SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from__________to__________.
Commission File Number 0-27929
WATERFORD STERLING CORPORATION
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 62-1655508
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
200 Knowles Avenue, Winter Park, FL 32789
-------------------------------------------
(Address of principal executive offices)
(407) 622-2040
-------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------
(Former name, former address and formal 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 Securities Exchange Act of 1934 during the preceding
twelve (12) months (or such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing requirements for the
past ninety (90) days. Yes X No
As of November 8, 2002, 20,887,815 shares of Common Stock of the issuer
were outstanding.
WATERFORD STERLING CORPORATION
FORM 10-QSB
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1 . Financial Statements
Consolidated Balance Sheets as of September 30, 2002 ................. 3
Consolidated Statements of Operations-for the three months and
nine months ended September 30, 2002 and 2001 and from inception
to September 2002..................................................... 4
Consolidated Statements of Cash Flows- for the nine months ended
September 30, 2002 and 2001 and from inception to September 30, 2002.. 5
Notes to Consolidated Financial Statements............................ 6
ITEM 2. Management's Discussion and Analysis or Plan of Operations............. 10
PART II - OTHER INFORMATION
WATERFORD STERLING CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
September 30, 2002
ASSETS
CURRENT ASSETS:
Prepaid expense (Note 4) $ 14,802
----------
Total current assets 14,802
EQUIPMENT:
Office equipment 40,761
Accumulated depreciation (24,892)
----------
15,869
OTHER ASSETS:
Business acquisition costs (Note 9) 73,680
----------
$ 104,351
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 59,603
Account payable related party (Note 5) 201,521
Notes payable - related parties (Note 5) 480,660
----------
Total current liabilities 741,784
STOCKHOLDERS EQUITY (Deficit):
Common stock, par value $.01;
authorized 30,000,0000 shares; issued
and outstanding 20,887,815 shares 208,878
Capital in excess of par 1,353,049
Deficit accumulated during the
development stage (2,199,360)
-----------
Total stockholders' deficit (637,433)
-----------
$ 104,351
===========
See accompanying notes to financial statements
WATERFORD STERLING CORPORATION
(A Development Stage Company)
Consolidated Statements Of Operations
For The Three Months Ended September 30, 2002 and 2001
For The Nine Months Ended September 30, 2002 and 2001
And May 17, 1989 (Date Of Inception) To September 30, 2002
Inception
Three Months Ended Nine Months Ended To
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001 2002
----------- ------------- --------- -------------- ------------
REVENUE:
Sales of software $ - $ - $ - $ - $ 652,458
Sales of furniture - 221 - 77,370 77,370
Interest income 490 1,922 2,323 5,946 60,548
---------- ----------- ----------- ------------ -----------
490 2,143 2,323 83,316 790,376
COST AND EXPENSES:
Cost of furniture sold - - - 70,072 70,072
Selling, general and
administrative 59,915 60,551 203,510 562,574 2,192,143
Interest 12,118 5,791 32,702 13,961 58,041
Depreciation and
amortization 1,880 2,319 5,139 6,956 29,155
Loss (gain) on sale of
investments - - - 9,825 9,825
----------- ----------- ----------- ------------ -----------
Total expenses 73,913 68,661 241,351 663,388 2,359,236
----------- ----------- ----------- ------------ -----------
LOSS BEFORE
EXTRAORDINARY ITEM (73,423) (66,518) (239,028) (580,072) (1,568,860)
----------- ----------- ----------- ------------ -----------
EXTRAORDINARY ITEM
Non-temporary loss
on securities - - - (630,500) (630,500)
----------- ----------- ----------- ------------ -----------
NET LOSS (73,423) (66,518) (239,028) (1,210,572) (2,199,360)
OTHER COMPREHENSIVE
INCOME
Unrealized gain on available
for sale securities - - - 200,000 -
----------- ----------- ----------- ------------ -----------
COMPREHENSIVE LOSS $ (73,423) $ (66,518) $(239,028) $(1,010,572) $(2,199,360)
=========== =========== =========== ============ ============
Loss per common share before
extraordinary item $ (.00) $ (.00) $ (.01) $ (.03)
Extraordinary loss per
common share - - - (.03)
----------- ----------- ----------- -----------
