U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
For the transition period from __________ to __________
COMMISSION FILE NUMBER 0-27721
EBIZ ENTERPRISES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 84-1075269
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
13715 Murphy Road, Suite D
Houston, Texas 77477
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(281) 403-8500
(ISSUER'S TELEPHONE NUMBER)
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.
Yes [X] No [ ]
Check whether the issuer (1) filed all reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [X] No [ ].
State the number of shares outstanding of the issuer's common equity
outstanding as of October 31, 2002 was 3,401,265 shares of common stock, par
value $.001.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
Yes [ ] No [X]
EBIZ ENTERPRISES, INC.
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
PAGE NUMBER
-----------
Item 1. Financial Statements ......................................... 3
Consolidated Balance Sheets
September 30, 2002 (unaudited) and June 30, 2002 ........... 3
Consolidated Statements of Operations
For the Three Months Ended September 30, 2002
(unaudited) and 2001 (unaudited) ........................... 4
Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2002
(unaudited) and 2001 (unaudited) ........................... 5
Notes to the Financial Statements ............................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 6
Item 3. Controls and Procedures ...................................... 8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings ............................................ 9
Item 2. Changes in Securities and Use of Proceeds .................... 9
Item 6. Exhibits and Reports on Form 8-K ............................. 9
SIGNATURES
2
PART I
FINANCIAL INFORMATION
EBIZ ENTERPRISES, INC.
Consolidated Balance Sheets
September 30, 2002 and June 30, 2002
Reorganized
Company
----------------------------
September, 30 June 30,
2002 2002
------------ ------------
Assets Unaudited
Current Assets:
Cash $ -- $ 164,821
Accounts receivable, net of allowance for doubtful accounts of $254,223
and $278,251 at September 30, 2002 and June 30, 2002, respectively 614,928 571,654
Inventory, net 150,319 100,114
Prepaid expenses and other current assets 102,200 158,809
Deferred Loan Fees, net 10,751 10,751
------------ ------------
Total current assets 878,198 1,006,149
Property and Equipment, net 289,833 317,049
Deferred Loan Fees, net 49,274 51,961
Reorganized value in excess of amounts allocable to identifiable assets 9,481,016 9,496,016
Other Assets 6,853 7,516
------------ ------------
$ 10,705,174 $ 10,878,691
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 2,108,428 $ 1,966,041
Accrued expenses 813,684 769,454
Notes payable 672,202 667,838
Related party notes payable 1,233,768 947,974
Convertible Debenture, net of discount --
------------ ------------
Total current liabilities 4,828,082 4,351,307
Notes payable 622,088 769,115
Related party notes payable 3,372,189 3,315,415
Convertible debenture, net of discount 575,545 584,410
------------ ------------
Total liabilities 9,397,904 9,020,247
Commitments and Contingencies
Stockholders' Equity (Deficit):
Common Stock Subscribed 73,311 1,646,436
Common stock; $0.001 par value; 70,000,000 shares authorized;
3,401,265 and 697,214 shares issued and outstanding at September 20,
2002 and June 30, 2002, respectively 3,401 697
Additional paid-in capital 2,057,421 452,492
Accumulated deficit (826,863) (241,181)
------------ ------------
Total stockholders' equity (deficit) 1,307,270 1,858,444
------------ ------------
$ 10,705,174 $ 10,878,691
============ ============
See the accompanying notes to these consolidated financial statements
3
EBIZ ENTERPRISES, INC.
Consolidated Statements of Operations
For the three months ended
September 30, 2002 and 2001
(Unaudited)
Reorganized Predecessor
Company Company
------------ ------------
Three Months Three Months
Ended Ended
September 30, September 30,
2002 2001
------------ ------------
Net Revenue $ 2,029,333 $ 1,625,535
Cost of Sales 1,678,015 1,387,364
------------ ------------
Gross profit 351,318 238,171
Selling, General and Administrative Expenses 811,399 1,382,712
Depreciation and Amortization 26,330 176,557
Provisions for Doubtful Accounts -- 30,000
------------ ------------
Loss from Operations (486,411) (1,351,098)
Other Income (Expense):
Interest Expense (99,522) (288,915)
Interest & Other income 251 3,346
------------ ------------
Net Loss (585,682) (1,636,667)
------------ ------------
Dividends on preferred stock -- (18,975)
------------ ------------
Net Loss Attributable To Common Stockholders $ (585,682) $ (1,655,642)
============ ============
Net Loss Per Common Share, Basic and Diluted $ (0.41) $ (0.05)
============ ============
Weighted Average Common Shares: Basic and Diluted 1,434,691 34,062,328
============ ============
See the accompanying notes to these consolidated financial statements.
