UNITED STATES
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: September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from _____ to _____
Commission file number: 1-14068
SEPRAGEN CORPORATION
(Exact name of small business issuer as specified in its charter)
California 68-0073366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14500 Doolittle Drive, San Leandro, California 94577
(Address of principal executive offices)
(Issuer's telephone number (including area code): (510) 667-1004
(Former name, former address and former fiscal year if
changed since last report:
Check whether the issuer (1) has 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 issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the registrant's classes of
Common equity, as of the latest practicable date:
November 15, 2002
-----------------
Class A Common Stock 11,311,848
Class B Common Stock 361,727
PART I - FINANCIAL INFORMATION
Item 1.- Financial Statements
SEPRAGEN CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)
September 30,
2002
------------
ASSETS
Current Assets:
Cash and cash equivalents .......................................... $ 67,375
Accounts receivable, less allowance for doubtful accounts
of $45,000 ....................................................... 295,673
Notes receivable ................................................... 50,000
Inventories ........................................................ 143,735
Prepaid expenses and other ......................................... 18,000
------------
Total current assets ............................................. 574,783
Furniture and equipment, net ....................................... 62,807
Intangible assets ............................................... 3,201
------------
640,791
------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable ................................................... $ 539,889
Notes Payable from shareholders .................................... 253,000
Accrued payroll and benefits ....................................... 689,764
Accrued liabilities ................................................ 149,844
Interest payable ................................................... 50,930
Customer deposit ................................................... 121,435
------------
Total current liabilities ........................................ 1,804,862
------------
Redeemable Preferred stock, no par value - 5,000,000 shares
authorized; and 175,439 convertible, preferred issued and
outstanding ...................................................... 500,000
Class A common stock, no par value - 20,000,000 shares
authorized; 11,311,848 shares issued and
outstanding ...................................................... 15,492,506
Class B common stock, no par value - 2,600,000 shares authorized;
361,727 shares issued and outstanding ............................ 2,097,393
Accumulated deficit ................................................ (19,253,970)
------------
Shareholders' equity (deficit) .................................... (1,164,071)
------------
640,791
------------
The accompanying notes are an integral part of this condensed financial
statement.
Page 2 of 12
SEPRAGEN CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues:
Net Sales ................................... $ 582,252 $ 25,483 $ 1,224,010 $ 536,301
------------ ------------ ------------ ------------
Cost of goods sold .......................... 270,992 14,031 654,678 316,666
Gross profit ................................ 311,260 11,452 569,332 219,635
Selling, general and administrative ......... 260,803 308,376 857,546 914,374
Research and development .................... 129,072 126,823 383,479 386,446
Total expenses ............................ 389,875 435,199 1,241,025 1,300,820
------------ ------------ ------------ ------------
Loss from operations ...................... (78,615) (423,747) (671,693) (1,081,185)
------------ ------------ ------------ ------------
Other income ................................ --
Interest income, (expense) net .............. (4,078) 0 (11,919) 0
------------ ------------ ------------ ------------
Net loss ................................. (82,693) (423,747) (683,612) (1,081,185)
============ ============ ============ ============
Net loss per common share,
Basic and diluted ........................... $ (.01) $ (.04) $ (.06) $ (.12)
============ ============ ============ ============
............
Weighted average shares outstanding ......... 11,673,575 9,560,241 11,673,575 8,762,741
The accompanying notes are an integral part of this condensed financial
statement.
Page 3 of 12
SEPRAGEN CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
2002 2001
----------- -----------
Cash flows from operating activities:
Net Loss .......................................... $ (683,613) $(1,081,185)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation ..................................... 24,273 34,032
Amortization ..................................... 11,969 20,311
Non cash - stock compensation expense ........... 0
Changes in assets and liabilities:
Accounts receivable ............................. 120,873 290,388
Notes receivable ................................ 0
Inventories ..................................... 90,523 (103,557)
Prepaid expenses and other ...................... 0 1,200
Accounts payable ................................ 27,102 19,178
Accrued liabilities ............................. 81,467 (45,056)
Accrued payroll and benefits .................... 250,024 199,965
Interest payable ................................ 11,918 0
Customer deposits ............................... 20,113 171,400
----------- -----------
Net cash used in operating activities ......... (45,351) (493,324)
----------- -----------
Cash flows from investing activities:
Acquisition of fixed assets ....................... (2,196) (94,009)
----------- -----------
Net cash used by investing .................... (2,196) (94,009)
Cash flows from financing activities:
Proceeds from issuance of common stock ............ 691,699
Proceeds from exercise of warrants ................ 0
Proceeds from issuance of notes payable ........... 38,000 135,000
Payment of notes payable to shareholders
Payment of notes payable .......................... (25,000)
Net cash provided by financing activities ......... 38,000 801,699
----------- -----------
Net increase (decrease) in cash ............... (9,547) 214,366
----------- -----------
Cash and cash equivalents at the beginning of the
period .............................................. 76,922 82,166
----------- -----------
Cash and cash equivalents at the end of the period .. 67,375 $ 296,532
=========== ===========
Supplemental disclosures of cash information:
Interest expense .............................. 11,919
State income tax .............................. 800
Conversion of Note receivable into Common Stock 50,000
The accompanying notes are an integral part of these condensed financial
statements.