Net less per common share $ (.00) $ (.00) $ (.01) $ (.06)
=========== =========== =========== ===========
Weighted average
shares outstanding 20,887,815 20,887,815 20,887,815 20,092,943
============== ============ ============== ============
WATERFORD STERLING CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF
CASH FLOWS For The Nine Months
Ended September 30, 2002 and 2001
May 17, 1989 (Date of Inception)
To September 30, 2002
Inception
To
Sept 30, Sept 30, Sept 30,
2002 2001 2002
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(239,028) $(1,210,572) $(2,199,360)
Adjustment to reconcile net loss to
net cash used by operating activities:
Loss on sale of investments - 9,824 9,824
Depreciation and amortization 5,138 7,096 25,828
Bad debt - - 12,074
Decrease in prepaid expenses 42,677 39,406 155,751
Increase (decrease) in accounts payable 45,180 (53,134) 59,604
Revenue in non-cash transaction - - (650,000)
Nontemporary loss on securities - 630,500 630,500
Expenses paid and debts settled
with common stock - 263,082 443,348
Loss on exchange of notes receivable
for prepaid rent - - 45,200
Other expenses incurred in
non-cash transactions - - 44,248
----------- ---------- ------------
Net cash (Used) by operations (146,033) (313,798) (1,422,983)
----------- ---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of securities available for sale - 59,676 59,676
Issuance of notes receivable - - (290,733)
Collections on notes receivable - - 78,658
Purchase of marketable securities - - (50,000)
Purchase of equipment - - (40,761)
Increase in organization costs - - (936)
Increase in business acquisition costs (73,680) - (73,680)
----------- ---------- ------------
Net cash provided (used)
by investing activities (73,680) 59,676 (317,776)
----------- ---------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock for cash - - 1,009,344
Loans from related parties 201,522 245,701 731,415
----------- ---------- ------------
Net cash provided from
financing activities 201,522 245,701 1,740,759
----------- ---------- ------------
NET DECREASE IN CASH (18,191) (8,421) -
Cash, beginning 18,191 12,664 -
----------- ---------- ------------
Cash, ending $ - $ 4,243 $ -
=========== ========== ============
See (Note 8) for supplemental disclosures.
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(239,028) $(1,210,572) $(2,199,360)
Adjustment to reconcile net loss to
net cash used by operating activities:
Loss on sale of investments - 9,824 9,824
Depreciation and amortization 5,138 7,096 25,828
Bad debt - - 12,074
Decrease in prepaid expenses 42,677 39,406 155,751
Increase (decrease) in accounts payable 45,180 (53,134) 59,604
Revenue in non-cash transaction - - (650,000)
Nontemporary loss on securities - 630,500 630,500
Expenses paid and debts settled
with common stock - 263,082 443,348
Loss on exchange of notes receivable
for prepaid rent - - 45,200
Other expenses incurred in
non-cash transactions - - 44,248
----------- ---------- ----------
Net cash (Used) by operations (146,033) (313,798) (1,422,983)
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of securities available for sale - 59,676 59,676
Issuance of notes receivable - - (290,733)
Collections on notes receivable - - 78,658
Purchase of marketable securities - - (50,000)
Purchase of equipment - - (40,761)
Increase in organization costs - - (936)
Increase in business acquisition costs (73,680) - (73,680)
------------ ----------- ----------
Net cash provided (used)
by investing activities (73,680) 59,676 (317,776)
------------ ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock for cash - - 1,009,344
Loans from related parties 201,522 245,701 731,415
------------ ---------- ----------
Net cash provided from
financing activities 201,522 245,701 1,740,759
------------ ----------- ----------
NET DECREASE IN CASH (18,191) (8,421) -
Cash, beginning 18,191 12,664 -
------------ ----------- ----------
Cash, ending $ - $ 4,243 $ -
============ =========== ==========\
See (Note 8) for supplemental disclosures.
WATERFORD STERLING CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
Business activity
The Company, a Delaware corporation was incorporated on May 17, 1989, and is
currently in the development stage. The Company sought to acquire and develop
high technology software firms, and to engage in the sourcing and marketing of
furniture and accessories to the hospitality and time share market. Currently
the Company is exploring other business possibilities.