4
EBIZ ENTERPRISES, INC.
Consolidated Statements of Cash Flows
For the three months ended
September 30, 2002 and 2001
(Unaudited)
Reorganized Predecessor
Company Company
------------ ------------
Three Months Three Months
Ended Ended
September 30, September 30,
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (585,682) $ (1,636,667)
Adjustments to reconcile net loss to net cash provided (used) in operating activities-
Depreciation and amortization 26,330 176,557
Recovery of prepetition settlement 15,000 --
Stock issued for management services 24,375 --
Amortization (capitalization) of discount and loan fees (62,712) 110,545
Changes in assets and liabilities:
Accounts receivable, net (43,274) 1,746,318
Inventory, net (50,205) 681,582
Prepaid expenses and other assets 57,272 17,765
Deferred financing fees, net 65,399 --
Accounts payable 142,387 490,952
Accrued expenses 44,230 80,135
------------ ------------
Net cash provided (used) in operating activities (366,880) 1,667,187
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of furniture, fixtures, intellectual property and equipment, net 886 (10,321)
------------ ------------
Net cash provided (used) in investing activities 886 (10,321)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under secured convertible note (8,865) (1,965,910)
Borrowings under Related parties notes payable 342,568 (41,278)
Borrowings (repayments) of notes payable (142,663) (4,931)
Transfer from restricted cash (non-current), net -- 8,879
Sale of stock, net of expenses 10,133 --
------------ ------------
Net cash provided (used) by financing activities 201,173 (2,003,240)
------------ ------------
Net decrease in cash (164,821) (346,374)
Cash, beginning of period 164,821 557,894
------------ ------------
Cash, end of period $ -- $ 211,520
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 42,122 $ 9,161
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND OPERATING ACTIVITIES:
Issuance of common stock for services $ 24,375 $ --
============ ============
Dividends accrued on preferred stock $ -- $ 18,975
============ ============
See the accompanying notes to these consolidated financial statements.
5
EBIZ ENTERPRISES, INC.
NOTES TO THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ebiz Enterprises, Inc. and its wholly-owned subsidiary, Jones Business Systems,
Inc., (consolidated as the "Predecessor Company") filed separate voluntary
petitions on September 7, 2001, to reorganize under Chapter 11 of the U.S.
Bankruptcy Code. On April 11, 2002, the Plan of Reorganization ("Plan"), filed
by the Predecessor Company, was confirmed and became effective on May 21, 2002
(the "Effective Date"). On May 21, 2002, Ebiz Enterprises, Inc., (the
"Reorganized Company" or the "Company") adopted fresh start reporting in
accordance with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") of the American Institute
of Certified Public Accountants. Accordingly, the Company's post-reorganization
balance sheet and statement of operations have not been prepared on a consistent
basis with such pre-reorganization financial statements and are not comparable
in all respects to financial statements prior to reorganization. For accounting
purposes, the inception date of the Reorganized Company is deemed to be May 21,
2002. A vertical black line is shown in the financial statements to separate the
Reorganized Company from the Predecessor Company since they have not been
prepared on a consistent basis of accounting.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles ("GAAP") for complete financial
statements. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary for a fair presentation of the results
for the interim periods presented have been made. The results for the
three-month period ending September 30, 2002 may not necessarily be indicative
of the results for the entire fiscal year. These consolidated financial
statements should be read in conjunction with the Company's Form 10-KSB for the
year ended June 30, 2002.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. Such
forward-looking statements include, but are not limited to, statements regarding
future events, our plans and expectations, financial projections and performance
and acceptance of our products and services in the marketplace. Our actual
results could differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed elsewhere in this Form 10-QSB or incorporated herein by reference. See
"Special Note on Forward-Looking Statements" below.
RECENT DEVELOPMENTS
CONVERTIBLE DEBT INSTRUMENT. On October 28, 2002, The Canopy Group, Inc.
