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SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
COMMISSION FILE NUMBER 0-9478
__________________________
SPECTRUM LABORATORIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4718363
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
18617 BROADWICK STREET, RANCHO DOMINGUEZ, CALIFORNIA 90220
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (310) 885-4600
Indicate by check mark 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 [ ]
Number of shares of Common Stock outstanding as of April 30, 2003: 5,312,468
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
YES [ ] NO [X]
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Page
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 29, 2003 3
Consolidated Statements of Income for the Three Months
Ended March 29, 2003 and March 30, 2002 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 29, 2003 and March 30, 2002 5
Notes to Consolidated Statements 6
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 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 10
Signature 12
Certifications Certifications - Chief Financial Officer and Chief
Executive Officer 13
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPECTRUM LABORATORIES, INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 29, 2003
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,032
Accounts receivable 1,993
Inventories 1,825
Prepaid expenses 279
Deferred taxes 528
Tax refund receivable 62
--------
Total current assets 9,719
EQUIPMENT AND LEASEHOLD IMPROVEMENTS 2,927
GOODWILL, not subject to amortization 1,122
DEFERRED TAXES 1,424
PATENTS, subject to amortization, net of accumulated amortization of $106 614
OTHER ASSETS 33
--------
Total assets $15,839
========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 960
Accounts payable 539
Accrued expenses and other current liabilities 890
--------
Total current liabilities 2,389
LONG-TERM DEBT, net of current maturities 2,505
MINORITY INTEREST 1,755
STOCKHOLDERS EQUITY:
Common stock, $.01 par value, 25,000,000 shares authorized;
5,312,468 shares issued and outstanding 53
Preferred stock, par value $.01; 10,000,000 shares authorized;
none issued and outstanding --
Additional paid-in capital 8,482
Retained earnings 655
--------
Total stockholders equity 9,190
--------
Total liabilities and stockholders equity $15,839
========
See Notes to Consolidated Financial Statements.
3
SPECTRUM LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 28, 2003 AND MARCH 30, 2002
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
2003 2002
------- -------
NET SALES $3,458 $3,254
COSTS AND EXPENSES
Cost of sales 1,794 1,797
Selling, general and administrative 1,055 962
Research and development 206 163
Other expense, primarily interest 36 27
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Total costs and expenses 3,091 2,949
------- -------
Income before provision for income taxes 367 305
Provision for income taxes 110 121
------- -------
Net income $ 257 $ 184
======= =======
Earnings per share:
Basic $ 0.05 $ 0.03
======= =======
Diluted $ 0.05 $ 0.03
======= =======
Weighted average shares outstanding:
Basic 5,312 5,312
======= =======
Diluted 5,373 5,442
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See Notes to Consolidated Financial Statements.
4
SPECTRUM LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 29, 2003 AND MARCH 30, 2002
(IN THOUSANDS)
(UNAUDITED)
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 257 $ 184
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 187 161
Noncash compensation 3 7
Change in working capital components:
(Increase) in accounts receivable (187) (224)
(Increase) Decrease in inventories (59) 16
(Increase) in prepaid expenses (46) (101)
(Increase) in other assets -- (1)
(Decrease) Increase in accounts payable (25) 117
Increase in accrued expenses 194 182
-------- --------
Net cash provided by operating activities 324 341
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment and leasehold improvements (178) (46)
Acquisition of patents -- (250)
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Net cash (used in) investing activities (178) (296)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt (223) (206)
-------- --------
Net decrease in cash and cash equivalents (77) (161)
CASH AND CASH EQUIVALENTS, beginning of period 5,109 3,027
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,032 $ 2,866
======== ========
See Notes to Consolidated Financial Statements.
5
NOTES TO CONSOLIDATED STATEMENTS
Note 1
Basis of Presentation - The accompanying unaudited financial statements
consolidate the accounts of Spectrum Laboratories, Inc. and its subsidiaries,
SLI Acquisition Corp., Spectrum Europe B.V. and Spectrum Chromatography
(collectively, the Company). All significant intercompany transactions have been
eliminated in consolidation. In the opinion of management, the accompanying
unaudited interim consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the financial position of the Company as of March 29, 2003 and the results of
its operations and its cash flows for the three months ended March 29, 2003 and
March 30, 2002. Certain information and footnote disclosures normally included
in the financial statements have been condensed or omitted pursuant to rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures in the unaudited interim financial statements are
adequate to make the information presented not misleading.
ACCOUNTING FOR STOCK-BASED COMPENSATION - In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure.
