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 EXCHANGE ACT
For the transition period from _______________ to _______________
Commission file number 000-27915
GENIUS PRODUCTS, INC.
---------------------
(Name of small business issuer as specified in its charter)
NEVADA 33-0852923
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11250 EL CAMINO REAL #100
SAN DIEGO, CA 92127
(Address of principal executive officers)
(858) 793-8840
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
There were 15,814,252 shares outstanding of the registrant's Common Stock as of
November 12, 2002.
Transitional small business disclosure format (check one): Yes [ ] No [X]
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GENIUS PRODUCTS, INC.
INDEX
PAGE
PART I Financial Information 3
Item 1 Financial Statements 3
Condensed Consolidated Balance Sheet at September 30, 2002
(unaudited) 3
Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 2002
and 2001 (unaudited) 4
Condensed Consolidated Statements of Operations
for the Nine Months Ended September 30, 2002
and 2001 (unaudited) 5
Condensed Consolidated Statements of Cash Flow
for the Nine Months Ended September 30, 2002
and 2001 (unaudited) 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3 Controls and Procedures 9
PART II Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities and Use of Proceeds 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
SIGNATURES 10
2
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30,
- --------------------------------------------------------------------------------
2002
-------------
ASSETS
Current assets
Cash and equivalents $ 735,478
Accounts receivable, net of allowance for
doubtful accounts and sales returns of $70,000 1,161,138
Inventories 237,041
Prepaid Expenses 63,173
-------------
Total current assets 2,196,830
Property and equipment, net of accumulated depreciation
of $107,532 151,256
Production masters, net of accumulated amortization of
$323,058 381,586
Patents and trademarks, net of accumulated
amortization of $20,717 88,178
Deposits and other 175,725
-------------
$ 2,993,575
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 383,859
Accrued payroll and related expenses 43,187
Debentures payable 60,750
Accrued other expenses 3,223
Deferred Income - Advance royalties 308,540
-------------
Total current liabilities 799,559
Redeemable common stock 524,159
Commitments and contingencies -
Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares
authorized: 15,655,053 shares outstanding 15,655
Additional paid-in capital 16,200,106
Stock subscription receivable (2,606,164)
Accumulated deficit (11,939,740)
-------------
Total stockholders' equity 1,669,857
-------------
$ 2,993,575
=============
The accompanying notes are an integral part of these statements.
3
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
2002 2001
------------- -------------
REVENUES
Product sales $ 918,831 $ 374,780
Licensing 17,179 108
Video royalties 113,767 --
------------- -------------
Total revenues 1,049,777 374,888
Returns, Discounts and Allowances (246,836) (7,988)
------------- -------------
Net revenues 802,941 366,900
------------- -------------
COSTS AND EXPENSES
Cost of revenues 423,321 355,081
Sales and marketing 119,267 91,426
Product and web development 18,789 63,610
General and administrative 652,301 326,934
------------- -------------
Total costs and expenses 1,213,678 837,051
------------- -------------
Loss from operations (410,737) (470,151)
Interest income 38,676 --
Interest expense (15,421) (11,864)
------------- -------------
Loss before provision for income taxes (387,482) (482,015)
Provision for income taxes -- --
------------- -------------
Net loss $ (387,482) $ (482,015)
============= =============
Basic and diluted loss per common share:
Net loss per share $ (0.03) $ (0.09)
============= =============
Basic and diluted weighted average shares 15,340,752 5,266,606
============= =============
The accompanying notes are an integral part of these statements.
4
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
2002 2001
------------- -------------
REVENUES
Product sales $ 1,917,297 $ 822,024
Licensing 31,666 20,350
Video royalties 189,367 --
------------- -------------
Total revenues 2,138,330 842,374
Returns, Discounts and Allowances (327,909) (57,580)
------------- -------------
Net revenues 1,810,421 784,794
------------- -------------
COSTS AND EXPENSES
Cost of revenues 1,224,524 660,234
Sales and marketing 316,870 370,050
Product and web development 35,734 284,004
General and administrative 2,238,429 1,071,981
------------- -------------
Total costs and expenses 3,815,557 2,386,269
------------- -------------
Loss from operations (2,005,136) (1,601,475)
Interest income 105,205 --
Interest expense (38,574) (89,818)
------------- -------------
Loss before provision for income taxes (1,938,505) (1,691,293)
Provision for income taxes 800 800
------------- -------------
Net loss $ (1,939,305) $ (1,692,093)
============= =============
Basic and diluted loss per common share:
Net loss per share $ (0.15) $ (0.36)
============= =============
Basic and diluted weighted average shares 13,140,589 4,753,821
============= =============
The accompanying notes are an integral part of these statements.