("Canopy") agreed to extend a revolving line of credit in the amount of $500,000
for the issuance by Ebiz Enterprises of a $500,000 "convertible debt
instrument". The convertible debt instrument carries an annual interest rate of
9% paid quarterly beginning December 31, 2002. All principal and accrued but
unpaid interest is due on December 31, 2003. At any time after the issuance of
this note and prior to payment in full of the outstanding principal balance of
this note, plus accrued interest, the note holder has the right, at the holder's
option, to convert the outstanding principal and accrued interest, in whole or
in part, into shares of the Company's common stock. The price per share at the
time of conversion shall mean either (i) the price per share paid by investors
in the next equity financing of $1,000,000 or more, or (ii) if an equity
financing has not occurred, then the product of (a) .90 multiplied by (ii) the
average of the closing bid and asked prices reported for the ten market days
immediately preceding the date of conversion. The use of these funds will be
roughly split in half between our new technology initiatives and general working
capital aimed at continuing several other new or revised areas of the Company's
business plan.
STOCK OPTION PLAN. On October 18, 2002 the Board of Directors approved the Ebiz
Enterprises, Inc. 2002 Stock Option Plan ("Option Plan"). There are 750,000
shares of common stock that may be optioned and sold under the Option Plan. We
anticipate registering the shares of common stock that may be optioned and sold
under the Option Plan on Form S-8. As of October 31, 2002 no shares have been
optioned. We anticipate submitting the Option Plan to a vote of our shareholders
at our next scheduled annual meeting of the shareholders.
6
OVERVIEW
CONFIRMATION OF AMENDED JOINT PLAN OF REORGANIZATION. On September 7, 2001 we
and our wholly owned subsidiary JBSI filed separate voluntary petitions to
reorganize under Chapter 11 of the Bankruptcy Code with the federal bankruptcy
court in Phoenix, Arizona. The bankruptcy court confirmed our Amended Joint Plan
of Reorganization dated January 4, 2002 (the "PLAN") on April 11, 2002, and the
Plan became effective on May 21, 2002. We have certain financial and other
commitments and obligations under the terms of our Plan which impact our
operations. Payments required under the plan are as follows: $1,411,028 in 2003;
$1,280,343 in 2004; $799,690 in 2005; $753,857 in 2006; $1,156,346 in 2007 and
$593,894 in 2008. The long-term implementation of our business plan and our
company strategies, as well as the achievement of the objectives of those
strategies, is dependent upon, among other factors, our ability to successfully
execute and fulfill the obligations of our confirmed Plan.
NEW CAPITAL. Following the confirmation of our Plan, we have been
successful in raising additional capital to support the implementation of our
business plan and company strategies. On May 14, 2002 we entered into a line of
credit loan agreement with Canopy. Under the terms of the agreement borrowings
under the line of credit are limited to the lesser of $500,000 or 85% of
eligible accounts receivable. The line of credit is secured by all accounts
receivable, inventory and property and equipment of the Company. In an amendment
dated September 4, 2002 the total amount available under the line was increased
to $700,000. On October 28, 2002, Canopy agreed to extend a revolving line of
credit in the amount of $500,000 for the issuance by Ebiz Enterprises of a
$500,000 "convertible debt instrument". SEE, MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - RECENT DEVELOPMENTS.
Even with the transactions set forth above, we have need for additional capital
and are continuing our efforts to locate and raise additional capital.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
Net revenues for the three months ended September 30, 2002 were $2,029,333
compared to $1,625,535 in the three months ended September 30, 2001. The
$403,798 increase, 24.8%, from the prior period, was due to the addition of
several new customers.
Cost of sales for the three months ended September 30, 2002 was $1,678,015 as
compared to $1,387,364, an increase of $290,651 related to the increase in
revenues. The cost of sales percentage decreased to 82.7% of sales, down from
85.3% of sales for the same period in 2001, which resulted in a corresponding
gross profit margin increase to 17.3% from 14.7% for the respective periods. The
increase reflects a shift in product mix towards higher gross profit margin
products. The gross profit for the fiscal quarter ended September 30, 2002 was
$351,318, an increase of $113,147 from the fiscal quarter ended September 30,
2001.
Selling, general and administrative expense was $811,399, or 40% of revenue, for
the three months ended September 30, 2002 as compared to $1,382,712, or 85% of
revenue, for the same period in 2001. The decrease of $571,313, or 41.3%, was
due to decreases in personnel related costs, marketing and advertisement,
professional fees and rent expense.
Interest expense for the three months ended September 30, 2002 was $99,522 as
compared to $288,915 for the three months ended September 30, 2001. The decrease
of $189,393 was principally due to the debt restructuring from the
implementation of the Chapter 11 plan of reorganization. The reduced interest
and other income of $251 for the three months ended September 30, 2002 as
compared to $3,346 for the same period in 2000, was primarily related to the
reduced cash on hand.