This Statement amends SFAS No 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for an entity that voluntarily changes
to the fair value-based method of accounting for stock-based employee
compensation. This Statement also amends the disclosure requirement of SFAS No.
123 to require prominent disclosure in both annual and interim financial
statements about the effect on reported net income (loss) of an entity's
accounting policy decisions with respect to stock-based employee compensation.
The Company adopted this Statement in fiscal year 2002.
The Company accounts for stock-based employee compensation under the
requirements of Accounting Principles Board (APB) Opinion No. 25, which does not
require compensation to be recorded if the consideration to be received is at
least equal to fair value at the measurement date. Nonemployee stock-based
transactions are accounted for under the requirements of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which requires compensation to be
recorded based on the fair value of the securities issued or the services
received, whichever is more reliably measurable.
SFAS No. 123 requires the disclosure of pro forma net income and earnings per
share had the Company adopted the fair value method. Under SFAS No. 123, the
fair value of stock-based awards to employees is calculated through the use of
option-pricing models, even though such models were developed to estimate the
fair value of freely tradable, fully transferable options with vesting
restrictions which significantly differ from the Company's stock option awards.
These models also require subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affect the calculated
value. The Company's calculations for the options granted were made using the
Black-Scholes option-pricing model.
The calculations are based on a single-option valuation approach and forfeitures
are recognized as they occur. The following table illustrates the effect on net
income and earnings per share had compensation cost for stock-based compensation
been determined based on the grant date fair values of awards for the quarters
ended March 28, 2003 and March 30, 2002, respectively:
2003 2002
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Net income:
As reportedd $ 257,000 $ 184,000
Add total stock-based employee compensation
expense determined under APB opinion 25,
net of related tax effects 3,000 7,000
(Deduct) total stock-based employee compensation
expense determined under fair value based for all
awards, net of related tax benefits (16,000) (19,000)
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Pro forma $ 244,000 $ 172,000
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6
Note 1 Accounting for Stock Based Compensation (Continued):
2003 2002
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Basic earnings per share:
As reported $ 0.05 $ 0.03
Pro forma $ 0.05 $ 0.03
Diluted earnings per share:
As reported $ 0.05 $ 0.03
Pro forma $ 0.05 $ 0.03
Note 2 - Inventories
Inventories are stated at the lower of cost, determined using the first-in,
first-out method, or net realizable value and are composed of the following (in
thousands):
Raw materials $ 1,081
Work in process 226
Finished goods 518
----------
$ 1,825
==========
Note 3 - Earnings per Share
Basic earnings per share is computed by dividing the net income attributable to
the common stockholders by the weighted average number of common shares
outstanding during the period. There is no adjustment in the net income
attributable to common stockholders. Diluted earnings per share reflect the
potential dilution that could occur from common shares issuable through stock
options (60,621 and 129,811 shares in the fiscal 2003 and fiscal 2002 periods,
respectively).
Note 4 - Income Taxes
In assessing the realizability of deferred tax assets, management has estimated
that it is likely that approximately $1,500,000 will not be realized. This
valuation allowance represents a portion of net operating loss carryforwards
attained through a prior business acquisition. As further discussed below, tax
law limits the use of an acquired entity's net operating loss carryforwards to
subsequent taxable income of the consolidated entity. Management will continue
to evaluate the realizability of the deferred tax assets by assessing the need
for and amount of a valuation allowance.
At December 28, 2002, the Company had approximately $6.2 million in net
operating loss carryforwards for federal income tax purposes available to offset
future taxable income. Certain of these loss carryforwards are limited to
approximately $298,000 annually. Any unused net operating loss is carried
forward. As a result of the limitation discussed above, it is probable that
approximately $4.5 million of the Company's net operating loss will expire
without utilization. Loss carryforwards for tax purposes expire in amounts and
by fiscal year as follows: 2004 $1,046,000; 2005 $2,836,000; 2006 $1,820,000;
2007 $274,000; 2010 $40,000; 2012 $114,000 and 2018 $85,000.
Note 5 - Product Group Information
The Company's product groups are based on specific product characteristics and
are grouped into laboratory products and operating room disposable products.
Laboratory products consist primarily of: (1) membranes used to concentrate,
separate and purify dissolved or suspended molecules that are sold primarily to
laboratories and (2) hollow fiber membrane devices that allow components
retained by a membrane to be concentrated including filters utilized for micro
and ultrafiltration separations that are sold to biotech and pharmaceutical
companies. Operating room disposable products consist primarily of sterile
plastic surgical drapes and cloth bandages that are sold primarily to hospitals.