5
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
- ----------------------------------------------------------------------------------------------
2002 2001
------------ ------------
Cash flows from operating activities
Net loss $(1,939,305) $(1,692,093)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 145,837 136,468
Bad debt expense (26,000) --
Common stock issued for services 233,584 236,229
Stock options granted to non-employees for services 566,536 --
Stock issued for compensation 210,000 --
Interest expense on redeemable common stock 24,709 --
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (853,395) 170,777
Inventories (113,730) (35,568)
Prepaid expenses (14,344) --
Deposits and other (97,497) (27,758)
Increase (decrease) in:
Accounts payable (461,723) 57,860
Deferred income 308,540 --
Accrued payroll & related items (54,388) --
Other current liabilities (150,165) 149,981
------------ ------------
Net cash used by operating activities (2,221,341) (1,004,104)
------------ ------------
Cash flows from investing activities
Patents and trademarks (63,646) (10,946)
Development of production masters (279,346) (80,531)
Purchase of property and equipment (115,527) (3,111)
------------ ------------
Net cash used in investing activities (458,519) (94,588)
------------ ------------
Cash flows from financing activities
Borrowings on notes payable 62,506 125,000
Proceeds from issuance of convertible debt 60,750 256,000
Proceeds from issuance of common stock 3,264,084 714,330
------------ ------------
Net cash provided by financing activities 3,387,340 1,095,330
------------ ------------
Net increase (decrease) in cash and equivalents 707,480 (3,362)
Cash at beginning of period 27,998 54,928
------------ ------------
Cash at end of period $ 735,478 $ 51,566
============ ============
Non-cash investing and financing activities:
Acquisition of production masters through the
issuance of common stock $ 73,600 $ --
Payment of loans by issuance of common stock 62,506 447,250
Common stock subscribed 728,400 --
Exercise of options with notes receivable 1,778,000 --
The accompanying notes are an integral part of these statements.
6
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Genius
Products, Inc. have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission.
The information furnished herein reflects all adjustments, consisting of only
normal recurring accruals and adjustments which are, in the opinion of
management, necessary to fairly state the operating results for the respective
periods. Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The notes to the condensed financial statements should be read in conjunction
with the notes to the consolidated financial statement contained in the
Company's Form 10-KSB for the year ended December 31, 2001. Company management
believes that the disclosures are sufficient for interim financial reporting
purposes. Certain items in the prior year financial statements have been
reclassified to conform to the current year presentation.
NOTE B: COMMON STOCK
During the nine months ended September 30, 2002, we issued a total of 9,471,297
shares, of which 3,645,797 restricted shares were issued at prices of $.50,
$.63, and $.80 per share, including 3,507,700 shares that were issued for notes
secured by the stock, at prices of $.50 and $.80 per share. We also issued (a)
4,996,462 shares at prices of $.63 and $1.00 per share for net proceeds of
$3,264,084 in private placements, (b) 99,215 shares at a price of $.63 per share
for the conversion of $62,506 in short-term debt, and (c) 424,107 shares at
prices ranging from $.63 to $2.51 per share for services and production masters.
Additionally, 305,716 shares were issued to employees at prices of $.63 and
$1.50 for $210,000 in past and current compensation.
NOTE C: COSTS ASSOCIATED WITH OPTIONS
Included in General and Administrative expenses for the three and nine month
periods ending September 30, 2002 are the costs of stock options granted to
non-employees for services amounting to $189,961 and $566,536, respectively.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTE
A TO THE FINANCIAL STATEMENTS INCLUDED ABOVE. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR THE COMPANY'S FUTURE
FINANCIAL PERFORMANCE AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS, LEVELS OF ACTIVITY,
PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS.