The preceding factors resulted in a net loss attributable to common stockholders
of $585,682 or $0.41 per basic and diluted share for the three months ended
September 30, 2002 as compared to a net loss attributable to common stockholders
of $1,655,642, or $0.05 per basic and diluted share, for the three months ended
September 30, 2001.
LIQUIDITY AND CAPITAL RESOURCES
Our net cash used in operating activities for the three months ended September
30, 2002 was $366,880 as compared to $1,667,187 provided in the three months
ended September 30, 2001. The operating cash shortage was financed through an
accounts receivable revolving line of credit.
The net cash used in investing activities during the three months ending
September 30, 2002 was $886.
The net cash provided by financing activities during the three months ended
September 30, 2002 was $201,173. The cash was provided by an increase in
borrowings under the terms of the accounts receivable revolving line of credit.
Even with the transactions set forth above, we have need for additional capital
and are continuing our efforts to locate and raise additional capital.
7
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, this Form 10-QSB contains
express or implied forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. We intend that such forward-looking statements be subject to the safe
harbors created thereby. We may make written or oral forward-looking statements
from time to time in filings with the SEC, in press releases, quarterly
conference calls or otherwise. The words "believes," "EXPECTS," "ANTICIPATES,"
"INTENDS," "FORECASTS," "PROJECT," "PLANS," "ESTIMATES" and similar expressions
identify forward-looking statements. Such statements reflect our current views
with respect to future events and financial performance or operations and speak
only as of the date the statements are made.
Forward-looking statements involve risks and uncertainties and readers are
cautioned not to place undue reliance on forward-looking statements. Our actual
results may differ materially from such statements. Factors that cause or
contribute to such differences include, but are not limited to, those discussed
elsewhere in this Form 10-QSB, as well as those discussed in our Form 10-KSB for
the fiscal year ended June 30, 2002, including those in the Notes to
Consolidated Financial Statements and in "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION" and "DESCRIPTION OF BUSINESS -
Factors Affecting Future Performance" sections which are incorporated by
reference in this Form 10-QSB.
Although we believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the results contemplated in such
forward-looking statements will be realized. The inclusion of such
forward-looking information should not be regarded as a representation that the
future events, plans or expectations contemplated will be achieved. We undertake
no obligation to publicly update, review or revise any forward-looking
statements to reflect any change in our expectations or any change in events,
conditions or circumstances on which any such statements are based. Our filings
with the SEC, including the Form 10-KSB referenced above, may be accessed at the
SEC's Web site, www.sec.gov.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, the Company carried
out an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. This evaluation was carried out under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer along with the Company's Chief Financial Officer and Chief
Accounting Officer. Based upon that evaluation, the Company's Chief Executive
Officer along with the Company's Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company required to be included in
the Company's periodic SEC filings. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date the Company carried out its evaluation,
and there were no corrective actions with regard to significant deficiencies and
material weaknesses.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include
controls and procedures designed to ensure that information required to be
disclosed in Company reports filed under the Exchange Act is accumulated and
communicated to management, including the Company's Chief Executive Officer and
Chief Financial Officer as appropriate, to allow timely decisions regarding
required disclosure.
8
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various legal proceedings and have certain outstanding claims
as described in our Form 10-KSB for the year ended June 30, 2002. Certain
outstanding vendor claims have been settled. Management believes that all such
matters are within ordinary levels for an organization of our size and nature.
Management believes that these disputes will be resolved without material
adverse consequences to operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Pursuant to the terms of our Plan, a total of 150,000 shares of our common stock
and one year warrants to purchase a total of 150,000 shares of our common stock
at $0.65 per share were issued to the Transition Management Team (as defined in
the Plan) effective August 19, 2002. The shares of common stock and the warrants
were issued under the provisions of Section 1145 of the Bankruptcy Code.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 99.1
Exhibit 99.2
(b) REPORTS ON FORM 8-K
None
9
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed by the undersigned, thereunto duly authorized.
EBIZ ENTERPRISES, INC.
Dated: November 14, 2002 By: /s/ Mike Colesante
------------------------------------
Mike Colesante
Chief Financial Officer
10
CERTIFICATIONS
I, Bruce Parsons, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ebiz Enterprises,
Inc.;
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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated November 14, 2002 By: /s/ Bruce Parsons
------------------------------------
Bruce Parsons
President & Chief Executive Officer
I, Mike Colesante, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ebiz Enterprises,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated November 14, 2002 By: /s/ Mike Colesante
------------------------------------
Mike Colesante
Chief Financial Officer