In April 1999 the Company changed its name from Commerce Centers Corporation to
Skreem.com Corporation and approved a reverse stock split of 3 shares of
outstanding stock for 5 shares. The report has been prepared as if the stock
split had occurred at inception.
In January 2001 the Company changed its name from Skreem.com Corporation to
Waterford Sterling Corporation.
Accounting method
The Company's financial statements are prepared using the accrual method of
accounting.
Principles of consolidation
The consolidated financial statements include the accounts of Skreem.com
Corporation and Waterford Florida, Inc., both Nevada corporations. All material
intercompany transactions have been eliminated.
Computer software costs
The Company expenses research and development costs related to software
development that has not reached technological feasibility and started
production for sale. Thereafter costs are capitalized and amortized over a
maximum of five years or expected life of the product, whichever is less.
Income (loss) per share
The computation of income (loss) per share of common stock is based on the
weighted average number of shares outstanding, after the stock split.
Statement of cash flows
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
Financial instruments
The Company estimates that the fair value of all financial instruments at June
30, 2002 do not differ materially from the aggregate carrying values of its
financial instruments recorded in the accompanying balance sheets.
Dividend policy
The Company has not yet adopted a policy regarding payment of dividends.
Estimates and assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
WATERFORD STERLING CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
Marketable securities:
Certain equity securities are classified as available for sale as defined by
SFAS 115. In accordance with that Statement, they are reported at aggregate fair
value with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity.
1. INCOME TAXES
The Company complies with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. At September 30, 2002 the Company had a net
operating loss ("NOL") carry forward for United States income tax purposes of
approximately $1,543,053. The NOL carryforward expires in increments beginning
in 2004. The Company also had a net capital loss carryover of approximately
$640,000. The Company's ability to utilize its net NOL carryforward is subject
to the realization of taxable income in future years, and under certain
circumstances, the Tax Reform Act of 1986 restricts a corporation's use of its
NOL carryforward. The Company believes that there is at least a 50% chance that
the carryforward will expire unused, therefore, any tax benefit from the loss
carryforward has been fully offset by a valuation reserve.
2. ACQUISITION OF SUBSIDIARIES
In April 1999 the Company, Skreem.com Corporation, a Delaware corporation
("SCD") acquired all of the outstanding stock of Skreem.com Corporation, a
Nevada corporation ("SCN") through a stock for stock exchange in which the
stockholders of SCN received 9,600,000 post stock split
common shares of the SCD in exchange for all of the stock of the SCN.
Skreem.com Corporation ("SCN") was incorporated in Nevada on January 29, 1999
for the purpose of developing high technology software.
For reporting purposes, the acquisition is treated as an acquisition of the
Company ("SCD") by Skreem.com Corporation of Nevada ("SCN") (reverse
acquisition) and a recapitalization of SCN with its historical financial
statements being combined with the Company's. No proforma statements have been
included since the acquisition is considered to be a reverse acquisition.
On January 31, 2001, the Company executed and Exchange Agreement for the
acquisition of all of the issued and outstanding shares of Waterford Florida,
Inc. in exchange for 7,000,000 share of the Company's common stock. .
3. PREPAID EXPENSE
The Company leases office space under a noncancellable operating lease agreement
effective January 1, 2001 which expires December 31, 2002. The Company prepaid
the rent for the two years specified in the lease agreement. Consideration for
the prepayment was based on the present value of 24 months at $5,000 per month,
discounted at 8% or $110,553. Prepaid rent expense at September 30, 2002 was
$14,802.
5. RELATED PARTY TRANSACTIONS
During February 1998, the Company issued 1,585,258 post stock split shares to
five major stockholders and two persons who were both officers and directors.
The consideration for the issuance was assumption of the Company's accrued
liabilities in the amount of $21,920 by the above mentioned shareholders, and
the agreement by them to fund future Company expenditures in the amount of
$4,500.
The shares issued pursuant to the acquisition agreement as described in note 3
were issued to four individuals who collectively represent a controlling
interest of the Company.
During May 2000, the Company borrowed $50,000 from its President payable on
demand at 8%.
On September 26, 2000, the Company issued 75,000 shares of its common stock in
settlement of the $50,000 note including accrued interest.