7
Revenue by product group is as follows (in thousands):
2003 2002
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Laboratory products 3,038 2,914
Operating room disposable products 420 340
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$ 3,458 $ 3,254
========== ==========
Note 5 - Option Plan
The Company had two options plans referred to as the 1995 Option Plan and the
2000 Option Plan with 200,000 and 300,000 shares of common stock, respectively
reserved for option grants to key employees, directors and consultants. In July
2002, the shareholders' approved merging the 1995 Option Plan and the 2000
Option Plan into one plan to be referred to as the 2000 Option Plan (the "2000
Option Plan"). In addition, shareholders approved the number of shares available
to grant under the 2000 Option Plan by 100,000 to a total of 600,000. As of
March 29, 2003, there were 436,300 options outstanding under the 2000 Option
Plan. There were no grants or cancellations of options during the quarter ended
March 29, 2003.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Spectrum Laboratories, Inc. and Notes thereto contained
elsewhere within this Report on Form 10-QSB. Except for the historical
information contained herein, the following discussion may contain
forward-looking statements that involve risks and uncertainties. The actual
future results of the Company could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this report and those factors discussed in the
Company's Form 10-KSB for the year ended December 28, 2002 as filed with the
Securities and Exchange Commission and, from time to time, in the Company's
other reports on file with the Commission.
Results of Operations
Sales
Sales for the first quarter ended March 29, 2003 increased $204,000 (6.3%)
compared to the first quarter of 2002. From a product group perspective sales
for laboratory products increased $124,000 (4.3%) while sales at the operating
room disposable ("ORD") product group were $80,000 (23.5%) ahead of first
quarter 2002.
The increase in sales for the ORD group related primarily to one key customer
whose sales were up significantly over prior year although prior year sales were
also lower than the typical quarter. The increase in laboratory products sales
was fairly broad based although direct to user sales for process type products
were up $62,000 (42%).
Gross Margin
Gross Margin for the first quarter of 2003 was $1,664,000 (48.1%) versus the
first quarter of 2002 of $1,457,000 (44.8%). The increase in gross margin
percentage was due to both product and customer mix. Gross margin also benefited
from the positive impact of the increase of the Euro exchange rate.
Selling, General & Administrative and Research & Developmental Expenses
("Expenses")
Expenses for the first quarter of 2003 were $1,261,000, an increase of $136,000
(12.1%) from the first quarter of 2002. The increase in expenditures was
principally attributable to an $80,000 charitable contribution the Company made
in the first quarter. In addition, the Company continues to issue its
BioProcessor newsletter to its customers. The most recent issued BioProcessor in
the first quarter of 2003, the cost of sales of catalogs and The ABCs of
Filtration book distributed during the quarter resulted in advertising
expenditures increasing by $73,000 for the first quarter of 2003 versus the same
period of 2002. These increases in expenditures were partially offset by reduced
consulting fees of $27,000 and reduction in the provision for bad debts of
$11,000.
Income before Taxes
The net of the above resulted in income before taxes in the first quarter of
2003 of $367,000, an increase of $62,000 (20.3%) over the first quarter of 2002.
Considering the historical utilization and availability of tax credits which are
anticipated for the current fiscal year, management believes an effective tax
rate of 30% to be appropriate.
8
Liquidity and Capital Resources
During the first quarter of 2003, the Company generated approximately $324,000
of cash from operating activities. Cash utilized for working capital
requirements totaled $123,000 as the increase in accounts receivable, inventory
and prepaids of $292,000 exceeded the net increase in accounts payable/accrued
expenses of $169,000.
The cash from operating activities was then offset by $223,000 in bank loan
payments and $178,000 for the acquisition of equipment. This resulted in a net
decrease in cash for the period of approximately $77,000 to a cash and cash
equivalent balance at March 29, 2003 of $5,032,000.
As noted in prior reports, the Company had committed $105,000 in the fourth
quarter of 2002 for a license relating to new software in order to operate its
business more efficiently. This amount has now been expended as of March 29,
2003, and the actual software implementation is now in process with an
anticipated conversion date of June 30, 2003. The total cost of the software
implementation is estimated at $350,000.
The Company is obligated under the terms of various operating lease agreements
for manufacturing, warehouse and office facilities. Certain of these leases
provide for rent escalation adjustments. Minimum future rental payments under
these operating lease agreements for the second and subsequent quarters ending
December 28, 2002 and the subsequent years ending December 31 are as follows:
second and subsequent quarters 2003 $348,000; 2004 $341,000; and 2005 $184,000
(total $873,000).