The three and nine months ended September 30, 2002.
Product sales are primarily music (Baby Genius) and jewelry sales to
wholesale customers. The Company also recognizes licensing revenue related to
licensing the Baby Genius trademark and royalties related to the distribution of
our line of videos. Sales returns, discounts and allowances are product sales
related and primarily on music.
Total revenues increased 180% ($674,889) to $1,049,777 for the three
months and 154% ($1,295,956) to $2,138,330 for the nine months ended September
30, 2002 as the result of increased sales of the Baby Genius music products and
the royalties recognized on the videos sold by a third party. Music sales
increased 393% in the three months ended September 30, 2002, and 336% for the
nine month period as compared to the similar periods in the prior fiscal year,
due to a wider distribution of the Company's products, the delivery of our new
multi packs, the addition of a new major customer and increasing sales to
existing customers. Jewelry sales declined 11% in the three month period and
increased 16% for the nine month period ending September 30, 2002 when compared
to the same year-earlier periods. Licensing revenues were up slightly in the
current nine months as compared to the previous year period. Video royalties
were $113,767 for the current quarter and $189,367 for the nine months ended
September 30, 2002. This revenue is the result of a production and distribution
agreement reached in February 2002, and no corresponding revenue existed in
fiscal 2001. Sales returns, discounts and allowances increased significantly in
the current three month and nine month periods, primarily due to the increase in
music product sales in the current year. Returns in the third quarter of 2002
were higher than expected due to customer returns of single CD's so that they
could sell the newly introduced CD multi-packs and due to the cancellation of a
relationship with a Canadian distributor.
Costs of revenues consist primarily of the costs of products sold to
customers and packaging and shipping costs. Cost of revenues also include
commissions paid on licensing and expenses related to the video royalty
agreement. The cost of revenues for the three months ended September 30, 2002
were 53% of net revenues as compared to 97% in the same quarter in 2001. This
reflects the increased music product sales that have a higher margin and the
addition of video royalty revenue in the current period, while the prior year
reflects the costs of repackaging the product line that began in the third
quarter of fiscal 2001. Cost of revenues for the first nine months of 2002 were
68% of net revenues versus 84% in the prior year nine month period. This also
reflects the increased sales of music products.
Sales and marketing expenses consist of costs for marketing personnel
and promotional activities. Sales and marketing expenses increased by 30% to
$119,267 for the three months ended September 30, 2002 as compared to $91,426
for the same quarter in 2001 as the result of increased personnel expenses.
Sales and marketing expenses for the current nine month period were down 14%, or
$53,180, from the same nine month period in the prior year due to the reduction
in promotional spending implemented by the Company in the current year.
Product and web development expenses consist of services in the
development of the Baby Genius web site and product line, although the expenses
in fiscal year 2001 included personnel costs not incurred in fiscal 2002. As a
result of the reduction in personnel costs and reductions in services the
product and web development costs decreased by 70% and 87% for the three and
nine month periods ended September 30, 2002, respectively, as compared to the
same periods in 2001. The cost reductions were primarily the result of the
completion of the web site development. The Company has begun increasing
expenditures for product development as reflected in increases in production
masters capitalized in the current year and expects to increase product
development expenses in the fourth quarter of 2002.
8
General and administrative expenses consist of payroll and related
costs for executive and administrative personnel, professional services and
consulting fees, and other general corporate expenses. General and
administrative expenses increased by 100%, or $325,367 to $652,731 for the three
months ended September 30, 2002, and 109%, or $1,166,448, to $2,238,429 for the
nine months ended September 30, 2002 when compared to the same year earlier
periods. A significant portion of these increases relates to the costs
associated with the issuance of options to non-employees, $189,961 and $566,536
in the three and nine month periods, respectively. Additionally, increased
personnel costs associated with the increased level of business, consultant and
professional fees, and other general increases related to the renewed activity
also contributed to the increases.