Page 4 of 12
SEPRAGEN CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2002
Note 1 - Basis of Presentation
These condensed financial statements have been presented on a going
concern basis. Sepragen, ("the Company") has incurred recurring losses and cash
flow deficiencies from operations that raise substantial doubt about its ability
to continue as a going concern. As of September 30, 2002, the Company had an
accumulated deficit of $19,253,970. The Company will be required to conduct
significant research, development and testing activities which, together with
expense to be incurred for manufacturing, the establishment of large marketing
and distribution presence and other general and administrative expenses, are
expected to result in operating losses for the foreseeable future. Accordingly,
there can be no assurance that the Company will ever achieve profitable
operations. The Company will have to obtain additional financing to support its
operating needs beyond December 31, 2002. The Company is currently pursuing
alternative funding sources to meet its cash flow needs, including private debt
and equity financing. Management intends to use such funding to further its
marketing effort and expand sales. It is uncertain, however, whether the Company
will be successful in such pursuits. No adjustments have been made to the
accompanying condensed financial statements for this uncertainty.
Note 2 - Interim Financial Reporting
The accompanying unaudited interim financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-QSB.
Accordingly, certain information and footnotes required by generally accepted
accounting principles in the United States of America have been condensed or
omitted. In the opinion of management, all adjustments consisting of normal
recurring accruals considered necessary for a fair presentation have been
included. Operating results for the nine months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. These interim statements should be read in conjunction with
the financial statements and the notes thereto, included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2001.
Note 3 - Notes Payable
Between April and September 2002, the Company received proceeds from
convertible notes payable of $38,000 from a shareholder.
Note 4 - Series A Preferred Stock
On September 1, 1998, we sold 175,439 shares of Series A Preferred
Stock. Our Series A Preferred Stock provides for both 7.5% dividend and
liquidation preferences. The dividend is payable from time to time at the
election of our Board of Directors subject to our retaining sufficient earnings
and profits. On any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the holders of series A Preferred Shares shall
receive, out of the assets of the Company, the sum of $2.86 per series A
Preferred Share, plus an amount equal to any dividend accrued and unpaid on
those series A Preferred Shares, before any payment shall be made or any assets
distributed to the holders of Common Stock.
Note 5 - Segment Reporting
The company has two operating segments based on the nature of the
customer's industry, the biotech and food (dairy) and beverage segments. The
chief operating decision-maker is the Company's Chief Executive Officer who
regularly reviews segment performance. There was no revenue in the nine months
ended September 30, 2002 from the food and beverage segment. Selling, general
and administrative expenses are not allocated to individual segments. There are
no significant assets that are identifiable to a segment.
Note 6 - Loss per Share
Basic loss per share is calculated using the weighted average number of
common shares outstanding in the period. Diluted loss per share includes
potentially dilutive securities such as outstanding options and warrants, using
the "treasury stock" method and convertible securities using the "if converted"
method. The assumed exercise of options and warrants and assumed conversion of
convertible securities have not been included in the calculation of diluted loss
at September 30, 2002 per share as the effect would be anti-dilutive.