WATERFORD STERLING CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
5 RELATED PARTY TRANSACTIONS ( continued)
The Company has borrowed additional funds from related parties resulting in 8%
demand notes secured by the Company's assets and treasury securities, and other
unsecured amounts as follows at September 30, 2002:
Notes payable - Stockholder of the Company $150,955
Notes payable - Market Management International,
a company is which a major stockholder has
an interest. 329,705
---------
$480,660
Unsecured amounts borrowed form Market
Management International $201,521
========
6. GOING CONCERN
The Company has suffered recurring operating losses from its inception. The
Company intends to acquire interests in various business opportunities which, in
the opinion of management, will provide a profit for the Company, however, there
is insufficient working capital to service its debt and for any future planned
activity. Continuation of the Company as a going concern is dependent upon
obtaining additional working capital for any future planned activity and
management of the Company will be required to develop a strategy which will
accomplish this objective.
7. SUPPLEMENTAL CASH FLOW DISCLOSURES
Inception to
September 30, September 30, September 30,
2002 2001 2002
----------- ------------- ------------
Non-cash operating and financing activities:
Non-cash sales $ - $ - $ 650,000
============ ============ ==========
Other non-cash operating expenses $ - $ - $ 89,448
============ ============ ==========
Issuance of common stock for expenses $ - $ 263,082 $ 443,348
============ ============ ==========
Issuance of common stock for note payable $ - $ - $ 50,000
============ ============ ==========
8. COMMITMENTS
The Company leases office space under a noncancellable operating lease agreement
effective January 1, 2001 which expires December 31, 2002. Minimum lease
payments of $60,000 for 2002 are required. The Company has prepaid this
obligation (refer to note 4).
9. BUSINESS ACQUISITION COSTS
The Company as incurred direct and incremental costs associated with a pending
merger of $73,680.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company's actual results could differ
materially from those set forth on the forward looking statements as a result of
the risks set forth in a Company's filings with the Securities and Exchange
Commission in general economic conditions and changes in the assumptions used in
making such forward looking statements.
Material Changes in Results of Operations
Three Months Ended Sep 30, 2002 Compared to the Three Months Ended Sep 30, 2001
Revenues for the three months ended September 30, 2002 decreased to
$490 from $2,143 for the three months ended September 30, 2001. This decrease
resulted from a lack of furniture sales in the current period and a reduction of
$1,432 in interest income.
General and administrative expenses decreased by $6365 or 1% to $59,915
for the three months ended September 30, 2001 from $60,551 for the corresponding
period of the prior year. This modest decrease resulted from a reduction in
expenditures for salaries which was partially offset by higher travel costs.
For the three months ended September 30, 2001, the Company incurred
interest expenses of $12,118 on funds borrowed from its principal shareholder.
This compares with $5,791 for the corresponding period of the prior year. Notes
and accounts payable to the principal shareholders totalled $682,181 as of
September 30, 2002.
Depreciation and amortization expense decreased by $439 or 18.9% to
$1,880 for the three months ended September 30, 2002 from $2,349 for the
corresponding period of the prior year. The decrease in depreciation and
amortization expense resulted from the absence of amortization of software in
the current period.
As a result of the foregoing, the Company incurred a net operating loss
of $73,423 the three months ended September 30, 2002. For the corresponding
period of the prior year, the Company had a net operating loss of $66,518.
Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September
30, 2001
Revenues for the nine months ended September 30, 2002 decreased by
$80,993 to $2,323 from $83,316 for the nine months ended September 30, 2001.
This decrease in revenues resulted from a decrease in the sale of furniture of
$7,737 and a decrease in interest of $$3,623. There was no cost of goods sold
for the nine months ended September 30, 2002. For the period ended September 30,
2001, the cost of goods sold on furniture was $70,072, producing a gross margin
of 9.43%.
General and administrative expenses decreased by $359,064 or 43.8% to
$203,510 for the nine months ended September 30, 2002 from $562,574 for the
corresponding period of the prior year. This decrease resulted from closing the
furniture operation and reduced staff levels.
The Company incurred interest expenses of $32,702 for the nine months
ended September 30, 2002 compared to interest expense of $13,961 for the
corresponding period of the prior year. The increase in interest expense
resulted from increased borrowings from the principal shareholder.
