipt of $370,000 in loan proceeds from the
principals who are party to the proposed transaction that the Board of Directors
approved on December 4, 2002, as discussed above.
While the Company has raised capital to meet its working capital requirements in
the past, additional financing is required, in order to meet current and
projected cash flow deficits from operations. The Company is seeking financing
in the form of equity and debt. There are no assurances the Company will be
successful in raising the funds required and any equity raises would be
substantially dilutive to existing shareholders.
In prior periods, the Company has borrowed funds from significant shareholders
of the Company to satisfy certain obligations.
INFLATION
- ---------
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
RISK FACTORS AND CAUTIONARY STATEMENTS
- --------------------------------------
Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: the ability of the Company to provide for its debt obligations and to
provide for working capital needs from operating revenue, and other risks
detailed in the Company's periodic report filings with the Securities and
Exchange Commission.
11
ITEM 3. CONTROLS AND PROCEDURES
(a) On November 30, 2002, we made an evaluation of our disclosure controls and
procedures. In our opinion, the disclosure controls and procedures are adequate
because the systems of controls and procedures are designed to assure, among
other items, that 1) recorded transactions are valid; 2) valid transactions are
recorded; and 3) transactions are recorded in the proper period in a timely
manner to produce financial statements which present fairly the financial
condition, results of operations and cash flows for the respective periods being
presented. Moreover, the evaluation did not reveal any significant deficiencies
or material weaknesses in our disclosure controls and procedures.
(b) There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since the last
evaluation.
12
PART II
ITEM 1. Legal Proceedings
The Company is engaged in proceedings in the Circuit Court of the
18th Judicial District, Seminole County, Florida, with SunTrust bank
concerning a $350,000 line of credit that is in default. In September
2002, the bank filed a summary judgment motion, seeking $360,000 in
full restitution of the money owed to it. The Company is currently in
negotiations with the bank regarding repayment of this money. For
additional information regarding the line of credit, see "Item 6.
Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 2. Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) Sale of Securities
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No. Description
--- -----------
99.1 Certification of Terrence Leifheit Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
99.2 Certification of Clifford A. Clark Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
(b) Reports on Form 8-K filed during the three months ended
November 30, 2002.
13
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.
PALADYNE CORP.
Date: January 21, 2003 By /s/ Terrence Leifheit
----------------------
Terrence Leifheit
President
Date: January 21, 2003 By /s/ Clifford Clark
-------------------
Clifford Clark
Chief Financial Officer
14
CERTIFICATION
I, Terrence Leifheit, certify that:
1. I have reviewed this quarterly report on Form 10QSB of Paladyne
Corp.,
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this 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 annual 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 report our conclusions about the
effectiveness of the disclosure controls an procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors:
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 there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: January 21, 2003
/s/ Terrence J. Leifheit
------------------------
Terrence J. Leifheit
President
15
CERTIFICATION
I, Clifford A. Clark, certify that:
1. I have reviewed this quarterly report on Form 10QSB of Paladyne
Corp.,
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this 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 annual 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 report our conclusions about the
effectiveness of the disclosure controls an procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors:
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 there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: January 21, 2003
/s/ Clifford A. Clark
-----------------------------
Clifford A. Clark
Chief Financial Officer
16