The Company's management believes that cash on hand and cash expected to be
generated from operations will be sufficient to meet cash requirements for the
next twelve months.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and its Chief Financial Officer, after evaluating the
effectiveness of the Company's disclosure controls and procedures (as defined in
Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date
within 90 days of the filing date of this quarterly report on Form 10-QSB (the
"Evaluation Date")), have concluded that as of the Evaluation Date, the
Company's disclosure controls and procedures were adequate and effective to
ensure that material information relating to the Company would be made known to
them by others within the Company, particularly during the period in which this
quarterly report on Form 10-QSB was being prepared.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's disclosure controls and procedures subsequent to the Evaluation
Date, nor any significant deficiencies or material weaknesses in such disclosure
controls and procedures requiring corrective actions. As a result no corrective
actions were taken.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Change in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
9
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation of Registrant (incorporated by reference to
Exhibit 4.1 filed with Registrant's Registration Statement on Form S-2,
Registration No. 2-68999)
3.2 Amendment to Article I of the Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.2 filed with Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1982,
Commission File No. 0-9478)
3.3 Bylaws of Registrant (incorporated by reference to Exhibit 4.2 filed
with Registrant's Registration Statement on Form S-2, Registration No.
2-68999)
3.4 Amendment to Article III, section 2 of Registrant's Bylaws
(incorporated by reference to Exhibit 3.3 filed with Registrant's
Report on Form 10-K for the fiscal year ended May 31, 1982, Commission
File No. 0-9478)
3.5 Amendment to Article IV, Section 6 and Section 7 of the Registrant's
Bylaws (incorporated by reference to Exhibit 3.4 filed with
Registrant's Report on Form 10-K for the fiscal year ended May 31,
1982, Commission File No. 0-9478)
3.6 Articles of Amendment to Registrant's Articles of Incorporation
increasing authorized stock to 25,000,000 shares (incorporated by
reference to Registrant's Schedule 14C-2 Information Statement, Exhibit
A, filed with the Commission on October 19, 1996, Commission File No.
0-9478)
3.7 Certificate of Ownership of Microgon into Spectrum Laboratories
(incorporated by reference to Exhibit 2B to the Registrant's Form 8-K/A
on October 15, 1996, Commission File No. 0-9478)
3.8 Reorganization Agreement, dated September 30, 1998, between Spectrum
Laboratories, Inc., and Spectrum Medical Industries, Inc. (incorporated
by reference to Exhibit 2 to the Registrant's Form 8-K/A filed November
18, 1998, Commission File No. 0-9478)
10.1 Amendment to Investment and Loan Agreement dated August 1, 1995 among
the Company, Microgon and certain preferred shareholders of Microgon
(incorporated by reference to Exhibit 2A to the Registrant's Form 8K/A
filed on October 15, 1995, Commission File No. 0-9478)
10.2 Stock Option Plan adopted October 11, 1996 (incorporated by reference
to Exhibit B to Registrant's filing of Schedule 14-2, filed with the
Commission on October 9, 1996)
10.3 Registrant's purchase agreement of Cellco, Inc. (incorporated by
reference to Exhibit 10.14 with Registrant's Form 8-K dated November 1,
1996, Commission File No. 0-9478)
10.4 Credit agreement, dated as of December 22, 1998, between Registrant and
City National Bank (incorporated by reference to Exhibit 10.18 filed
with Registrant's report on Form 10-KSB for fiscal year ended January
2, 1999, Commission File No. 0-9478)
10.5 Incentive Agreement dated August 10, 1998, between Spectrum Medical
Industries, Inc., the Registrant and F. Jesus Martinez and Roy T.