Interest income represents the earnings on both short-term invested
funds and the amounts earned on subscription agreements, neither of which
existed in fiscal 2001. The 30% increase in interest expense for the current
quarter is primarily the result of increased interest on redeemable common
stock. The 57% decrease in interest expense for the nine months ended September
30, 2002 compared to the same period last year reflects the decrease in
borrowing that was facilitated by the funding from the issuance of stock in
2002.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2002 we obtained significant
financing primarily through the issuance of additional common shares in private
placements for net proceeds of $3,096,090. These funds have allowed the Company
to meet its financial obligations, to fund the increase in product sales in the
third quarter and the net loss. We believe that the combination of remaining
funds and the accounts receivable at September 30, 2002 will be sufficient to
meet our needs through the quarter ending March 31, 2002.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, Genius Products,
Inc. carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of Genius Products,
Inc.'s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
Based upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that Genius Products, Inc.'s disclosure controls and
procedures are effective in timely alerting him to material information relating
to Genius Products, Inc. required to be included in our periodic filings with
the Securities and Exchange Commission.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of conducting business, we are involved in various
litigation. There has been no material change in legal proceedings from those
disclosed previously in our Form 10-KSB for the year ended December 31, 2001.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the period from January 1, 2002 through September 30, 2002, we
issued a total of 9,471,297 shares, of which 3,645,797 restricted shares were
issued to accredited investors under Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act") at prices of $.50, $.63, and $.80 per share,
including 3,507,700 shares that were issued for notes secured by the stock, at
prices of $.50 and $.80 per share. We also issued (a) 4,996,462 restricted
shares at prices of $.63 and $1.00 per share for net proceeds of $3,264,084 to
accredited investors pursuant to private placements under Section 506 of
Regulation D of the Securities Act, (b) 99,215 restricted shares to accredited
investors under Section 4(2) of the Securities Act at a price of $.63 per share
for the conversion of $62,506 in short-term debt, and (c) an aggregate of
185,029 unrestricted (registered) shares and 239,078 restricted (unregistered)
shares at prices ranging from $.63 to $2.51 per share pursuant to a number of
agreements with third-party consultants and service providers and related
parties under Section 4(2) of the Securities Act. Additionally, 305,716
restricted shares were issued to employees at prices of $.63 and $1.50 for
$210,000 in past and current compensation under Section 4(2) of the Securities
Act. All cash proceeds were used principally for working capital purposes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our annual meeting of shareholders was held on July 8, 2002. Of the
15,421,712 shares eligible to vote, 12,062,586 shares appeared by proxy and
established a quorum for the meeting. The following items were approved by a
majority of the shareholders:
VOTES FOR VOTES AGAINST VOTES WITHHELD NOT VOTED
1. Election of Directors
Klaus Moeller 12,058,711 300 3,575 0
David Anderson 12,058,386 625 3,575 0
Margaret Loesch 12,058,086 925 3,575 0
Deborah L. Cross 12,058,711 300 3,575 0
Richard Bermingham 12,058,086 925 3,575 0
Nancy Evensen 12,058,086 925 3,575 0
Larry Balaban 12,058,211 800 3,575 0
2. Increase Authorized Shares of Common Stock to 50,000,000
11,915,368 106,718 40,500 0
3. Authorization of 10,000,000 Shares of Preferred Stock
9,795,191 173,074 3,000 2,091,321
4. Ratification of Second Amended and Restated 2000 Non-Qualified Stock Option
Plan
11,852,979 164,755 44,852 0
5. Ratification of Selection of Cacciamatta Accountancy Corporation to Serve
as Auditors for Fiscal Year Ending December 31, 2002
12,057,511 2,075 3,000 0
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B
3.1.3 Certificate of Amendment of Articles of Incorporation
dated August 27, 2002
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(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 on its behalf by the undersigned, thereunto duly
authorized.
GENIUS PRODUCTS, INC.,
a Nevada Corporation
November 14, 2002 By: /s/ Klaus Moeller
------------------------------------
Klaus Moeller, Chief Executive Officer,
Chairman of the Board and Interim
Chief Financial Officer
10
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Klaus Moeller, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Genius
Products, 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 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 functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this 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/ Klaus Moeller
------------------------------
Klaus Moeller
Chief Executive Officer
11
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Klaus Moeller, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Genius
Products, 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 functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this 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/ Klaus Moeller
----------------------------
Klaus Moeller
Chief Financial Officer
12