Page 5 of 12
Note 7 - Intangible Assets:
A. Intangible assets consist of the following:
September 30, 2002
---------------------------------------------------------
Weighted
Gross Net Average
Intangible Accumulated Intangible Life
Assets Amortization Assets (Years)
------------ ------------ ------------ ------------
Goodwill 0 0 0
Other Intangibles 194,018 190,817 3,201 7
------------ ------------ ------------
Total $ 194,018 $ 190,817 $ 3,201
============ ============ ============
December 31, 2001
---------------------------------------------------------
Weighted
Gross Net Average
Intangible Accumulated Intangible Life
Assets Amortization Assets (Years)
------------ ------------ ------------ ------------
Goodwill 0 0 0
Other Intangibles 194,018 178,059 15,959 7
------------ ------------ ------------
Total $ 194,018 $ 178,059 $ 15,959
============ ============ ============
The Company adopted SFAS 142 on January 1, 2002. The Company does not have
goodwill, therefore is not affected by the new rules. Under the new rules
companies are no longer permitted to amortize intangible assets with indefinite
lives; instead they will be subject to periodic tests for impairment.
SFAS 12 supercedes APB Opinion #17, Intangible Assets. In accordance with SFAS
142 the Company also performed an impairment test of its intangible assets and
determined that no write-down was necessary. Below is a reconciliation of
previously reported net income and earnings per share to the amounts adjusted
for the exclusion of amortization expense for goodwill and the Company's trade
name, net of income tax.
Nine Months Ended
September 30,
2002 2001
------------ ------------
Reported net income (loss) $ (683,612) $ (1,081,185)
Goodwill and Company trade name
amortization, net of tax 0 0
------------ ------------
Adjusted net income (loss) $ (683,612) $ (1,081,185)
============ ============
Reported diluted earnings (loss)
per share $ (0.06) $ ( 0.12)
Goodwill and Company trade name
amortization, net of tax 0.0 0.0
------------ ------------
Adjusted diluted earnings (loss)
per share $ (0.06) $ ( 0.12)
============ ============
Estimated amortization expense for each of the next two years
ended December 31, is as follows:
2002 (12 months) $ 15,959
2003 0
Total $ 15,959
Page 6 of 12
Item 2. Management's Discussion and Analysis.
Critical Accounting Policies
Application of our accounting policies requires management to make
judgments and estimates about the amounts reflected in the financial statements.
Management uses historical experience and all available information to make
these estimates and judgments, although differing amounts could be reported if
there are changes in the assumptions and estimates. Estimates are used for, but
not limited to, the accounting for the allowance for doubtful accounts,
inventory allowances, restructuring costs, impairment costs, depreciation and
amortization, sales discounts and returns, warranty costs, taxes and
contingencies. Management has identified the following accounting policies as
critical to an understanding of our financial statements and/or as areas most
dependent on management's judgment and estimates.
Revenue Recognition--We generally recognize revenue when persuasive
evidence of an arrangement exists, delivery has occurred, the price is fixed or
readily determinable, and collectibility is probable. Sales are recorded net of
sales returns and discounts. We recognize revenue in accordance with Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements."
Impairment of Long-Lived Assets--We continually review the
recoverability of the carrying value of long-lived assets using the methodology
prescribed in Statement of Financial Accounting Standards (SFAS) 144,
"Accounting for the Impairment and Disposal of Long-Lived Assets." We also
review long-lived assets and the related intangible assets for impairment
whenever events or changes in circumstances indicate that the carrying value of
such assets may not be recoverable. Upon such an occurrence, recoverability of
these assets is determined by comparing the forecasted undiscounted net cash
flows to which the assets relate, to the carrying amount. If the asset is
determined to be unable to recover its carrying value, then intangible assets,
if any, are written down first, followed by the other long-lived assets to fair
value. Fair value is determined based on discounted cash flows, appraised values
or management's estimates, depending on the nature of the assets.
Deferred Tax Asset Valuation Allowance--We record a deferred tax asset
in jurisdictions where we generate a loss for income tax purposes. Due to
volatility in the industry within which we operate, we may record a valuation
allowance against these deferred tax assets in accordance with SFAS 109,
"Accounting for Income Taxes," when, in management's judgment, the deferred tax
assets may not be realized in the foreseeable future.
Inventories--Our inventories are stated at the lower of cost (first-in,
first-out method, or standard costing method) or market. Slow moving and
obsolete inventory are written off quarterly. To calculate the write-off amount,
we compare the current on-hand quantities with both the projected usages for a
two-year period and the actual usage over the past 12 months. On-hand quantities
greater than projected usage are calculated at the standard unit cost. The
engineering and purchasing departments review the initial list of slow-moving
and obsolete items to identify items that have alternative uses in new or
existing products. These items are then excluded from the analysis. The
remaining amount of slow-moving and obsolete inventory is then written off.