Eddleman (incorporated by reference to Exhibit 10.19 filed with
Registrant's report on Form 10-KSB for fiscal year ended January 2,
1999, Commission File No. 0-9478)
10.6 Sublease agreement dated January 19, 1999 between Millipore Corporation
and Spectrum Laboratories, Inc. (incorporated by reference to Exhibit
10.20 filed with Registrant's report on Form 10-KSB for fiscal year
ended January 1, 2000, Commission File No. 0-9478)
10
10.7 First amendment, dated July 14, 1999, to the credit agreement, dated
December 22, 1998, between the Company and City National Bank
(incorporated by reference to Exhibit 10.21 filed with Registrant's
report on Form 10-KSB for fiscal year ended January 1, 2000, Commission
File No. 0-9478)
10.8 Second amendment, dated July 1, 2000, to the credit agreement, dated
December 22, 1998, between the Company and City National Bank
(incorporated by reference to Exhibit 10.8 filed with Registrant's
report on Form 10-KSB for fiscal year ended December 30, 2000,
Commission File No. 0-9478)
10.9 The Registrant's Year 2000 Stock Option Plan (incorporated by reference
to Exhibit 10.9 filed with Registrant's report on Form 10-KSB for
fiscal year ended December 30, 2000, Commission File No. 0-9478)
10.10 Third amendment, dated January 8, 2001, to the credit agreement, dated
December 22, 1998, between the Company and City National Bank
(incorporated by reference to Exhibit 10.10 filed with Registrant's
report on Form 10-KSB for fiscal year ended December 30, 2000,
Commission File No. 0-9478)
10.11 Royalty Agreement, dated June 1, 1976, between Roy T. Eddleman and
Spectrum Medical Industries (incorporated by reference to Exhibit 10.11
filed with Registrant's report on Form 10-KSB for fiscal year ended
December 30, 2000, Commission File No. 0-9478)
10.12 Fourth amendment, dated December 14, 2001, to the credit agreement,
dated December 22, 1998, between the Company and City National Bank
(incorporated by reference to Exhibit 10.12 filed with Registrant's
report on Form 10-KSB for fiscal year ended December 29, 2001,
Commission File No. 0-9478)
10.13 Amended and Restated Credit Agreement, dated December 26, 2002, between
the Registrant and City National Bank (incorporated by reference to
Exhibit 99.3 filed with Registrant's report on Form 10-QSB for the
quarterly period ended September 28, 2002, Commission File No. 0-9478)
16 Letter on change in certifying accountant (incorporated by reference to
Exhibit 16 filed with Registrant's report on Form 10-KSB for fiscal
year ended January 2, 1999, Commission File No. 0-9478)
21 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21
filed with Registrant's report on Form 10-KSB for fiscal year ended
January 2, 1999, Commission File No. 0-9478)
99.1 Certification of Chief Executive Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.1 filed with Registrant's
report on Form 10-QSB for the quarterly period ended June 29, 2002,
Commission File No. 0-9478)
99.2 Certification of Chief Financial Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.2 filed with Registrant's
report on Form 10-QSB for the quarterly period ended June 29, 2002,
Commission File No. 0-9478)
99.3 Certification of Chief Financial Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.3 filed with Registrant's
report on Form 10-QSB for the quarterly period ended September 28,
2002, Commission File No. 0-9478)
11
99.4 Certification of Chief Executive Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.4 filed with Registrant's
report on Form 10-QSB for the quarterly period ended September 28,
2002, Commission File No. 0-9478)
99.5 Certification of Chief Financial Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.5 filed with Registrant's
report on Form 10-KSB for the fiscal year ended December 28, 2002,
Commission File No. 0-9478)
99.6 Certification of Chief Executive Officer of Spectrum Laboratories, Inc.
(incorporated by reference to Exhibit 99.5 filed with Registrant's
report on Form 10-KSB for the fiscal year ended December 28, 2002,
Commission File No. 0-9478)
99.7 Certification of Chief Financial Officer of Spectrum Laboratories, Inc.
99.8 Certification of Chief Executive Officer of Spectrum Laboratories, Inc.
(b) The Company filed no reports on Form 8-K during the quarter ended
March 29, 2003.
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, on May 6, 2003.
SPECTRUM LABORATORIES, INC.
(Registrant)
/s/ F. Jesus Martinez
- ------------------------------
Signature
F. Jesus Martinez
President
/s/ Brian A. Watts
- ------------------------------
Signature
Brian A. Watts
Chief Financial Officer/Vice President of Finance
12
Certifications
Chief Financial Officer
I, Brian A. Watts Chief Financial Officer certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Spectrum
Laboratories, 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 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; and
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 ("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:
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;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were any 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: May 6, 2003
/s/ Brian A. Watts
- ------------------------------
Signature
Brian A. Watts
Chief Financial Officer/Vice President of Finance
13
Chief Executive Officer
I, Roy T. Eddleman Chief Executive Officer certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Spectrum
Laboratories, 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 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; and
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 ("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:
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;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were any 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: May 6, 2003
/s/ Roy T. Eddleman
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Signature
Roy T. Eddleman
Chief Executive Officer & Chairman
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