Depreciation and amortization expense decreased by $1,817 or 26.1% to
$5,139 for the nine months ended September 30, 2002 from $6,956 for the
corresponding period of the prior year. The decrease in depreciation and
amortization expense resulted from the absence of amortization of software in
the current period.
For the nine months ended September 30, 2002, the Company also incurred
a loss of $9,825 from the sale of certain investments. There was no such loss
for the corresponding period of the current year.
As a result of the foregoing, the Company incurred a net operating loss
of $239,028 for the nine months ended September 30, 2002. This compares with a
net operating loss of $580,072 for the corresponding period of the prior year.
The Company incurred a loss of $630,500 for the nine months ended
September 30, 2001 from the non-temporary loss on securities. There was no such
loss during the period ended September 30, 2002.
In addition, the Company reported other comprehensive income, net of
taxes, of $200,000 from unrealized gain on securities for the nine months ended
September 30, 2001. There was no comprehensive income or loss during the
corresponding period of the current year. 30, 2000.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has funded its operations and met its
capital requirements through the sale of stock and loans from its principal
shareholder. As of September 30, 2002, the Company had no cash, and a working
capital deficit of $726,982. This compares with cash of $4,243 and a working
capital deficit of $232,582 as of September 30, 2001.
Net cash used in operating activities decreased to $146,033 for the
nine months ended September 30, 2002 from $313,798 for the nine months ended
September 30, 2001. The decrease in cash used in operations principally resulted
from a reduced net operating loss which was partially offset by non-cash
transactions.
Cash flows used in investing activities for the nine months ended
September 30, 2002 increased to $73,680 from $59,676 provided by investing
activities for the nine months ended September 30, 2001. This change resulted
from the sale of $59,676 of securities in the prior year and none in the current
year and $73,680 of business acquisition costs in the current period and none in
the prior period.
Net cash provided by financing activities decreased to $201,522 from
$245,701 for the nine months ended September 30, 2002 and 2001, respectively.
The entire amount of proceeds for both periods came from loans from related
parties.
The Company has experienced operating losses since inception.
Furthermore, the Company will require substantial funds to continue in business.
Therefore, the Company's ability to survive is dependent on its ability to raise
capital through the issuance of stock or borrowing of additional funds. Without
the success of one of these options, the Company will not have sufficient cash
to satisfy its working capital and investment requirements for the next twelve
months.
The Company has negotiated the acquisition of a British Virgin Islands
corporation, Eternal Technologies Group Ltd. ("Eternal"). Following a 1:6
reverse share split, the Company will issue 22,050,000 shares of its common
stock for Eternal. Eternal, through its subsidiaries operates a sheep breeding
center and research facility in Inner Mongolia, the People's Republic of China.
During the month of November an information statement concerning the reverse
split and proposed acquisition will be sent to the shareholders of the Company.
Should this acquisition be completed, the Company will need to raise additional
capital to fund its operations.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WATERFORD STERLING CORPORATION
Date: November 13, 2002 By: /s/ Jacob Nugyen
---------------------------------------
Jacob Nugyen
President and Chief Executive Officer
and Chief Financial Officer
WATERFORD STERLING CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
CERTIFICATIONS
I, Jacob Nugyen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Waterford Sterling
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 13, 2002
By:/s/ Jacob Nugyen
--------------------
Jacob Nugyen
Chief Executive Officer
I,Jacob Nugyen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Waterford Sterling
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 13, 2002
By:/s/ Jacob Nugyen
---------------------
Jacob Nugyen
Chief Financial Officer
WATERFORD STERLING CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
Item 4. Evaluation of Disclosure Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Our
chief executive officer and our chief financial officer, after evaluating the
effectiveness of the Company's "disclosure controls and procedures" (as defined
in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a
date (the "Evaluation Date") within 90 days before the filing date of this
quarterly report, have concluded that as of the Evaluation Date, our disclosure
controls and procedures were adequate and designed to ensure that material
information relating to us and our consolidated subsidiaries would be made known
to them by others within those entities.
(b) Changes in internal controls. There were no significant
changes in our internal controls or to our knowledge, in other factors that
could significantly affect our disclosure controls and procedures subsequent to
the Evaluation Date.