Additionally, non-cancelable open purchase orders for parts we are obligated to
purchase where demand has been reduced may be reserved. Reserves for open
purchase orders where the market price is lower than the purchase order price
are also established.
Accounts Receivable and Allowance for Doubtful Accounts--The Allowance
for Doubtful Accounts is established by analyzing each account that has a
balance over 90 days past due. Each account is individually assigned a
probability of collection. The total amount determined to be uncollectible in
the 90-days-past-due category is then reserved fully. The percentage of this
reserve to the 90-days-past-due total is then established as a guideline and
applied to the rest of the non-current accounts receivable balance. When other
circumstances suggest that a receivable may not be collectible, it is
immediately reserved for, even if the receivable is not yet in the
90-days-past-due category.
Recent Pronouncements and Accounting Changes--In October 2001, the
Financial Accounting Standards Board (FASB) issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" .
SFAS 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS 144
superseded SFAS 121, and APB Opinion No. 30, "Reporting the Results of
Page 7 of 12
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The
provisions of SFAS 144 are effective in fiscal years beginning after December
15, 2001 and in general are to be applied prospectively. We adopted SFAS 144
effective January 1, 2002, which did not have a material impact on our
consolidated results of operations and financial position.
In June 2002, the FASB issued SFAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which nullifies EITF Issue No.
94-3. SFAS 146 is effective for exit and disposal activities that are initiated
after December 31, 2002 and requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is incurred, in
contrast to the date of an entity's commitment to an exit plan, as required by
EITF Issue 94-3. The Company will adopt the provisions of SFAS 146 effective
January 1, 2003.
First nine months of 2002 compared to first nine months of 2001.
- ---------------------------------------------------------------
The management of the Company believes there is a significant potential
for revenue growth in the biotech sector via sales of our existing products. The
Company believes its products offer major competitive advantages over the
competition - higher productivity and smaller footprint - that enable faster
time to market. Thus the expansion of sales, marketing and service capability is
a key focus for the management.
The results stated below reflect the resource constrained operating
state of the Company over the last year. Such resource constraints have impeded
our ability to capitalize on the market opportunities. Despite these
constraints, the Company has sold its products to several leading biotech
companies which meets their current capacity and productivity needs.
Our net sales have increased by $688,000 or 128% from $536,000 in the
first nine months of 2001 to $1,224,000 for the comparable period in 2002. The
increase was primarily due to shipment of our large stainless column that was
booked in the first quarter of 2002. In addition, our net sales for the third
quarter of 2001 was very low.
Gross profit increased by $349,000 or 159% from $220,000 in the first
nine months of 2001 to $569,000 for the comparable period in 2002. The increase
in gross profit was due to higher sales. As a percentage of sales, gross profit
increased by 5% from 41% in the first nine months of 2001 to 46% for the
comparable period in 2002. The increase in gross profit was attributable to the
higher volume resulting in lower fixed cost.
Selling, general and administrative expenses decreased by $56,000 from
$914,000 in the first nine months of 2001 to $858,000 for the comparable period
in 2002 due to reduction of head count.
Research and development expenses decreased by $3,000 from $386,000 in
the first nine months of 2001 to $383,000 in the first nine months of 2002 due
to completion of some projects.
Overall, net loss decreased by $397,000 or 37% from $1,081,000 in the
first nine months of 2001 to $684,000 for the comparable period in 2002. The
decrease in loss is due to higher revenue and lower expenses.
Three months ended September 30, 2002 compared to three months of ended
September 30, 2001:
- ------------------
Focus in the biotech market has resulted in net sales increase by
$557,000 from $25,000 in the third quarter of 2001 to $582,000 for the third
quarter of 2002.
Our gross profit increased by $300,000 from $11,000 in third quarter of
2001 to $311,000 for the third quarter of 2002. As a percentage of sales, gross
profit increased by 9% from 44% in the third quarter of 2001 to 53% in the third
quarter of 2002. The increase in gross profit was due to higher volume resulting
in lower unit fixed cost and product mix.
Belt tightening accounted for having selling, general and
administrative expenses decrease by $47,000 from $308,000 in the third quarter
of 2001 to $261,000 in the third quarter of 2002.
Page 8 of 12
Our research and development expenses increased by $2,000 from $127,000
in the third quarter of 2001 to $129,000 in the third quarter 0f 2002.
Our net loss for the third quarter decreased by $341,000 or 80% from
$424,000 in the third quarter of 2001 to $83,000 in the third quarter of 2002.
The decrease in loss was due to higher revenue and lower expenses.
Inflation:
We believe that the impact of inflation on its operations since its
inception has not been material.
Subsequent Event:
Mr. Jon Salquist resigned his position as a director of the Company
effective October 8, 2002.
Liquidity and Capital Resources:
- --------------------------------
We used cash of $45,000 and $493,000 for operations during the first
nine months of 2002 and 2001, respectively. Cash used in operations in the first
nine months of 2002 was the result of net loss incurred for the nine months of
$684,000 offset by net non-cash expense of $36,000, and the net change in
operating assets and liabilities resulting in source of cash of $603,000. Cash
used in operations in the first nine months of 2001 was the result of net loss
incurred for the nine months of $1,081,000 offset by net non-cash expense of
$54,000, and the net change in operating assets and liabilities resulting in
source of cash of $534,000.
Investing activities used cash of $2,000 and 94,000 in the first nine
months of 2002 and 2001 respectively.
Financing activities provided cash of $38,000 and $802,000 during the
first nine months of 2002 and 2001, respectively. The cash provided in the first
nine months of 2002 resulted from issuance of convertible notes payable. The
cash provided in the first nine months of 2001 resulted from issuance of
convertible notes payable of $135,000 partially offset by $25,000 retirement of
notes payable and net proceeds of $692,000 from issuance of common stock.
At September 30, 2002 we had cash and cash equivalents of $67,000 as
compared with $77,000 on December 31, 2001. At September 30, 2002, we had a
working capital deficit of $1,230,000, as compared to working capital deficit of
$580,000 at December 31, 2001. The decrease in cash in the first nine months of
2002 was a result of the aforementioned increases and decreases in cash from
operating, investing and financing activities noted above.
Clearly our working capital must increase significantly to fund the
level of manufacturing and marketing required to meet any growth in demand for
our products in the nutritional and biotech industries during the next several
years. Moreover, we require additional funds to market and develop products as
stated earlier.
Since we do not have credit facilities, most of the required growth
capital would have to come from customers and partners and equity financing. No
assurance can be given, however, that the terms of any contemplated financing or
alliances will be successfully negotiated or that such financing will be
successful in generating the revenue required to make us profitable.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.
- ----------------------------------------
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, we caution that, while such
Assumptions, or bases are believed to be reasonable and are made in good faith,
assumed facts or bases almost always vary from the actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, we
expresses expectation or belief as to future results, such expectation or belief
is expressed in good faith and is believed to have a reasonable basis, but there
Page 9 of 12
can be no assurance that the statement of expectation or belief will result or
be achieved or accomplished. The words "believe," "estimate," "anticipate," and
similar expressions may identify forward-looking statements.
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings Not Applicable
Item 2. Defaults Upon Senior Securities Not Applicable
Item 3. Submission of Matters to a vote of Security Holders Not Applicable
Item 4. Other Information Not Applicable
Page 10 of 12
CERTIFICATION
- -------------
I, Vinit Saxena, certify that:
I have reviewed this quarterly report on Form 10-QSB of Sepragen Corporation;
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;
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 registrants of,
and for, the periods presented in this quarterly report;
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have;
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
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 (August 26, 2002); and
presented in this quarterly report our conclusions about the effectives of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
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):
all significant deficiencies in the design or operation in 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
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and
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: 11/19/2002 Signature: /s/ VINIT SAXENA
---------- ------------------------------
Vinit Saxena
Chief Executive Officer
Page 11 of 12
CERTIFICATION
- -------------
I, Henry N. Edmunds, certify that:
I have reviewed this quarterly report on Form 10-QSB of Sepragen Corporation;
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;
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 registrants of,
and for, the periods presented in this quarterly report;
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have;
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
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 (August 26, 2002); and
presented in this quarterly report our conclusions about the effectives of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
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):
all significant deficiencies in the design or operation in 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
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and
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: 11/19/2002 Signature: /s/ HENRY N. EDMUNDS
---------- ------------------------------
Henry N. Edmunds
Chief Financial Officer
Page 12 of 12